Everyone knows about the importance of saving up for a rainy day, but sometimes the unpredictable can take you by surprise and without warning. While a good habit to nurture is to spend within our means, every now and then something unplanned happens, which requires you to have to look into obtaining a loan.

While long term loans, such as a home loan, is a feasible way for homeowners to purchase their properties with a long term repayment plan, they may not be practical in situations where you require smaller amounts of money or prefer a shorter repayment period.

Aside from getting married, planning for a new member of the family can also require you to come up with a significant amount of money up front. If you’re thinking of turning the study into a nursery for the baby, be prepared to spend on renovating the space. If you need to consider moving to a bigger space, you may also need to re-furbish your current premises in order to ensure it fetches a good rate on the resale market.

There are several types of loans available on the market. In such cases, it pays to research and compare the personal loans out there through SingSaver. According to SingSaver's research from last year, one in two of us will go straight to our existing bank, but that could add significant cost. Below we share a few loan types and when they might be a good time to have use… don't forget to look at SingSaver's site for the latest offers and able to adjust by duration (tenure) and value. 

Personal Loan

It refers to money that is borrowed from a financial institution for personal use. Personal loans tend to be for relatively small amounts, especially when compared to larger, long-term loans, such as home loans. While personal loans are typically used to pay for one-time expenses (such as medical bills, home repairs, or a significant purchase), a borrower is usually not required to disclose the specific purpose for the loan. These loans are ideal for time-critical issues, where you need to find an immediate financial solution. If you’re looking for a personal loan, DBS now offers the lowest interest rate of 3.88%. Apply through SingSaver now to receive 3 months of interest-free loans.

Debt Consolidation

It means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones. In effect, multiple debts are combined into a single, larger piece of debt, usually with more favorable pay-off terms: a lower interest rate, lower monthly payment or both. This also helps you to monitor your monthly paybacks and better manage your debt, so you don’t forget to pay any outstanding bills. Consider a debt consolidation plan after checking your other options and ensuring that you are unable to get loans that offer lower interest rates on repayment.

Balance Transfer

It means moving the outstanding debt from one card to another card. Credit card balance transfers are typically used by consumers who want to move the amount they owe to a credit card with a lower interest rate, fewer penalties or even benefits, such as rewards points or travel miles. It’s not uncommon for credit card companies to offer attractive interest rates or award additional points when you apply for a balance transfer, however be sure to check on what the benefits and conditions are. You can also stand to save on interest rates when you transfer your outstanding debt from a credit card charging a high interest rate, to one that offers an introductory 0% interest period.

Credit Line

A credit line is a pool of money available for borrowing. Also known as a line of credit (LOC), these loans have a maximum limit, and borrowers have the option of borrowing any amount up to that limit (or not using any of the money at all). So instead of obtaining a sum of money up front and being charged interest rates immediately, you only have to pay interest and fees on the amount that you borrow. It’s ideal for those who may be self-employed or require sums of money to keep an existing venture afloat. Some banks offer credit lines that may be up to six times your monthly salary. While it may sound similar to how one uses a credit card, the difference lies in the amount of interest charged (an LOC usually offers lower interest) and the account spending limit (credit cards offer lower limits).

To find a loan option that fits what you need, visit SingSaver – Singapore’s leading site for personal finance comparison.

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