Acquiring a personal loan in Singapore may be a good idea if you need money immediately. Money lenders and banks have made it possible to get a loan. We all know to compare personal loan interest rates from different loan providers carefully.
To help you select the best loan for your needs, we’ll delve deeply into personal loans in this article. Before you apply for a loan, let’s find out where to get loans with the lowest interest rates so you can find the best personal loan Singapore.
What Is A Personal Loan?
A personal loan in Singapore is not backed and can be gotten from a bank, credit union, or authorised money lender. It is loaned for a brief or medium-term period (a few months or a few years), and repayment is made in equal monthly instalments. That is why people prefer personal loans for quick repayments.
Consumer loans, also known as personal loans, are not secured by any asset. If you cannot repay the loan, the lender is unauthorised to take your property.
Personal loans are used for various purposes, including consolidating debt, paying for urgent medical care, a wedding, launching a business, a home loan to purchase a house, etc.
Types Of Personal Loans
There are different types of personal loans available on the market, including:
- Unsecured personal loans: These loans do not require collateral and are based on your personal credit history and financial situation.
- Secured personal loans: These require the borrower to put up collateral, such as a car or a house, to secure the loan.
- Debt consolidation loans: These loans are used to pay off multiple debts and simplify monthly payments into one single payment.
- Personal line of credit: This loan provides the borrower with a credit limit they can draw on as needed, similar to a credit card.
- Payday loans: These are loans that meant to be repaid on the borrower’s next payday.
- Personal instalment loans: They have a set loan period, during which the borrower pays back the loan in fixed monthly payments.
- Emergency loans: These loans are designed to help individuals with unexpected expenses or emergencies.
How Does Personal Loan Work In Singapore?
Personal loans function like other types of loans. You obtain a loan from a bank or other lender for a specific sum to pay for the necessities you require.
A personal loan in Singapore enables you to meet a short- or long-term financial need. You apply to a lender for a personal loan, and the lender determines whether you are qualified for the loan. This is based on your personal credit and income profile.
If your personal loan application is successful, initially, you’ll be given a large amount of money equal to the approved loan amount. You must pay back the loan’s principal plus interest and fees.
After the loan disbursement, your personal loan provider requires timely and complete repayment of the loan in full. When the loan term is over, your full loan will be repaid if you make the repayments specified in your loan contract.
Most repayment periods and loan interest rates in Singapore are set, like personal instalment loans. Simply put, you must repay the personal loan in monthly or annual instalments. Personal loan tenure of 3 full years is acceptable as it is directly proportional to your interest cost.
The borrower can make principal and interest-only payments because the debt has been fully amortised. A loan that has been amortised does give the borrower time to plan their repayments.
Do You Really Need A Personal Loan?
Taking out a personal loan can be a good option when you instantly need a large amount of money and don’t have the funds available.
It’s important to remember that personal loans come with a repayment period, during which you’ll need to pay back the loan amount and interest. As such, it’s important to ensure you can make the payments prior to applying for a low-interest loan.
It’s also worth noting that personal loans, such as credit card debt, typically come with lower interest rates. It is a more cost-effective option for certain types of expenses.
As with any loan, it’s essential to shop around and compare the best personal loans from different lenders and their terms before making a decision. Here are some of the best personal loan uses.
Debt Repayment Or Consolidation
You can consolidate your various credit card payments into a single monthly payment with a low interest rate by using a personal loan to enable you to settle credit card debt. In doing this, you can avoid the hassle of remembering each bill’s due date and amount each month.
Be aware that your annual salary and other factors affect your personal loan’s interest rates and other terms. Make sure to compare the terms and interest rates of the personal loans available in Singapore by various financial institutions and banks to see how the advertised interest rates differ from the published rate.
Vacations And Wedding
A personal loan can help finance events other than emergencies, such as weddings and international vacations. Considering the cost of a wedding, consider taking out a loan to cover these costs. It is usually quick and simple to meet the specifications.
Education
As a student, you may need additional funds to cover the cost of textbooks, tuition, or other expenses related to your education. You can use a personal loan to help support your studies, as it can generate extra cash you need to pay for these expenses.
Personal loans for students are typically tailored to meet the unique needs of students, with flat interest rate and flexible repayment terms.
Medical And Family Emergencies
Emergencies and other accidents are unpredictable, so saving money for a rainy day is always advisable. When the provided medical or health insurance is insufficient to cover any expensive critical health condition, that can be termed a medical emergency.
