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The Unofficial Guide to Personal Loans in Singapore

This guide serves to detail and collate some frequently asked questions by our site's visitors about legal personal loans in Singapore. It is very much a work in progress and feedback is appreciated.

Where Do You Use a Personal Loan?

A personal loan can be used for any expenses. The two types of these loans that are available are unsecured and secured. The unsecured personal loan in Singapore does not require collateral and you can get an amount from $500 to $100,000. If you want to borrow a larger amount, companies will instead offer you a secured loan requiring you a car, house or property as collateral.

Should I Get a Massive Personal Loan?

It is possible to borrow money in Singapore from banks to consolidate a credit card debt because they have much lower interest rates. This is known as a debt consolidation.

Personal loans can also be used for home repair, child's education, unexpected expense or anything you need funds for. Although you can also use it for a dream wedding or a luxury vacation, it's best to save up for these events rather than borrow money for it. As always, do think carefully before getting into any debt.

How Do I Know Personal Loan is My Best Option?

Borrowing money is one of your many options if you need personal loan assistance. Before you consider borrowing, do your homework. Ask yourself, “Should I take a personal loan?”. Review your options and decide which works best for you. Find out, how many personal loans can you get without compromising your credit score. It is important to understand the fees and charges as well as the repayment conditions.

If you need the money and this is a favorable option for you, do think through your repayment plan. Banks and companies have a loan calculator on their websites that you can use that can help you make up your decision. Please do consider carefully and do not borrow on impulse.

Who Provides Protected Personal Loans in Singapore?

Licensed lending companies and banks can lend money to people with good credit scores. Although the banks will require a higher income from borrowers, the licensed lending companies are more lenient with their income brackets as long as you meet all their requirements. Above all, check out and choose a reputable and finance company for your security and peace of mind.

Ensure that any licensed personal loan lenders are legal and registered either with the Monetary Authority of Singapore (MAS) or the Ministry of Law (Minlaw).

Who Can Get a Legal Personal Loan?

Anyone who meets the eligibility requirements of the bank, lending agency or licensed lender can apply. The borrower should have a stable job, and age between 18 to 65 with proof of income. This is usually specified on the finance company's website. If the borrower falls within the eligibility requirements, he/she will be able to apply.

All applications are subject to the approval of the lender and bank, and in general, banks have higher requirements for you to qualify for the loan.

Where Do I Find Good Personal Loan Terms?

The question now is, “Where can I borrow money in Singapore and where do I find good terms?”. In Singapore, you can borrow money from banks and licensed lenders. You can apply in person at the bank or licensed lender. For many lenders, you have the option of doing the initial application on the company's websites, followed by the submission of all your requirements at their office for approval. Some large banks may offer loans over the phone. Keep in my mind to know the required documents for your application to make the process faster.

Please note that whichever medium you use to apply and get approval, there should be a clear contract detailing the terms of the loan. If your application does not require an official contract in the lender's or bank’s, name, this is a sure sign that this is an illegal moneylender/loan shark.

Some banks do treat your recording over the phone or submission over the internet as a contractual agreement. When in doubt, please do check with your legal representative or other official sources for the most accurate information.

How is Personal Loan Eligibility Calculate?

Personal loans by banks are usually offered to Singapore citizens and permanent residents. Licensed lenders will often lend to anyone with a full-time job in Singapore, including foreigners on any type of work pass.
In general for licensed lenders, if you borrow from a licensed lender, your can typically borrow up to four times your monthly salary, if you make more than $30,000 a year. If you make between $20,000 to $30,000 a year, you can borrow up to two times your monthly salary. If you make above $120,000 a year, you can borrow any amount.

If you borrow from a bank and make $20,000 a year or more, you can usually qualify for a loan for up to 4 times your monthly salary. Or up to 10X your monthly salary if you make $120,000 a year or more.

For both banks and licensed lenders, these rules may vary depending on your credit rating, outstanding debts and other factors.

Which Personal Loan is Easiest to Get?

Banks and institutions usually consider two things in approving loan applications. First is the amount you want to borrow and the second is your personal credit rating. The finance company will analyze your capability to pay by reviewing your credit rating and income. Once you submitted the required documents and showed your excellent credit rating, you're on your way to fast approval. Please note that it is not easy to get a personal loan if you have incomplete requirements.

What is the Reason Why My Credit Application is Denied?

There are several possible reasons why your application was not approved. The most common reason is due to bad credit history or lack of it because the bank will gauge your ability to pay based on your credit reputation. Your salary may also have fallen short of the bank requirements. The other reason might be because you have too many loans.

The banks will also consider that your repayments should not exceed 60% of your net salary. The good thing is banks have different ways of measuring creditworthiness of a borrower. So you if you've been declined by one bank, it doesn't necessarily mean you'll be rejected by others as well. Do check to ensure you completed all forms and submitted all the mandatory documents.

If you do not qualify for a loan from a bank, sometimes licensed lenders may still be able to offer you a loan. However, this is also subject to approval, and your credit rating will be reviewed to ensure that you can pay the money back.

What Are the Banks that Offer Personal Loans?

Almost all banks offer personal loans with information made available on their website. Some of them also have promotions. If you're not approved by the bank, you can also go to private licensed credit institutions. The thing is to do a lot of research and comparison. Consider the eligibility requirements, interest rates, repayment details and other terms and conditions.

What is the Interest Rate of Personal Loans?

