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How can you use a Personal Loan to Invest?

  • user-iconAero Credit
  • calendar29 July, 2022

In recent years, Licensed Money Lending services have become quite a norm as many individuals are making use of these services for any simple personal purchases to an emergency car repair in their daily lives.

A Licensed Money Lender in Singapore can offer you a personal loan that can be used for almost anything, which also includes investment purposes. Many individuals utilize this personal loan service for funding of investments which they can reap benefits from eventually. This blog will provide you with an in-depth knowledge about personal loans and how you can utilize them in your own personal investments.

What is a Personal Loan?

A personal loan is one of the most preferred and fuss-free types of loan whereby you can have quick access to cash within a few minutes upon the approval of your loan. This sum of money can be taken from a local bank or Licensed Money Lenders and can be repaid over a certain tenure. There are various installment repayment plan when returning the loan, for example;

  • Monthly
  • Weekly
  • Bi-Weekly

However, it is important to consider your monthly income and personal credit score before applying for a personal loan so that you may stand a better chance of qualifying for the company’s lowest interest rates.

Pros of Using a Personal Loan for Investments

Here are several positive points of using personal loans for investments;

It can be used for a wide variety of reasons

One of the greatest benefits of personal loan is that you can use the funds from purchasing a simple household item to using it for the purpose of a life skill or career advancement. Additionally, all personal loans with Licensed Money Lenders are unsecured loans, which means the loans do not need any collateral.

Fast processing

Personal Loans are processed quickly and the funds will be disbursed right on the spot upon signing of the loan contract.

Maximum Profits

Investments can open the gateway of earnings for you. If you have an excellent credit score and credit history, you may be able to qualify for the lender’s lowest interest rate. With this, the personal loan interest amount needed to be returned may be lower than your personal investment returns. In that way, you can earn maximum profits in just a short duration of time.

Cons of Using a Personal Loan for investments

Here are some of the cons of using Personal Loans for investments;

Risk of Losing the Capital

There is always a risk that comes with investments. Yes, you read it right! There is the risk that your investments might be lost or they may not produce the desired benefits.

Higher interest rate

Another drawback is that personal loans can charge a huge interest from you. If you do not return the amount in the desired period, you may then be charged a lot more in return.

Short Loan Tenure

The time period to return the personal loan may be shorter than your investment returns. If you are unable to return the stated interest to your lender, the accrued late interest will be charged accordingly and there will be a late fee imposed as well.

Things to consider when using a personal loan for investments

When using a personal loan for investments, it is always preferable to consider a few things.

Consider the Interest Rates.

The first thing on the list is considering the interest rates before applying for a personal loan. You need to have a clear picture of the prevailing market interest rates. This will help you in making the maximum profits out of your investments.

Research about Investments

Do prior research before making investments. You need to have full information about the investment procedure and policies. Many people are afraid to invest their money because of a lack of knowledge. As soon as they get a clear idea of what investment is, they are able to make better decisions.

Consider the Payment Options

Personal loans have a variety of payment options depending on the agreement. If you want to use your loan in long-term investments, it is essential to consider the payment options accordingly.

Analyzing The Risks

There is no doubt that investments can earn you high profits but there is always the risk of loss. Hence, it is better to plan everything instead of rushing into it. If the market is down, you will suffer a loss which eventually increases the interest rate. Instead of being a risk-taker, it is better to start by investing for the short term.

Ask an Expert

Investments can be made profitable with experience. It is crucial to consult a professional so that you can make a wise and informed decision.

Conclusion

Undoubtedly, personal loans can solve many of your financial issues but if you plan to use them in big investments, remember to seek an expert’s advice beforehand. They will guide you better and help you in making a sound decision.

 

Online Enquiry

Very often, it is only when you reach the bank or meet a lender that you are told your credit rating is not good enough for a loan. That can be immensely frustrating when your need for additional cash or extra funds is urgent. Use our Online Enquiry service to find out if you are eligible for a loan — it is easy, and it is fast.