You can never predict when you might need that extra financial support for your kin or yourself. Even with some savings, you could still require more.
A personal loan can have a positive impact when you do not have enough cash or savings to cover the bills, allowing you more time to reorganise your finances.
How To Choose The Best Personal Loan In Singapore
It’s advisable to be aware of the loan terms before applying for one. Although a personal loan gives you fast money, it has interest charges. To make sure that your decision is well-informed and that the loan will fulfil your needs, you should consider that.
Advantages Of Personal Loan
Here are some benefits of taking out a personal loan.
Simple And Quick Processing
Once you have completed the personal loan application and provided all the necessary documentation for personal loans in Singapore, you can obtain a loan within a day to one week. Because of this, personal loans are very practical, especially in an emergency.
Additionally, fewer documents are required than when you apply for a personal loan than others.
Collateral Is Not Required For Personal Loans
Personal loans are unsecured loans, as opposed to mortgages and business loans, which demand collateral like real estate or other assets. A personal loan is not secured since it is intended for use when there is a need.
Fixed Interest Rates
The interest you begin paying on your debt may change over time if you use certain borrowing products, such as LOCs.
Compared to other loan types, like credit card debt, personal loans in Singapore typically have fixed interest rates, making them a more affordable choice for specific expenses.
Furthermore, it indicates that personal loans are less vulnerable to fluctuations in annual interest rates over time, which may impact your personal credit and income profile.
Disadvantages Of Personal Loans
A personal loan, like everything else in life, has downsides.
Interest Rates Might Be High
Some people find it difficult to get a personal loan. This is because personal loans occasionally have higher interest rates than secured loans, which raises the total cost of borrowing. This loan interest rate may occasionally be higher than some credit cards.
Required Income And Age
Generally, to submit an application, you must be 21 years old and no older than 65. Most Singaporean banks also require a yearly income of at least $30,000. While some loan providers lend to borrowers with annual incomes under $30,000, they do so at a high interest rate.
When you for a loan through a bank, foreigners in Singapore must earn between $40,000 and $60,000 per year in income.
But at Lending Bee, you still can borrow up to $3,000 even if your yearly income is less than $10,000. Foreigners within the same income range can borrow up to $500.
What Else Do I Have To Consider Before Applying For A Personal Loan In Singapore?
Before submitting an application, consider the following and weigh the advantages and disadvantages.
Plan Ahead
Before requesting a personal loan, make sure you can pay back your debt. Understand how the lender’s proposed repayment schedule will fit into your budget.
Remember that this debt includes the principal amount you borrowed, applicable interest, and other fees. Read the loan agreement carefully to ensure that you are aware of the best personal loan interest rates, terms of the agreement, and any other fees or costs associated with the loan. Maintaining a high credit score is made possible by making on-time debt payments.
Your financial stability and the likelihood that you will repay a loan are reflected in your credit score. The higher your credit score, the more reliable a borrower you are.
On the contrary hand, missing payments may hurt your credit rating. In the future, your chances of authorising your loan will be lower if this occurs.
Managing Your Money Wisely
Regardless of whether you have a loan, managing your finances is essential. Budget carefully and only take out loans that you can afford.
Consider personal loans promotions as they can offer attractive interest rates and special perks, making it a good option for those needing financial assistance. Deciding on your loan amount can have a positive impact on which option is best for you.
Select a repayment schedule you will commit to during the application process. Also, it is important to take note of the total cost of your personal loan and the repayment rate of your loan.
No matter how often you decide to repay your debt (monthly, weekly, etc.), maintain a budget accordingly. It makes it more likely that you will be able to repay your loan on time.
Consider Other Options
Before you apply for a personal loan, it is important to explore alternative options for borrowing money. One alternative option mentioned is borrowing from family and friends.
This approach may offer a more flexible and less formal arrangement, with potentially lesser interest rates or no interest and helps one avoid the cost of taking a loan.
However, having an open and honest conversation with your family and friends about your financial needs and repayment plan is important.
It’s also essential to reassure them that you are capable and committed to paying them back on time. Weigh this option’s pros and cons and consider the potential impact on relationships.
Should You Take A Personal Loan from Banks Or Licensed Moneylenders?
When deciding where to borrow a loan, it’s important to consider different factors such as interest rates, repayment terms, and ease of application. This means you have to visit the bank for the loan.
