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A personal loan in Singapore is a sum of money borrowed from a bank, financial institution, or private legal money lender. This sum of money is to be repaid in equal monthly instalments (EMI), otherwise known as monthly repayments, over the loan tenure.
Depending on where you get your personal loan in Singapore from, its loan tenure can vary. Major banks offer loan tenures ranging from 1 to 7 years while private money lenders offer loan tenures ranging from 3 to 12 months.
A personal loan in Singapore is a form of term loan and is usually an unsecured loan. This means that a borrower does not have to pledge collateral in exchange for the loan.
Personal loans are disbursed to borrowers in one lump sum, often in cash or directly deposited into their bank account. Any applicable processing fee (i.e. administrative fee) would be deducted from the approved loan amount prior to loan disbursement.
Each repayment amount is the same throughout one’s loan tenure. This comprises principal repayment as well as interest charges.
As long as you make your monthly repayment in full punctually according to your repayment schedule, there is no need to worry about the possibility of chalking up additional charges and fees, such as late interest and late payment fees.
Most banks allow borrowers to borrow up to 4X – 6X monthly income if they meet the minimum income requirement and earn less than $120,000 per year
The majority of banks allow borrowers to borrow up to 10X monthly income if they earn $120,000 or more per year
Most banks allow borrowers to borrow up to 4X – 6X monthly income if they meet the minimum income requirement and earn less than $120,000 per year
The majority of banks allow borrowers to borrow up to 10X monthly income if they earn $120,000 or more per year
That being said, your actual loan amount may or may not be the maximum amount derived from your monthly salary — it depends on your credit history, income, and existing credit facilities, subject to the bank’s discretion.
You can use a personal loan for anything, really. There are no restrictions as to how you are supposed to spend the funds. Take out a loan only if you have a real need for the money, such as a medical emergency or unforeseen vehicle repair cost, etc.
There are many reasons to get a personal loan. A personal loan can be very helpful should you find yourself in an unexpected situation that requires money you don’t have at that particular point in time, such as a family emergency.
Like it or loathe it, the best personal loan can come in extremely handy when you’re experiencing a period of cash flow difficulty. But of course, always do a thorough personal loan rate comparison first!
Apart from providing the cash you require in times of need quickly, personal loans are highly flexible. You can use the funds for anything and everything without having to disclose it to your lender.
The best personal loans are also great in that their interest rates are all rather competitive, compared to other types of loans (e.g. payday loan, renovation loan, debt consolidation loan) and credit cards. Besides offering attractive personal loan interest rates, banks also often run personal loan promotions —such as processing fees or annual fee waivers— that help borrowers keep their cost of borrowing to a minimum.
Personal loans can be a good option for consolidating debt if the interest and charges on the personal loan are much lower than your existing debts’ interest and charges.
For example, a personal loan typically has a lower interest rate compared to high-interest debts such as credit card debts. By taking advantage of low personal loan interest rates to pay off all your existing debts, you can avoid accruing sky-high interest that compound daily.
Besides saving on interest charges and possibly even late fees, it’s much easier to manage repaying one personal loan than several different debts.
To consolidate private loans in Singapore, you should first find out what your total outstanding debt is, how much the penalty charges would be if you repaid all your loans ahead of your tenures, and how much interest you could save if you consolidated your loans.
If debt consolidation is found to be a more advantageous move, you should get a loan to pay off your existing debts right away. Then, commit to repaying your new loan punctually according to your repayment schedule to avoid racking up more debt. While you’re at it, try your best to stay out of additional debt.
A debt consolidation plan from a participating bank is available only if you fulfil the following criteria:
A debt consolidation loan from a private lender doesn’t have such stringent criteria. Think of it as a hassle-free personal loan that lets you consolidate and pay off your existing private loans in Singapore.
You can easily compare personal loan interest rates and apply for the best personal loan online or through your digibank mobile app. It’s important to determine which one best suits your needs and is the most favourable for you.
While not everybody is eligible to obtain a personal loan from a bank, all’s not lost. There are licensed money lenders in Singapore that may be able to help.
The processing time varies depending on where you’re getting the loan from. It is usually speedy if you’re already an existing customer of a particular bank. Singpass MyInfo also helps hasten the processing time of your personal loan application.
