Loan With Minimum Amount Bigger Than Needed: Take It Out Or Not?

It is likely that we have all stared down a financial situation that needs a cash injection. Still, the loan options seem like they are designed for whales, not everyday Singaporeans. You need $5,000, but the minimum loan amount is $10,000. The struggle is real.

When stuck in this situation, do you accept that extra $5,000 just to get the cash you need, or do you explore other avenues? The answer is it depends. This is a case-to-case basis that requires a lot of thought and none of those quick, impulsive actions.

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Extra cash is often tempting

Did you ever experience finding a hidden ten-dollar bill in your jean’s pocket when doing your laundry? A happy surprise, right? That is what having a bigger pile of cash can feel like (on top of being tempting).

There are so many ways that an extra $5,000 from a legalised money lender in Singapore can make your life better. Let’s say an unexpected bill arrives, or your roof suddenly has a leak. You can even save it and use it as your emergency fund. The possibilities are almost endless! Still, there is a not-so-fun side to this scenario that you need to factor in before deciding to “swipe right”.

Extra debt can also be real

Nowadays, you would have to pay for everything you purchase. That applies to that extra $5,000, too. It might seem like free money right now, but remember, it is not. It is a loan, which means you will be paying it back with interest. Remember that extra plate of chili crab you know you should not have – it might feel good at the moment, but later you will be sweating and regretting it (pun intended).

A vital food for thought is the longer your loan term and the higher the amount borrowed, the more interest you will pay. That extra $5,000 could end up costing you thousands more in the long run. Can you resist the urge to spend that extra cash? Having a bigger chunk of money readily available can be a recipe for unnecessary spending. Remember, you are borrowing to solve a specific problem, not fund a shopping spree at Bugis Street. Plus, adding another loan to your plate can increase your debt-to-income ratio, which can make it harder to qualify for future loans (like that dream home!).

Exploring Other Options

Here are some alternative ways to get the cash you need:

Can you negotiate a payment plan with the creditor or service provider? Sometimes, a little communication can go a long way.
Do you have any savings you can tap into, even if it means putting a hold on a non-essential purchase?
Consider taking on a part-time job or side hustle to generate some extra income.
If you have a close friend or family member who can offer a loan with reasonable terms, it could be an option. Just be sure to have a clear repayment plan in place to avoid any awkwardness later.

Conclusion

Look, there is no shame in needing a loan, especially if you are doing it right. For instance, when borrowing from a legitimate Chinatown money lender. But before taking the first offer, understanding the terms and exploring all your options can prove crucial in the long run. Remember, it is all about being smart with your money, not just getting a quick fix.

The next time you encounter a loan with a minimum bigger than you need, take a deep breath, assess the situation, and be smart and responsible. You got this!