Banks are generally considered more reputable and are regulated by the Monetary Authority of Singapore (MAS), and they offer lower interest rate and flexible repayment options.
Many residents opt for bank personal loans in Singapore to fulfil their monetary needs without dipping into their savings.
On the other hand, licensed moneylenders offer personal instalments loans with faster approval times and minimal documentation. But they typically charge higher interest rates and may have stricter repayment terms. Therefore you have to be keen and ensure the money lender you choose offers the best personal loan.
The Advantage Of Taking Up A Personal Loan From Licensed Moneylenders
Quick And Easy Approval
Licensed moneylenders in Singapore are known for their fast approval process and only minutes of waiting to see your loan approval status.
Our loan officers at Lending Bee are renowned for responding to requests for loan approval within an hour. Therefore, you will get your loan immediately using the most recent technology to respond quickly.
Easy And Quick Online Loan Application
Licensed moneylenders are now utilising online application forms as they use technology. Your initial information, such as your I.D. type, monthly income, and loan request, will be entered into the form.
Simple procedures must be followed. Consider Lending Bee, where there are only three easy steps to complete: The first step is to apply the best personal loan is using a form, then receive the application status, and immediately receive your money.
Saves Time
You can apply online instead of going to a licensed moneylender’s branch because of this. It translates to saving and the ability to apply from the convenience of your home. A time saver, particularly if you need to get a loan in Singapore immediately.
Easier Eligibility Criteria
Licensed moneylenders are an option for people with bad credit histories because they don’t run credit checks, making it easier for them to qualify for a personal loan. Some may even offer promotional interest rates.
Licensed moneylenders can approve you for a loan even if your yearly income is less than $10,000, unlike banks that require you to make at least $30,000.
Ideal For Emergencies
Emergencies do occur without warning. Disasters and accidents can happen at any time. Managing this circumstance may require you to take out some loans.
A personal loan from an authorised lender can save your life. Your quick cash loan can be picked up the same day so that it can meet your urgent financial needs.
Low Rejection Rates
Even if your credit score is low, there is still a chance that your personal loan will be approved. You shouldn’t worry about applying for a personal loan if you have a low credit score. Licensed lenders will consider your repayment capability now.
Loan For The Short Term
Short-term loans are a speciality of licensed moneylenders. It means you can borrow money for a shorter period and pay much lesser interest than you would if you took out a long-term loan.
The Disadvantage
Usually Offer Smaller Loan Amounts
Due to the higher credit risks, most moneylenders only offer small sums based on a borrower’s gross pay. Loan offers range from a minimum loan amount of a few hundred to a maximum of $1,500, depending on the borrower’s income. In contrast, you can borrow up to 10 times your monthly salary from banks.
High Loan Interest Rates
Due to the high credit risk associated with unsecured loans, money lenders may have higher competitive rates than banks. The loan may become more difficult to repay due to these high interest rates.
But keep in mind to borrow money from an authorised lender to avoid paying the highest interest rates, such as those offered by loan sharks or “Ah long.”
The Registry of Moneylenders – Ministry of Law regulates licensed money lenders, so they are only permitted to charge up to 4% monthly interest rates.
Knowing the differences between a legitimate lender and a loan shark is crucial if you want to benefit from getting a loan from a licensed moneylender.
The Advantage Of Taking Personal Loan From Banks
The best bank for your financial needs will depend on various factors, including loan amount and ease of applying.
Increased Maximum Loan Amount
The best option will be to obtain a personal loan from a bank loan if you want to borrow up to 10 times your monthly salary. That is an excellent response, particularly if you require more money.
Utilising Online Applications
The majority of banks currently use their websites to accept loan applications. Borrowers can apply conveniently and without waiting in line while sitting in the convenience of their own homes.
The Disadvantages
Strict Review Procedure
Bank loans are more challenging to obtain because they have stricter approval criteria. Bank loans, for instance, are intended for people with outstanding credit.
Your credit score determines whether you are accepted and what terms and interest rates you receive. Of course, this assumes that you have all the required paperwork and satisfy all the requirements in your application. Additionally, you must apply with an annual income of at least $30,000.
Longer Time For Approval
Credit analysis may take some time. Your credit report and other criteria for eligibility will need to be examined. A few days may pass before your loan is approved.