For example, Standard Chartered CashOne Personal Loan promises that you can get cash disbursed within 15 minutes. UOB Personal Loan offers instant approval and cash disbursement if you submit your online application between 8am and 9pm and are using a UOB account for loan disbursements.
Aside from acquiring the necessary funds, getting a personal loan to increase your credit score is one of the other perks. But this is only provided that you consistently repay your personal loan instalments punctually. Be sure to pay off the full amount during your loan tenure!
When it comes to finding the lowest personal loan interest rates for yourself, consider the following factors:
Interest rate and interest charges: What’s the total amount you have to pay in interest for the loan?
Loan tenure: How long is the loan period? Are you fine with paying it off within a shorter period or do you prefer to have more time? Your repayment amount will vary depending on the loan tenure you choose.
Processing fee: Banks usually charge a processing fee of 1% to 3% of the loan amount. They may also run promotions that waive the processing fee.
Early repayment fee or loan cancellation fee: Most banks charge a fee of 2.5% to 3% for early repayment or cancellation of the loan.
It is always a good idea to compare personal loan interest rates and your options before choosing the best personal loan deal that suits your needs most.
These are the main considerations of a personal loan:
Pay attention to your loan eligibility, too. It’s a necessary step to take to avoid being disappointed should the bank reject your personal loan application.
To give you a leg-up, consider questions like “Do you meet the income requirement for the loan?” and “Is your credit history good enough for the bank to extend a loan?”
Banks typically charge a processing fee of 1% to 3% of the loan amount as well as an interest rate from around 2.5% to 6% per annum for personal loans. Banks with personal loans run promotions from time to time, too.
For banks with personal loans, take note the advertised annual interest rate isn’t the same as its effective interest rate (EIR). The EIR is a better gauge of your true cost of borrowing, and the actual interest rate you would incur on your loan as it takes into account the administrative fees or transaction fees.
No, personal loans from private money lenders aren’t the same as personal loans from banks.
These are the main differences of money lenders vs banks when it comes to personal loans:
| Bank | Licensed money lender | |
|---|---|---|
| Minimum loan amount | $500-$1,000 (depending on the bank) | N/A |
| Credit checks | Very stringent | Less stringent |
| Loan approval period | Up to 2 weeks | On the same day, usually less than 30 minutes |
| Interest rates | From 2.5-6% per annum | 1-4% per month |
| Loan tenure | Up to 7 years | Up to 12 months |
| Processing fees | Typically 1-3% of the approved loan amount | Up to 10% of the approved loan amount |
Banks look at factors such as your monthly income, credit report and credit score, existing credit facilities, Total Debt Servicing Ratio (TDSR), and more when deciding on your bank loan interest rate and amount.
This depends on your salary as your maximum personal loan amount is typically a multiple of your monthly salary.
Major banks in Singapore such as DBS, OCBC, and HSBC let you borrow up to 4X your monthly income if you earn less than $120,000 annually.
For those who earn at least or more than $120,000 annually, depending on the bank you’re borrowing from, the maximum loan amount can go up to 6X or even 10X your monthly income. Some banks have a maximum loan limit of $200,000.
The loan tenure of a personal loan from the bank ranges anywhere between 1 and 7 years. The majority of the banks in Singapore offer loan tenures of up to 5 years.
It is important to consider the loan tenure, interest rate, EMI (equated monthly instalment), and total interest charges on the loan.
A personal loan EMI calculator is a handy tool that helps borrowers figure out quickly and easily whether a certain loan offer is more suitable for us than another. It shows how much we’re required to pay for each instalment throughout our loan tenure.
It’s easy to use: All you have to do is key in the loan amount, interest rate (per annum), and loan tenure. The personal loan EMI calculator will show you the total interest on the loan and the EMI (i.e. the fixed payment amount you have to pay your lender throughout the loan tenure).
In short, it breaks down the loan for you and helps you take charge and plan better for your finances.
It is an invaluable tool to use for ascertaining the suitability of a loan, pushing you to consider if you would be able to cope with the loan repayments or if it would be better if you played around with the loan tenure (e.g. opt for a longer loan tenure to bring down your EMI).
