5 Situations That You Should NEVER Use Personal Loan

CreditMaster December 15, 2021

5 Situations That You Should NEVER Use Personal Loan


Emergencies happen to everyone, and you can always find yourself in an unforeseen situation where you don’t have enough savings. Take the COVID-19 pandemic, for example. Many people who thought their lives were on a steady track lost their jobs, extra funds, and health.

If you’re reading this, you might be facing some financial difficulties too.

You’re wondering if you should take a personal loan or not.

According to research, more and more young Singaporeans have their knees deep in debt. Some are in debt because of home loans while some face issues with overspending.

But what’s the difference between a legit reason and one that’s not?

Take this example: you need a personal loan to purchase a $5,000 massage chair.

If you have debilitating back pain that’s stopping you from working or fighting depression, getting that massage chair is an excellent investment. But if you don’t need that chair and your finances are tight, that personal loan would be a mistake.

Of course, you can consider using your credit card. You can read our article on credit cards to find out more about their interest rates and fees.

So, how can you tell when to take a personal loan?

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    Drop us a message and we will get back to you shortly.

    Let’s review five examples that should help you understand better:


    1. A Non-Essential, Non-Urgent Wish


    If you’ve ever read a financial literacy course or taken part in a programme, you know the first thing they teach you is budgeting. And the first step within this budgeting business is discerning your needs from your wants.

    The example we gave you in the introduction highlights the nuances of this very distinction.

    For some, buying a smart fridge is a non-essential purchase they can save for. For example, other people, if they’re on the spectrum, will need that smart fridge to make their lives easier.

    Remember this:

    You should never get a personal loan for non-essential purchases. Instead:

    • Be disciplined with your expenses.
    • Start by writing a budget.
    • Mark all of your usual expenses in two categories: essential and non-essential.
    • When you want to purchase something new, consider which category it fits.
    • If the item is urgent, consider cutting back some non-essential expenses for a few months. For instance, if you want to buy a new AC, consider buying it in installments from the store. Next, give up dining out or styling your hair professionally for some time until that AC is paid for.
    • If the item is non-urgent (e.g., a designer bag), make a savings plan to gather enough money for it.

    When you’re certain that it is a need, you can apply for a quick cash loan and have your cash disbursed within an hour here.


    2. Risky Investments


    People make risky investments all the time. For example, you may be passionate about reading B-category crime novels, so you start a publishing house focusing on those novels. While following your passion and instinct is excellent, you should also double those with in-depth research.

    Here’s another example:

    People across income classes and education levels have become more interested in stock market investments in the past few years. As a result, many of them invest poorly because of peer pressure or misleading advertising.

    Both examples have one thing in common: lack of research.

    Don’t let emotion cloud your reason. If something sounds too good to be true or if you’re too passionate about it, take a step back.

    We’re not saying don’t follow your dreams or be extra cautious all the time.

    No, you should seize opportunities as they arise, and you should follow your dreams rationally.


    3. Expensive Purchases / Luxury Goods


    Firstly, we can’t define expensive purchases as an absolute term. Costly things are relative to your means.

    For instance, some Singaporeans can easily afford a $5,000 massage chair or a $3,000 designer bag. Others have to work for at least a year to get these things.

    The advice is this:

    Don’t take a personal loan to fund an extravagant lifestyle that’s beyond your means.

    If you’re binge-purchasing each time, you’re tired or upset, while your unpaid bills pile up, taking a personal loan to buy more things isn’t wise. Instead, you should enroll in credit counselling and possibly consider a debt consolidation plan to cover those bills. That way, you can at least prevent your credit score from decreasing further.

    For all your financial needs, CreditMaster will be able to help you. We have received numerous 5-star reviews from our customers. Read the reviews here!


    4. Foreseen Expenses

    If you know, you’re going to need money for a specific purchase, save as much as you can in advance. For example, if you know you’re getting married in a year, open a joint bank account with your partner. Start making passive income to reach your goals. Also, consider all of your purchases carefully.

    Your focus shouldn’t be on impressing the guests for one evening.

