Even if you want to work to earn extra, you’re limited by your time and energy. Plus, overworking can lead to chronic stress, which can damage your health, and ultimately, finances. That’s where passive income comes in, and investing is one way you can get in on that.
Basically, it’s making money work for you. For that, you can either use your savings or borrow from a private money lender in Singapore. However, you have to be aware of the risks and learn how to choose the investments that will fit your personality. You also need to be aware of the usual mistakes of first-time and new investors.
Settling for the First Lender You Come Across
Do not be afraid to shop. Ask for the loan features, the maximum loanable amount, the interest rate and even penalties and fees. Ask if there is an interest rate renegotiation period or if you can have an option to do a balloon payment. Ask if you can suspend payment of interest for the first few months.
It would also be helpful if you have a table of loan products with features and terms you can easily consult. Remember, a loan is an obligation that will affect your life for years to come. The higher the loan amount, the more years you will have to live with the burden of amortizations so you have to be assertive and well-informed.
Ignoring the Fine Print
Be wary of things written down in small font size or written down at the end of a long page. Presume that everything in your loan agreement is crucial, and read them carefully. Ask for a simple explanation so you can understand complex terms.
Ask the lender to explain any technical words or jargon.
Ask important questions such as how the loan will be structured, if there will be collateral, what the penalties and fees are, And the lender. You will never know if you never ask. Imagine missing out on offers that can make your loan less burdensome just because you were afraid to ask.
Ignoring Small or Medium-Sized Lenders
Understandably, you would want to borrow from a financial institution with a good reputation. One which you know will not engage in unfair collection practices and will respect you and not harass you. However, do not be swayed by big names and conglomerates.
Do not limit yourself to big banks and lending companies. There are decent small or medium-sized lenders who will give you excellent deals and great customer service, like R2D Credit.
Having No Plan on What to Invest In
Before submitting your loan application, make sure you already have this part sorted out. Researching about investments – their feasibility, how they work, and the risks involved – is crucial in making sure you will not be investing in something you can’t handle, isn’t profitable, or too risky.
Avoid Common Pitfalls When Taking Out Loans for Investment
Researching and learning the basics are good tactics to ensure you do not squander the loan proceeds you just took out for an investment. Familiarize yourself with the loan terms and ask lenders to clarify and explain complex concepts. Lastly, know the features of the investment you plan to avail of.
