A Guide on Personal Loans in Singapore
Table of Contents
- Where Can I Get A Personal Loan in Singapore?
- Which is The Best Bank for Personal Loan?
- How Can I Get A Personal Loan with Bad Credit?
- How Much Personal Loan Can I Get in Singapore?
- What is A Personal Loan?
- How Does A Personal Loan Work?
- How Do I Get A Personal Loan in Singapore?
- What Do I Need to Apply for A Personal Loan?
- How Do I Get The Best Personal Loan Rate?
- What is The Best Personal Loan Available?
Where Can I Get A Personal Loan in Singapore?
Finance companies and banks are highly recommended places to get personal loans from. Although a higher income and good credit scores are required, the licensed lending companies are more lenient with their income brackets as long as the borrowers meet all their personal loan requirements.
It is imperative to do your research and select an established finance company to ensure your security and avoid getting into unnecessary trouble.
All legal personal loan lenders should be registered with the Monetary Authority of Singapore (MAS) or the Ministry of Law (Minlaw).
Which is The Best Bank for Personal Loan?
Most banks provide personal loans which you may find more information about them on their websites. There is no specific bank that offers the best deal for personal loans as there are many components you have to consider when selecting your preferred personal loan. Some aspects include eligibility requirements, interest rates, repayment details and other terms and conditions.
However, some banks do offer promotions for time to time so make sure you check all of them out before you reach a decision. Do take note that few banks provide personal loans to borrowers with bad credit scores. Should you find it challenging to get approval for a personal loan from a bank, you could also get a loan from private licensed credit institutions.
How Can I Get A Personal Loan with Bad Credit?
Bad credit is a huge barrier when it comes to getting a loan. Several banks either charge a high interest rate or disapprove applications from borrowers with poor credit due to the high risk involved. Therefore, you could consider private licensed credit institutions. Your loan amount depends on your credit score and how secure the loan is.
A collateral loan is the most secured loan as the borrower offers an asset/collateral in exchange for the loan. The borrower should ensure that the loan is returned on time or the asset offered in exchange for the loan will be seized.
How Much Personal Loan Can I Get in Singapore?
The amount you can loan depends on your annual income. It can be as low as S$10,000 to as high as 4 times your monthly salary. If your annual income exceeds S$120,000, you can borrow up to a maximum of S$200,000. For foreigners living in Singapore, a minimum annual income of S$40,000 is required and you may borrow up to a maximum of S$100,000. Rules and regulations differ from various banks and private licensed credit institutions. However, it is normally easier for borrowers with bad credit to loan from private licensed credit institutions.
What is A Personal Loan?
There are two types of personal loans - unsecured and secured. They can be used for all kinds of expenses. You can get an amount in between S$500 to S$100,000 of unsecured personal loans in Singapore and need not require collateral. On the other hand, companies will recommend a secured loan in exchange for collateral such as your car or house if you want to borrow an amount more than S$100,000.
How Does A Personal Loan Work?
Personal loans are a type of installment loan which have a fixed repayment term, usually two to five years, and a fixed interest rate. You will receive the whole amount of the loan immediately and return the money including the interest in regular monthly installments.
The interest rates and approval rate on personal loans depends on your credit history. Although borrowers with poor credit history normally find it more challenging to get loan approval from banks, they have other options for personal loans from private licensed credit institutions.
Tip: Look for a fixed-rate agreement when choosing your personal loan. Even though most personal loans have fixed term and interest rate, there are exceptions so read the terms and conditions very carefully.
How Do I Get A Personal Loan in Singapore?
Citizens and PRs can generally get from both banks and private financial institutions unless they have a bad credit score. Several private financial institutions offer personal loans with higher approval rates in exchange for collateral/assets to secure the loan. It is important that you do proper research before you decide which loan is best for you.
What Do I Need to Apply for A Personal Loan?
You will need to provide:
- an identification (i.e. driver's license, passport or IC)
- Proof of income (i.e. payslips, bank statements and income tax returns if you're self-employed)
- Other financial documents (i.e. statements of other debts, such as loans or credit cards)
Online applications usually take about 15 minutes to complete.
How Do I Get The Best Personal Loan Rate?
There are a few websites sharing information on the various personal loans you can get in Singapore. However, you should always cross check with the banks' and licensed lenders' websites to see if the information is accurate. There are several things you need to consider besides the personal loan interest rates before you decide which is your preferred personal loan. Sometimes the lowest interest rate does not mean you end up paying less.
Personal loan rates for bank typically range from 4% - 10% and are calculated annually. Interest rates change all the time and vary from different institutions. By law, your interest rate from a licensed lender cannot exceed 4% a month.
Try looking for a personal loan with fixed interest rate so that you can be assured that the monthly installment you pay every month is fixed.
What is The Best Personal Loan Available?
There are many institutions offering different personal loans. How do you find the best available personal loan?
These are several factors you need to consider when choosing a personal loan:
- Type of Interest Rate (Fixed or Variable, Monthly or Annually)
- Amount of Interest Rate
- Processing fee
- Approval Rate and Process
- Your credit score
- Maximum Loan Tenure
- Your Principal Loan Amount
- Total Amount Payable
- Total Interest Payable
- Your Annual Income
- Your Citizenship
- Your Age
- Your Collateral (for collateral loans)
- What can the loan be used on
- Cancellation policy
- Your ability to return the loan/repayment plan
- Repayment conditions
After you have all this information, you will be able to make a decision on what works best for you. You can also have a few personal loans at one time without affecting your credit score so read the terms and conditions carefully to ensure you get the most favourable outcome.
There are also loan calculators available on banks and moneylenders website to assist you in your decision making. Some institutions offer early repayment options to clear your debt as quickly as possible. It is crucial that you do not borrow on impulse and take all these factors into consideration before arriving at a conclusion.