There are many things you can do to reduce your personal loan’s EMI:
Get a smaller loan
Negotiate for a lower interest rate
Choose a longer loan tenure
Repay more than the stated amount every month (*early repayment fee may apply)
Get a smaller loan
Negotiate for a lower interest rate
Choose a longer loan tenure
Repay more than the stated amount every month (*early repayment fee may apply)
Careful loan management will allow you to pay off your personal loan efficiently:
Figure out how much is allocated for all your monthly repayments and fixed expenses
Ensure your expenses are less than your disposable income
Cut back on your unnecessary spending
Set up automatic payments to pay off your personal loan, bills, and other liabilities
Avoid racking up additional debt
Avoid credit cards if you aren’t confident of paying off your credit card bills before they’re due
Be very disciplined in making loan repayments
Go for credit counselling if you need extra guidance
Singaporeans or Permanent Residents who are aged 21 to 65 can apply for a personal loan from major banks in Singapore.
While the majority of the banks require the loan applicant to have a minimum annual income of $30,000, some banks (e.g. DBS, POSB, OCBC) offer personal loans to those with a minimum annual income of $20,000.
Yes, personal loans for foreigners in Singapore are available from banks and private lenders alike. However, not all banks with personal loans offer these products to foreigners in Singapore.
It isn’t the easiest for foreigners to apply for personal loans in Singapore if you’re talking about borrowing from banks.
The eligibility criteria for foreigners are stricter; they are expected to make at least $40,000 to $60,000 annually and must hold a valid Singapore employment pass. They must also show proof of their residential tenancy agreement (or any other proof of their residential address in Singapore) as well as bank statements.
It is much easier for foreigners to get a private loan in Singapore from legal lenders — many of the best personal loan lenders offer loans to foreigners even if their minimum annual income is less than $10,000. But of course, the loan amount is limited to just $500.
Not really, you can’t get a personal loan from the bank if you have bad credit.
You can get a personal loan with bad credit from some of the best private personal loan lenders in the market.
Absolutely. Private lenders offer personal loans for low-income earners with an annual income of less than $10,000. The lowest minimum annual salary low-income applicants have to meet if they want to borrow from banks with personal loans is $20,000.
Yes, there are personal loans for the self-employed in Singapore.
Take OCBC ExtraCash Loan for example. The minimum income requirement is $20,000 for Singaporeans and PRs alike, regardless of whether they are regular salaried employees or self-employed.
The difference lies in the income documents required by the bank — those who are self-employed have to furnish their last 12 months’ CPF contribution history statement OR the Latest Income Tax Notice of Assessment.
Regular salaried employees can submit any of the 2 combinations below:
Banks do not offer personal loans for the unemployed in Singapore. You’ll have to consider alternative legal lenders if you’re looking for personal loans for the unemployed.
No, there aren’t personal loans for students without an income. Most students can get hold of education loans (i.e. study loans) with the help of a guarantor who’s gainfully employed.
No, you cannot get a personal loan without income proof in Singapore.
If your loan wasn’t approved, it could be due to one of the many possible personal loan rejection reasons.:
Nope, getting rejected for a personal loan doesn’t hurt your credit score per se. However, a hard inquiry stemming from multiple lenders’ assessment of your credit report within a short period could potentially hurt your credit score temporarily.
To increase your chances of loan approval, take steps to boost your credit score or repair your credit score. You should:
Several things can happen if you’re unable to repay your loan or deviate from your loan repayment schedule.
Late interest and compound interest will start accruing on the balances owed
Late payment fees will start accruing for every late repayment made
Legal proceedings and seizure of bank accounts
Your bank may offer you a loan tenure extension
Reduced or no access to crucial loans in the future (read: thanks to your marred credit report)
Late interest and compound interest will start accruing on the balances owed
Late payment fees will start accruing for every late repayment made
Legal proceedings and seizure of bank accounts
Your bank may offer you a loan tenure extension
Reduced or no access to crucial loans in the future (read: thanks to your marred credit report)
After doing adequate personal loan rate comparison, you can get a personal loan fairly quickly by applying for a personal loan online from (i) banks with the best bank loan interest rates or (ii) the best alternative personal loan lenders. There are plenty of legal options for you to choose from in Singapore if you know where to look, such as licensed money lenders.
