Although settling your debt early attracts a small cost. However, there are two situations that make this worthwhile. Personal loans from legal money lender could help you manage the difficult times as they provide the cash you want. You then have to repay the loan amount through monthly repayments. I would advise you to get a loan from a 24 hours money lender or a money lender that opens on Sunday. You can look for them at this reliable moneylender directory www.moneylender.loan.
Realize that a longer loan tenor means, smaller monthly repayments. This will allow you to get a loan fitting your budgetary needs. At the same time keeping to the original repayment schedule perfectly.
Still, there are certain instances when it is advantageous to repay the loan early. This could be when you face these scenarios.
Wanting To Save For Retirement
Singaporeans save money for many reasons, such as saving for retirement. You need to keep in mind that debts you owe can reduce the funds available for usage in future. When you are saving for old age needs, starting earlier is better. As much as 5 years savings may be the difference between having a comfortable retirement, or one troubled with sleepless nights.
Certainly, it is a lot better to be debt free. This way you can a) increase your savings with ease and b) set aside funds conveniently. Therefore, think about settling the personal loans early then you may start making savings for retirement immediately.
If You Require A Mortgage
When you are thinking about owning a home, and require a mortgage to make it happen. Then you need to consider repaying early the personal loan. It is particularly so when your TDSR (Total Debt Ratio) is very high. The TDSR is the measure of the portion of your earnings going into debt payments. The mortgage if you have one is also included when calculating your TDSR.
It is crucial for borrowers to know that TDSR attracts a 60% cap. Meaning that any mortgage will push the TDSR beyond this limit cannot be allowed. Therefore, if a borrower’s TDSR – without a mortgage – is about 50%, the mortgage granted will be too little to be helpful. From this, your plans will be thrown off when you have not saved enough funds to fund the flat purchase.
Since personal loans contribute towards the TDSR. For this reason, repaying them early can help you decrease your ratio. In so doing you will be creating room for bigger (and possibly more helpful) mortgage loan.
Ways To Settle A Personal Loan Early
When you have significant extra cash, such as from the end of year bonus, for instance. You simply could repay the loan in lump-sum and you get over with it.
Even so, you do not need to pay off your loan at once, particularly when that can only lead to more burden financially. You could only need to increase your installment for each month.
A word of caution though; making early repayment attract a fee, that is normally S$150 – S$250. Or it could be a specific percentage of the existing debt as to when you complete the repayment – the one that is higher. Settling your loans early can free up the cash flow. This will allow you to begin saving early, thus the early repayment charges are the little cost to incur.