Ever wondered about questions along the lines of “How much can a personal loan be?”, “What’s the maximum personal loan amount I can get for my salary?”, or “How much personal loan can I get on a $25,000 annual salary?” — you have come to the right place.
In this article, we will deepen your understanding of personal loans from money lenders and banks, the maximum amount a borrower can get, loan limits in Singapore, and more through strategically crafted questions and answers.
Read on and have all your burning questions answered.
The maximum personal loan amount you can get in Singapore greatly depends on your income. Most banks allow borrowers like you and me to borrow up to 4X – 6X our monthly income if we (i) meet the minimum income requirement, and (ii) earn less than $120,000 per year.
For those with higher income, most banks allow these borrowers to borrow up to 10X their monthly income if they earn $120,000 or more per year.
To reiterate, the maximum loan amount that most banks would offer you is 4X to 6X your monthly income.
If you have a $25,000 annual salary, a simple calculation would show you that the maximum loan amount the bank may be willing to lend you ranges from $8,333 to $12,500.
Be that as it may, keep in mind the actual loan amount may or may not be the maximum amount derived from your monthly salary.
This may surprise you but nobody —except the lender— can decide how much you can borrow on a personal loan.
As a matter of fact, not everyone is eligible to borrow the maximum loan amount as stated on paper, usually derived from 4X to 6X one’s monthly salary.
The bank considers other factors such as your credit history, existing loans, and unsecured credit facilities when determining how much you are eligible to borrow from them (i.e. the actual loan amount the bank is willing to lend).
In case you are wondering, this is entirely the bank’s discretion. The bank has the ultimate say in deciding how much to lend you.
While there isn’t a limit per se on how many personal loans you can have at any one point in time —yes, you can have two or even multiple loans in Singapore provided you meet all the eligibility criteria and are assessed to be financially stable— there is a legal limit on how much you are allowed to borrow on unsecured loans and credit facilities in Singapore.
Effective from 1 June 2019, the maximum loan-to-income ratio set by the Monetary Authority of Singapore (MAS) for unsecured loans and credit facilities in Singapore is 12X the borrower’s monthly income. Besides knowing what the legal loan limit is, it’s also best that you’re aware of the other rules on unsecured credit so you’re better prepared.
Banks and financial institutions will take this legal loan limit into account when extending loans and credit facilities to you. Don’t be surprised if the loan amount you’re eligible for is lower than what you were expecting to get!
Note: The information in this segment applies to loans from licensed money lenders.
Did you know banks aren’t the only legal loan providers in Singapore? Legitimate licensed money lenders exist and are a good alternative if you need to take out a fast cash loan but aren’t able to get one from a traditional bank.
For those who don’t already know, licensed money lenders are less stringent in their credit assessment and income requirements. You can get a personal loan even though your annual income is less than $20,000 or $30,000. Moreover, you can get loans with a poorer credit rating.
That being said, be prepared to accept a higher interest rate of up to 4% per month if you are considering a personal loan from a licensed money lender in Singapore!
While the interest rate is much higher than what a bank would offer, licensed money lenders are through and through a legal option. You shouldn’t and wouldn’t want to turn to illegal money lenders or loan sharks.
There is plenty to know about borrowing from licensed money lenders; it’s always a good idea to read up and stay-in-the-know about these lenders.
It depends on whether you’re getting a personal loan from the bank or a licensed money lender.
To reiterate, if you earn less than $120,000 a year, most banks allow you to borrow a maximum of 4X – 6X your monthly income. This goes up to 10X your monthly income if you make $120,000 or more annually.
Not sure which bank loan to take? Compare personal loans from major banks on Personal Loan Finder here.
Considering a loan from a licensed money lender instead? Licensed money lenders allow you to borrow up to 6X your monthly income, regardless of whether you are a Singaporean, Permanent Resident, or foreigner — if you make at least $20,000 annually.