So, if you’re wondering where to find the best personal loan, consider your annual income and the required amount. Don’t be depressed if your annual salary is less than $30,000; licensed moneylenders can assist you.
How To Choose The Right Personal Loan
Suppose you have decided to request a loan from a licensed money lender or a bank. In that case, it is essential to consider the options available to make the best decision for your needs.
Which Is The Best Interest Rate For The Personal Loan?
You need to consider that a personal loan from a licensed moneylender should have an interest rate as low as 4% per month. To find a loan with the lowest interest rates possible, compare different lenders to get the personal loan interest rate available.
When obtaining a bank loan, you must consider the effective interest rate (EIR) rather than the advertised interest rate. The EIR of your loan, which accounts for processing and other fees, is called the “real interest rate.”
What Is The Ideal Loan Amount, And What Is It For?
Banks, as well as authorised moneylenders, may make a higher loan offer. Banks will lend you up to 10 times your monthly salary, while licensed moneylenders will lend you up to 6 times your monthly wage. It’s critical to weigh repayment against the loan amount you require for your particular purpose.
What The Repayment Schedule Should Contain
The repayment period should be considered because it will influence the total interest due. Even though both lending institutions can be flexible with your loan repayment schedule, it is best to choose the manageable one.
Remember to read and comprehend the Note of Contract carefully to avoid paying late fees and interest. It could impact your credit score for loans.
What Should The Ideal Loan Tenure Be?
Remember that the shortest loan term is ideal because it allows you to pay a much low interest rate than the longest. Generally, loan tenure of 3 years is applicable. Consider your financial situation as well; it is best if it aligns with your repayment capability.
Need More Help?
These frequently asked questions can assist you in applying for a personal loan.
Can I Take A Personal Loan If I Have A Bad Credit Score?
Obtaining a personal loan despite having a low credit score is still possible. Some lenders might make specialised personal loan offers to borrowers with poor credit, but these loans might have higher interest rates and more strenuous repayment conditions.
If accepted, it is recommended that you take a loan with the lowest offer and make on-time payments to raise your credit score.
Are Personal Loans Good For My Credit Score?
If you use personal loans responsibly, they can help you build credit. Your credit score can rise if you pay a personal loan on time and in full. Remember that you must be a responsible borrower to benefit from the personal loan.
What Are The Requirements For A DBS Personal Loan?
To be eligible for a DBS personal loan, you must be at least 21 years of age, have a minimum annual income of S$30,000, and have a good credit record.
What Documents Do I Need For The Application?
These documents are required when applying for a personal loan in Singapore. They may vary depending on the lender, but typically, you will need to provide;
- Proof of income: Your contribution history statement to your Central Provident Fund (CPF) for the last 12 months, latest income tax Notice of Assessment, latest electronic payslip, or salary depositing into the lender’s bank account (if you’re applying at a bank)
- Proof of identity: Your NRIC, Employment Pass (EP) and passport.
- Proof of address: Documents showing your residential address, such as a utility bill or bank statement.
- Other documents: Some lenders may also require additional documentation, such as a co-signer or proof of collateral.
How Long Does It Take To Get My Personal Loan Approved?
Your loan could be approved in minutes if you work with a licensed moneylender. As a result, they are renowned for offering quick cash loans.
The loan application form at Lending Bee takes three minutes to complete, and loan officers will contact you within an hour.
What Are The Benefits Of An HSBC Personal Loan?
An HSBC Personal Loan’s benefits include competitive interest rates, flexible repayment terms, and a simple application process.
So Are You Now Ready to Take Up a Personal Loan?
Consider your goals before applying for a loan. You must weigh the benefits and drawbacks of getting a personal loan and any additional benefits and drawbacks specific to your situation.
Be careful with your expenditures and borrowing as you move forward with your plans, and only take loans you can afford to repay. When in doubt, consult your peers, whether they are your family, friends, legal or financial advisor. When you need advice or assistance, they can provide it.
Apply now for a personal loan with Lending Bee to get the lowest interest rates in Singapore or contact us for more more details.
About Ashley Sim
Calling herself a “professional multi-tasker”, Ashley worked as a relationship manager in a bank for five years. She left her job just before the pandemic happened and became a freelance writer for about a year. Now, she’s making the most of her love for writing and knowledge of the banking and financial industry in her role as a content marketing lead. She hopes to help people make better financial decisions through her content and campaigns.