    You should start your marriage responsibly. And if that means saying goodbye to your Guo Da Li or renting your wedding gown, so be it.

    Here’s another tip:

    Always look for alternative solutions to minimise your expenses.

    Let’s say you’re not comfortable with renting wedding costumes; still, you can skip the “trash the wedding dress” moment and resell your gown. Alternatively, you may not want to compromise on your dream venue, but you can settle for an afternoon wedding lunch instead of a weekend dinner party.

    Of course, problems can arise:

    • You may not be able to compromise on everything.
    • Paying for a $50,000 wedding isn’t doable only from your savings.
    • You might want to get married faster because you have a baby on the way.

    You can’t always avoid getting a personal loan. However, you can:

    • Maximise your savings.
    • Minimise your expenses.
    • Get a personal loan with convenient terms that won’t hamper your budget.


    5. Not the Best Alternative

    Don’t get a personal loan if it’s not the best alternative for your needs. For example, don’t get a personal loan to fund your business if you check all the eligibility conditions for a government grant.

    If you want to renovate your home, consider a renovation loan first. CreditMaster offers customizable renovation loans that can help you build your dream home. Sure, those loans are only up to $30,000 and don’t allow you to purchase furniture, but:

    • You can get a low-interest $30,000 renovation loan for masonry and carpentry, and:
    • Supplement it with a $10,000 personal loan for decorations and furniture.

    From this perspective, getting a $40,000 personal loan from the get-go would be a mistake.

    Remember always to double-check possible alternatives to a personal loan:

    • Saving money
    • Looking into government grants
    • Researching other loan options that are specifically customised for your purpose


    How To Get The Best Personal Loan In Singapore?


    Now that you know what not to use a personal loan, here is another tip: the best loan is one you can repay comfortably. From that point of view, you should:

    • Get the best-interest personal loan.
    • Borrow a sum you can afford repaying.

    Best Interest Rate

    If you ask regular people what the best-interest loan is, they’ll tell you it’s one with meagre interest rates. And sure, low-interest rates mean you will pay less money within your loan term.

    That’s not always the best solution, though.

    For instance, licensed moneylenders feature higher interest rates compared to banks. However, expert agents adjust your monthly installments to prevent those high rates from affecting your life.

    Also, there are no early repayment fees should you clear your loan before the contract ends.

    Consider a licensed moneylender if you don’t qualify for a bank loan or don’t want to wait around for a lengthy approval.

    The Sum You Can Afford

    Let’s say you earn a $5,000 income. Your financial institution tells you that you qualify for a $30,000 personal loan, but you only need $20,000.

    At this point, you can be tempted to take the entire amount you’re offered.


    You should never take the maximum sum you’re eligible for if you need less money to solve your problems. Remember that the interest you’ll have to pay accumulates faster for larger loans. Also, if you get retrenched or in an accident, you don’t want to remain in high debt.


    • Make a budget.
    • Know exactly how much money you need to solve your problem.
    • Subtract your savings to find out the amount you need to borrow.
    • Figure out the realistic period you need to finish paying your loan. There’s no need to drag your debt for five years if you can repay it in three.


    Should You Get A Personal Loan?

    There’s no shame in taking a personal loan; Singaporeans do that all the time. If you need $20,000 for a medical emergency, your wedding, or a trip around the world – we can help with the funds.

    But you should also consider your current financial situation.

    You’ll need to be diligent with your finances – and that diligence doesn’t depend on your earnings.

    Some people with $1,000/month salaries are more responsible with their bills than others earning $20,000/month.

    At CreditMaster, we employ expert loan officers who tailor the best loan options according to your needs and budget. We are also able to approve your loan within minutes should all documents be ready.

    If you have any questions on your mind, feel free to contact us here or visit our shop at Chinatown.


    At CreditMaster, we believe in building long-term relationships with our clients. Our team of experienced professionals is always ready to provide personalised financial advice and assistance to ensure that our clients make informed decisions. We understand that each client's situation is unique, and we strive to tailor our services to meet their specific needs.

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