Licensed Moneylender for Vehicle Loan: 4 Things to Consider
A licensed moneylender is a good option in case you want to apply for a vehicle loan. According to studies, the minimum cost of cars in Singapore as of 2018 is around $90,000 to $110,000 because of different fees. With this amount, anyone who is not wealthy enough will need to get financial assistance through car loans.
Before going to a money lender, the first and most important thing you need is to know your current financial status. This will be the basis of your future business financial plans and decisions.
How much do you need from a licensed moneylender?
The maximum amount a licensed moneylender can offer you depend on the car’s OMV or Open Market Value which is about $19,000 in Singapore. You can get as much as 60% to 70% of the car’s OMV. Sounds like a great deal, right? But hold your horses and seriously ask yourself, do I really need that much of vehicle loan? Or do I even need it at all?
This is how important to evaluate your financial resources first before borrowing from money lender Singapore. If you have other sources of finances you can utilize such as savings or income generating projects, you would want to factor them in before applying for a vehicle loan.
Once you settle your accounts and get your updated financial status, you can now make a rational and factual decision like on how much assistance from money lenders you need. You can either pay a bigger amount in down payment (lower loan) or either way around.
Watch out for tempting fast cash loans from car dealers. They are always active waiting for anyone who will fall for their bait. They will give you false promises like small interest but actually, it is a trick for extended loan period. In the end, you’ll pay more than you planned to.
Have you read and understood the licensed moneylender’s terms of agreement?
When you thought you already got the best loans and already signed the contract, then the bills came and surprise! You will pay a much higher price than you assumed. This happens when loan applicants get too excited and take for granted the significance of thoroughly reading the terms of payment.
The most important things your car broker and lending agents would not tell are all written the repayment terms. Indeed they are thick and lengthy with full of technical terms to read but it is all worth it in the end. Read each paragraph, highlight the things you don’t understand, make your own computations, compare prices and most of all, ask questions.
Do you want a new or pre-loved car?
This factor is important because licensed moneylenders give a higher interest rate for older cars. It may cost you lower down payment but much higher repayment terms than that for new cars.
Also, loan assistance choices for used cars are fewer. This means you might get a lower maximum amount of financial assistance, shorter repayment periods or limited interest rate options. Some banks and licensed money lender won’t even offer car loans.
One tip we can give is if you are planning to have the car for a short period of time, a used car is a good option. However, if you want to keep the vehicle for a long time and pay less in the long-term, get a new one. We just want to remind you also that if you get an old car and planned to replace it before your repayment period ends, you have to pay penalties.
Who will pay for the money owed from a licensed money lender?
Who will use the car and will he/she or both of you pay for it? Make sure you have a clear plan on how you are going to pay for your loan. If you are the sole source of income in your family, you may want to discuss terms of payment with your partner. You can design a strategic contribution plan so everyone can help you meet the needs.
Do not be afraid of getting smart financial advises from professionals. You can create a financial projection which includes expenses and income for the whole repayment period. Set your limit on how much you are willing to sacrifice like if it affects so much of your basic resources like a budget for food and children’s education, you should think more than twice.
Did these considerations help you decide on whether to get a vehicle loan from a licensed moneylender? Share your thoughts with us and bookmark our page for more updates.