Term loans, revolving loans, personal loans, business loans.
What do all these terms mean?
With all these loans made available in the market, it is important to know the characteristics of each loan. This is so that you are well aware of the terms and conditions associated with the loan. It also ensures that you are able to make comfortable repayments without having to strain your finances.
Looking to take out a term loan with Lending Bee? Here is all you have to know about taking out a term loan in Singapore.
What Is A Term Loan?
Term loans are the types of loans that can get repaid through regular payments during a specified period.
A term loan can be given to an individual or as a small business loan.
Being able to repay over an extended period is an attractive prospect. This is especially so for expanding and new businesses that strive to increase their profitability as time goes on.
A term loan can be an effective way to increase capital to boost the ability of a business to access supplies. For example, an enterprise may use a loan to pay rent for a bigger space or purchase vehicles for operations.
Some individuals may also use a term loan as a form of home equity loan.
What Are The Interest Rates For Term Loans?
One of the factors to keep in mind when applying for a term loan is whether it has a fixed interest rate. Fixed interest rates refer to interest rates that do not change or increase regardless of what is going on within the financial market.
Borrowers can take advantage of fixed rates when low interest is getting offered. At Lending Bee, we ensure that our interest rates are fixed between 1% – 4%, depending on your credit score and ability to make timely repayments.
If a term loan comes with compound interest, this means that the interest amount is added to the principal amount periodically as the interest depending on how long the term lasts.
With compound interest, it is essential to find out whether any penalties are applicable for early loan repayments. You may want to pay off the whole balance before the due date to prevent you from incurring additional interest rate at the end of the loan term.
How Do I Make Repayment With A Term Loan?
Some lenders provide various repayment plans for a term loan. You might opt to pay off the debt in standard amounts.
Alternatively, the amount paid can be increased gradually during the loan period. You can save on interest with an incremental increase if you will be financially capable of repaying later. Regular payments can prevent you from defaulting if you are not sure about financial circumstances in the future.
Lending Bee allows our borrowers to take out a term loan with a repayment period of up to 36 months. We understand that each individual and business is different. There are different financial commitments and each individual’s financial situation is different.
Depending on your situation, a term loan can be a good option. It is essential to note that an extended repayment period exposes you to the risk of owing more as interest accrues with a longer-term. A reputable lender will give you details regarding the loan options that are available.
Understanding Term Loans
While Loans from conventional lenders such as banks may offer better rates, they can be more challenging to qualify. They typically consist of a long term of many years. On top of that, the term loan might also take a longer time to be approved.
Licensed money lenders can provide loans faster, within 24 hours, and with flexible conditions.
You can get short and long-term loans from different lenders, and interest rates may fluctuate.
Fixed-rate credit maintains the same interest rate from the beginning. However, variable rate loans may end up with substantially lower or higher rates than what was initially in place. Several borrowers opt for fixed rates because they are reliable.
Term Loans vs Revolving Loans
It is important to understand the difference between a term loan and a revolving loan.
A term loan requires you to repay the loan by installments over the set loan period. Most borrowers use term loans for big ticket items such as housing loans, car loans, or business loans.
On the other hand, a revolving loan allows you to use the available money till you reach the agreed card limit. This is as and when you wish. Once you have made repayment, you can draw out the credit again. This applies to loans such as bank overdrafts and credit card loans.
Here is a table to compare the difference between a term loan and a revolving loan:
|Lower Interest Rate
|Higher Interest Rate
|Not Recallable on Demand
|Recallable on Demand
|Cannot be repaid anytime
|Can be rapid anytime
5 Different Term Loans & How To Use Them
1. Home Equity Loans
Home equity loans are also known as equity loans and second mortgages.
When you take out a term loan, you are essentially using the equity of your property as collateral.
A home equity loan works best when your property has increased in value over the years. How this works is that the increase in value of your property will be able to cover for a portion of the loan. This way, you will be able to take out a loan at a lower interest rate.
To be elligible for a home equity loan, you will have to own a private property in Singapore. If you own an executive condominium, you will then have to wait till your 5-year Minimum Occupation Period is up.
2. Renovation Loans
A renovation loan gives you access to the money you need to fix your home. Taking out a term loan for your renovation costs enabes you to cover repair costs and make affordable monthly repayments.
