6 Reasons Why You May Need A Personal Loan In Singapore

Woman with multiple debts needs a personal loan fast as he looks at credit card bills and other bills spread across desk
Woman with multiple debts needs a personal loan fast as he looks at credit card bills and other bills spread across desk

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In an ideal world, most people would rely on their savings to tide over difficult times. However, one may have no choice but to consider other options such as taking a personal loan in desperate times. In this article, we’ll touch on why you may need a personal loan fast, the best reasons to give for a personal loan, the documents required when you apply for a personal loan in Singapore, and more.

1. Sudden medical costs

We’d like to be able to do what we enjoy and remain healthy. However, sometimes the unexpected happens. Have you been in an accident, and your insurance plan doesn’t cover everything? You may not have enough monthly disposable income to cover your medical bills. Here’s where you’ll need a personal loan fast.

2. Emergency expenses

Personal loans are helpful when you need the extra funds for emergencies. Home repair costs can add up quickly when several things need replacement at the same time. Hiring a caregiver for your aged parents in the event of sudden sickness or immobility can be expensive, too.

Shouldering funeral costs can set you back anywhere between $1,700 and $10,000 on average. If you lack sufficient funds or cannot get funds from other family members quickly, a personal loan can come in handy.

3. Big ticket purchases

Weddings in Singapore are costly. Staying within your budget, yet getting what you want is the best way to plan a wedding, but unexpected occurrences may occur along the way. A personal loan could help cover the extra expenses without tapping into your savings.

Collecting keys to your new home? There are many things you’ll need to buy after purchasing a new home. Think home renovation and household appliances. These items may cost more than most Singaporeans can afford; personal loans can come in handy.

4. Vehicle repair costs

It’s not uncommon for vehicles to occasionally break down or sustain damages. Your comprehensive car insurance may not cover certain repair costs for various reasons, and you’ll need to fork out cash for them. If you don’t have spare cash on hand to foot the bill, you’ll likely need a personal loan fast as your vehicle may be impounded at the workshop.

5. Debt consolidation

Why should you consider debt consolidation? Not only is it possible to combine multiple loans into a single loan, but also a debt consolidation can save on interest. Plus, personal loans have lower interest rates than credit cards (i.e. lower cost of borrowing).

That’s not all. Personal loans can solve credit card debt by consolidating multiple high-interest credit card debts if keeping up with multiple repayments is a struggle for you.

All you have to do is get a personal loan, pay off your credit card debts using funds from the loan, and make sure to continue making monthly repayments for your personal loan!

6. Payday loan alternative

Personal loans may help you get by until payday. Payday loans have high interest rates because they’re ultra short-term. Note that only licensed money lenders provide payday loans in Singapore. Personal loans are, therefore, a more wallet-friendly alternative.

Do I need collateral for a personal loan?

Foremost, is your personal loan a secured or unsecured loan? Most of the time, you don’t need collateral for a personal loan. Personal loans are typically unsecured, so you can borrow the funds without pledging any asset.

Are personal loans a good thing or a bad thing?

It depends on your perception of personal loans and why you’re taking a personal loan.

Personal loans might help get through challenging times. Repaying them, however, requires a great amount of responsibility and diligence.

Determine whether you would spend the additional funds on needs or wants when thinking of why you need a personal loan.

What’s the best reason to give when applying for a personal loan?

The best thing about applying for a personal loan is that you don’t have to disclose why you’re doing it or how you plan to utilise the money. A personal loan is highly flexible. You can use it however you want, not limited to the reasons mentioned above. That said, be sensible — only take out a loan when needed.

Can I still get a personal loan with bad credit?

Yes, you can! Banks might consider lending to borrowers with bad or poorer credit, at their discretion.

Can I take a personal loan for my home’s downpayment?

Yes, you can if you need extra cash to supplement funds from your CPF Ordinary Account (OA).

Can I take a home loan after a personal loan?

Yes, you can, but you risk a reduced home loan amount because personal loans count towards the Total Debt Servicing Ratio (TDSR) computation. The TDSR is currently set at 55%.

TDSR formula: (Borrower’s total monthly debt/ Borrower’s gross monthly income) x 100%


Jane earns $14,000 per month. Her credit card bill and car loan total $5,000 per month.

TDSR = ($5,000/ $14,000) X 100% = 35%

Her TDSR threshold is = 55% of $14,000 = $7,700

If Jane wants to apply for her home loan, the maximum repayment she can make monthly is: $7,700 – $5,000 = $2,700

Therefore, if Jane wants a larger home loan, she must first pay off all her outstanding debts.

Still, considering taking up both personal and home loans? Your best bet is to take a home loan before a personal loan.

I need a personal loan in Singapore. What do I need to apply for a personal loan?

Before applying for a personal loan, ensure that you meet all the requirements and have your documents in order. Note: the following information applies to loans from banks.

Minimum/Maximum Age Requirements At least 21 years old and up to 75 years old
Minimum Annual Income $20,000 – $30,000/ year, depending on the bank you’re borrowing from
Documents needed to apply for a loan (for Singaporeans):
  1. Proof of identity – Passport or NRIC
  2. Proof of income – Latest 3 months computerised payslips
  3. Proof of address – Utility bills, handphone bill etc
  4. Credit Bureau Report
Are foreigners eligible to apply for a personal loan?
  • Yes, depending on your salary and employment permit/ pass type
  • Not all banks offer personal loans to foreigners

Bottom line

There are many reasons why someone may need a personal loan fast. Everyone’s situation is unique and different. Need an urgent personal loan right now? It’s best to compare your loan options before deciding which one is the best for you and your wallet.

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