Interest rates differ between banks and institutions. You may call the banks or visit the websites of the various agencies to find out more. Ask about the fine print involved in the personal loan application.

Also, find out if the interest rates are fixed or variable. A fixed rate, which is mostly offered by banks will remain constant throughout the loan period. A variable rate varies according to general annual percentage rate fluctuations. The risk of a variable interest rate is that it may seem low at first but can double or triple later.

What Are Personal Loan Rates?

Personal loan rates are interest rates applied to your overdue or late payment to the lending institution. It is factored into the amount and tenure of the loan, credit report assessment, and the current market rate. For banks, personal loan rates normally range from 4% - 10% and are calculated on an annual basis. Interest rates change from time to time and from different institutions because licensed lenders and banks do not offer the same interest rate.

If you borrow from a licensed lender, by law, your interest rate cannot exceed 4% a month.

When Do I Need to Get a Personal Loan?

Maybe you want to buy the laptop or furniture you've been eyeing for months, you can get a personal loan any time but set aside enough time to do your research. It will be beneficial for you if you look for the lowest personal loan rate you can find. Note that banks approval process will take some time. Be sure to complete all the mandatory documents to ensure a faster transaction and response time.

As always, make sure that you have a plan to repay the money back before taking a personal loan. If not, you might find yourself knee deep in debt.

Is it Smart to Refinance My Personal Loan?

Refinancing your personal loan can help you to save money if you have done your research. Take time to understand everything involved. You may choose to refinance your personal loan if you find a new term with reduced fees or has the lowest interest rate.

Consider the ongoing fees, repayment fees, loan establishment costs and other terms of the new loan. Take all aspects of both loans into consideration. You may want to use a repayment calculator to compare your options.

When to Refinance a Personal Loan?

You may consider refinancing your personal loan if the interest rates drop and if the calculations tell you that you can save some money in the long term.

Use a loan repayment calculator to determine the amount of money you might save. It will need your existing credit information and refinancing option. This is to determine the total cost of each loan. This information is then used to calculate any potential savings.

Where to Refinance Personal Loan?

Depending on the agency or institution, you may be able to apply for a new loan online. If you used the same institution for the refinancing, they would use funds from the new contract to close the original loan. If a different institution is used, they will wire the funds to the original institution to close the loan. Request and receive the account paperwork from the original loan to show that payment has been made in full.

Are Personal Loans Considered Bad?

Personal loans are a great option if borrowers don't live beyond their means. It will give you the extra cash you need on things you want to spend on. Meanwhile, getting a personal loan will be an awful idea if you spend more than you can afford, resulting you falling into a debt trap.

Make sure that your income plus the loan installment is sufficient to sustain your needs. But as long as you are sure that you have the ability to pay it back promptly, personal loans can be a flexible financial option for you.

Are Personal Loans Good for Your Credit?

Your credit score is based on three factors. The first is your payment history. The second and third is the total amount of debt you owe and the number of credit lines you have opened recently. Taking a new personal loan will increase your total debt and open a new credit line.

While this could lower your credit score, credit agencies take into consideration your overall credit history. If you have a history of managing debt and making timely payments, the new loan is likely to have less effect on your credit score. To prevent a personal loan from negatively affecting your credit score, continue to make payments on time and pay off the debt within the terms of the agreement.

How to Secure a Personal Loan With Mediocre Credit?

Having poor credit can be a big obstacle in getting a loan from a traditional big bank with standard personal loan guidelines. However, you may want to consider other options like licensed lenders.

The loan amount could depend on both your credit score and whether the loan is secured. A secured loan is one that is backed with collateral that the one lending the money can seize if you cannot repay the loan. Ensure you pay back your loan on time, or you might lose the collateral you’ve agreed to use.

What is The Purpose of a Personal Loan Insurance?

Personal loan insurance is a form of insurance that ensures that your repayments are taken care of in unfortunate instances. Loans are often a long-term commitment. Getting a personal loan insurance can help you ensure that your debt does not get out of control if something unfortunate happens like death, disability or involuntary unemployment. Like all insurance, a personal loan insurance is subjected to exclusions, limits and conditions.

Typically personal loan insurance is only available from a bank. Do check with your bank for more details.

How does Personal Loan Payment Calculator Work?

Different institutions would have a different personal loan calculator offered for you to use. A personal loan calculator helps you to estimate the monthly personal loan repayment amount. Most calculators would require you to enter the loan amount, term, and interest rate. If you are using a personal loan payment calculator from a bank, the interest rate would be pre-populated for you.

How are Personal Loans Calculated?

It can be calculated using a personal loan calculator. It will calculate the Effective Interest Rate (EIR) and the amount that is payable per month for a specified period.

The amount payable per month depends on three things, the loan amount, the interest rate that the bank charges for your personal loan and the duration of your personal loan. To adjust the equated monthly installment, change the personal loan amount or the specified loan period. Keep in my mind to not get a personal loan that is beyond your ability to repay every month.

Personal Loan Repayment in Singapore

The borrower has to make a monthly repayment of a fixed personal loan. For flexible personal loans, the borrower has to repay at least the minimum payment that is stated in the offer letter. A late payment penalty will be charged if payment is not made within the predetermined time frame. The penalty amount may vary for different banks. You will also expect charges like processing and insurance fees for certain loans.

Do read the fine print before taking up any loan or signing any contract.

Last Updated: April 11th, 2017