3. Business Term Loans
Business term loans are lump sums of capital paid back through regular payments, usually at a fixed interest rate. Terms get based on the set term length for repayment.
Many business owners use the funding from a term loan to invest in their businesses.
4. Debt Consolidation Plans
Debt consolidation plans enable you to combine your debts into one low-interest rate loan.
It is especially beneficial if your debts have high-interest rates. Combining debts through a debt consolidation plan makes it possible for you to lower your monthly payment while making your payments more affordable.
5. Education Loans
Education loans are sums of money that get borrowed for financing expenses that are related to school. When the students are still in school, payments usually get deferred along with being given a specified grace period after graduation.
3 Reasons To Apply For A Term Loan With Lending Bee
When borrowing cash, you should find a suitable loan according to the products and services that you want to purchase.
One of the personal loans you can get is a term loan that usually consists of fixed time frames and monthly installments. You are supposed to repay the amount you owe when the loan period ends.
People choose term loans for different reasons, including the following:
1. Fast & Reliable
Compared to banks and other traditional financial institutions with a long and tedious application process, Lending Bee prides ourselves in being fast, and efficient.
We understand that some might require a term loan for pressing needs. Hence, we expedite the loan process with our online application form. You simply have to provide us with your personal particulars and supporting documents.
This way, we will be able to expedite the loan process and ensure that you receive your loan within 24 hours.
2. Customisable Loan Tenure
When taking out a term loan from Lending Bee, we will provide you with the option of customizing your loan tenure.
We understand that different individuals and businesses have varying financial capabilites. Thus, we allow our borrowers to opt for a repayment schedule where they are able to make comfortable repayments.
3. Credit Score Ratings
One thing that all banks and financial institutions consider before granting you the loan is your credit rating. If you have a history of late repayments or defaulting on payments, chances are that your loan will not be approved.
This can be very distressing, esepcially for those who require cash, fast.
However, at Lending Bee, we aim to help as many individuals as we can. Speak to us and we are more than willing to listen and provide you with the term loan that you require.
What Should I Consider Before Applying For A Term Loan?
- It is always advisable to carry out enough research when looking for a loan. It will enable you to learn about various financial products, their costs, and their critical features.
- Term loans come with fixed repayment periods, unlike revolving loans that get repaid according to usage.
- Term loans entail loan repayments through installments during the loan period. Loans are typically in the form of substantial amounts and have extended periods for refund. Examples of term loans include education, car, and housing loans.
- Assess your financial capability before applying for a term loan. If you are unable to commit to the repayment amount you can request for a longer repayment period. Alternatively, you might wish to rethink the purpose of the loan.
Taking Out A Term Loan? Here Are Some Tips!
Loans are commonly perceived as bad options because they are associated with debt. In reality, they often yield positive results due to their functionality and viability.
1. Do You Really Need The Loan?
Oftentimes, we hear horror stories of borrowers unable to make repayments on their loans. Hence, they fall into even deeper debt.
This can have a severe effect on one’s credit score and their ability to make timely repayments.
Ask yourself if you really require the term loan. If not, are there are other viable alternatives such as borrowing from family or friends? Or not taking the loan altogether if it is for bad debt, whereby the cost of taking out the loan offers little to no returns.
2. Have A Detailed Plan Of What You Are Using The Term Loan For
We all know that poor planning often leads to trouble.
With a detailed plan, you will be able to access the amount of money you require. This way, you will only borrow what you need, and not have excess.
This also ensures that you will not have to incur additional interest cost for the additional sum of money which you do not require.
3. Always Make Loan Repayments On Time
Struggling to make loan repayments on time? Or have too many loans that you are unable to keep track?
Fret not as Lending Bee offers all our borrowers with an individual login account. With your personalised account, you will be able to keep track off your monthly repayments and repay them on time.
Thus, ensuring that you do not incur additional unecessary late payment fees and increase the cost of your loan.
Looking to apply for a term loan with Lending Bee? You can easily apply for a term loan with us here and our friendly loan officers will be in touch with you within the hour!
About Lending Bee
In a volatile, uncertain, complex and ambiguous world, you can count on one thing – your partner in credit, Lending Bee. Just like an industrious bee, we are committed to helping each and every customer access credit – quickly, easily and seamlessly.