As its name suggests, no credit check loans are loans that do not require any form of credit checks. As far as legal loan providers are concerned, these loans do not exist in Singapore.
Of course, it is harder to get a personal loan with bad credit or no credit in Singapore. For the latter, lenders aren’t able to gauge your creditworthiness since there’s no credit history to talk about. For the former, such borrowers are deemed to be at greater risk of defaulting on their repayment, hence it lenders tend to steer clear of them.
Yes, but it might be harder since lenders perceive you as a riskier borrower. Legal lenders don’t place as much focus on your credit score, though.
Yes, there are instant approvals for personal loans in Singapore from banks and legal lenders alike if you’re assessed to be eligible.
A pre-approved personal loan is akin to in-principle loan approval. It gives you an inkling of whether the bank is willing to offer you a loan, based on the initial assessment of your income, job status, date of birth, etc. It doesn’t, however, dictate how much your approved personal loan amount would be.
To get actual loan approval, the bank has to dig deeper into your credit report and carefully assess your creditworthiness and overall financial health.
There’s no fixed answer to how many personal loans you can have at once. Sure, you can have more than one personal loan, but the bank will never let you exceed the unsecured credit borrowing limit the Monetary Authority of Singapore (MAS) has set — 12X your monthly income.
Yes, you can take a home loan after a personal loan. However, you would have to be okay with the bank offering a smaller home loan amount as your personal loan counts towards your Total Debt Servicing Ratio (TDSR).
Here’s how to calculate a borrower’s TDSR:
(Borrower’s total monthly debt obligations / Borrower’s gross monthly income) x 100%
Yes, to ease your cash flow, you may take a personal loan for home downpayment.
Yes, you can use a personal loan to buy a car, but it is likely to be a more expensive option compared to a regular car loan.
Yes, you can definitely pay off a personal loan early, ahead of your loan tenure. However, most banks in Singapore charge early repayment fees or foreclosure charges for personal loans on the outstanding loan amount. On the contrary, some legal lenders give borrowers a discount for paying off their loans early.
No, you cannot make repayments towards paying down your personal loan with a credit card. Common modes of loan repayment include:
Yes, it is legal to be a personal loan guarantor.. However, you may be putting your finances and well-being at risk.
As far as the bank is concerned, your name is on the loan agreement — you are the one they would go after if whoever you’re helping isn’t repaying the loan as promised. Your credit score could also take a hit as a result.
It is a good idea to pay off high-interest credit card debt with a lower-interest personal loan if there are substantial savings to be had. In case you didn’t already know, credit cards have high interest rates that can make your debt snowball rapidly.
While you can use a personal loan to pay off credit card debt temporarily, it isn’t the only option. Consider balance transfers if credit card debts are your main concern. Banks often run promotions for balance transfers in which the first 3 – 12 months are the low-to-no interest period!
The difference between personal loan and line of credit is clear. A personal loan comprises the disbursement of a lump sum from the bank to you. You’re expected to pay off the principal and interest over a fixed period (i.e. loan tenure).
A personal line of credit is when the bank gives you access to a fund that you can draw on, whenever the need arises. You’re expected to pay an annual fee for having access to this fund. You’ll only have to pay interest on the amount that you borrow.
While personal loans and credit cards are both credit facilities that help you get the money you need, interest rates are the biggest difference between them.
For credit cards, there’s no loan tenure, and you don’t need to pay interest as long as you pay your credit card bill in full before its due date. To use, simply use your credit card to make payment at the merchant in-store or online.
For personal loans, you have to make equal monthly repayments throughout your loan tenure. Interest is calculated based on your loan principal. A lump sum is disbursed and you’re free to use the funds however you want.
Personal Loan Finder connects you to major banks and fully legal alternative loan providers in Singapore. We help you compare loans from the different loan providers so you can get the best loan for your needs.
Our one-stop platform is seamless, easy to use and free-of-charge. Get the best personalised loan for your needs with minimal effort and maximum efficiency through Personal Loan Finder today.