Tax season is around the corner. Thinking of applying for a tax loan so that you can enjoy low interest rates or coupons as rewards? Generally, the interest rate of tax loans is lower than a personal instalment loan, but other factors such as Monthly Flat Rate, Annual Percentage Rate (APR) and Tenor etc. toned to be taken into consideration before application. Have a look now!
1. What is a Monthly Flat Rate?
Generally, for a personal instalment loan, the ratio of interest payments to repayment amounts is higher in the earlier repayment period and the ratio slowly descends as time goes by. Monthly flat rates divide the total interest payment into each month, so that borrower can easily calculate the monthly interest payment. However, a monthly flat rate does not fully reflect the actual cost of borrowing. Other information such as the Annual Percentage Rate (APR), handling fees and administrative fees should also be considered when comparing different tax loan offers.
2. APR is Key for Comparison
Annual Percentage Rate (APR) includes a monthly flat rate, handling fees or other charges, which represents the actual cost of borrowing. It is easier for borrowers to compare different offers directly. Generally, the lower the APR, the cheaper the offer is. One point to note, some cash rebates or interest rebates may be counted into the APR, while coupons or gifts are excluded. To play safe, you should confirm the APR with the lenders before application.
3. Tenor and Maximum Loan Amount
Generally, the tenor of tax loan is shorter than personal loan, from 6 to 24 months, with the longest period of 60 months. Similarly, the interest payment is positively related to the tenor, total interest payment will be higher if tenor is longer. For loan amounts, tax loans are comparable to personal loans 20 times your monthly salary and not limited to the tax payable. Therefore, you may reserve your cash flow while paying your tax simultaneously.
4. Terms and Conditions
Tax loans are attractive with its low interest rate, the promotion usually comes with different terms and conditions, such as it may only be applicable to selected customers with a minimum loan amount or salary requirement, etc. Also, you are required to pay administrative fees for early settlement, which may exceed the interest saved! You are advised to understand the details from lenders before application.
5. How do I apply for this?
DBS offers low interest rate tax loan offer to suit your financial needs, so please click here to discover more and about the tax loan.
Reminder: To borrow or not to borrow? Borrow only if you can repay!
If a customer decides to early pay off the loan, customers should assess whether the Early Settlement Administrative Fee outweighs the interest saved. For details of such administrative fees, please refer to the Personal Instalment Loan Terms and Conditions.