Personal loans Singapore banks and financial institutions offer are convenient for buyers who need a considerable amount of cash in a short period. You’ve been in this situation: you’re short of a few hundred dollars to pay for a time-sensitive item or service. With quick approval personal loans in Singapore, you can address your huge setback immediately.
However, you’ve heard horror stories of Singaporeans having to pay high interest added on their initial loan amount borrowed or principle. Truthfully, those are horror stories of mismanagement. If you compare personal loan interest rates against each other properly, you can get the lowest interests and maximize the service altogether.
Where to Use Personal Loans?
A personal loan is useful when you’re trying to make purchases but are short on time to get more cash. You can use personal loans to jump-start your small company. Furthermore, you can use it to pay for your wants, such as a down payment for an expensive appliance or financial gap-filler for a new flat or property.
Financial institutions will not question your purpose for personal loans. Therefore, they ask for documents that verify the following facts and metrics they need:
- Monthly salary
- Job Stability
- Length of Stay in Singapore (for Foreigners)
- Credit Rating and Score (for Banks)
How Does Personal Loan Work?
You need money, but your pay isn’t enough to cover the total amount you need. A friend offers to provide you the financial gap, and you finally purchase the item or service you needed. However, your friend agreed you pay later in installments but with added interest rates.
Financial institutions, such as banks and moneylenders, provide you a maximum amount you can loan. Sometimes, they need to put to use some resources, so they ask you for a processing fee. Once they finish processing your application and investigating your trustworthiness, they will give you their approval or rejection and the date you can receive your loan amount.
What is a Good Personal Loan Interest Rate?
A reasonable personal loan interest rate is low enough to have an insignificant impact on your expenses and regular payments.
For example, a loan amount of S $40,000 payable for one year will often have a lower interest rate. However, the regular payment amount of S $3,333 might be too much for some Singaporeans.
A higher interest rate that allows them to pay for 24 or even 36 months might be manageable. While it does mean borrowers will pay higher by the loan term’s end, the convenience of paying lower and making financing manageable is undeniably a better and less stressful choice.
Where Can I Get a Low-Interest Personal Loan in Singapore?
From February 2020, here are some of the lowest interest rate personal loans you can find in Singapore.
|Personal Loan||Interest Rate||Processing Fee|
|HSBC Personal Loan||3.7% to 3.8% (EIR from 7%)||None|
|Citibank Quick Cash||From 3.99% (EIR from 7.5%)||None|
|POSB/DBS Personal Loan||From 3.88% (EIR from 7.5%)||1%|
|Standard Chartered CashOne||3.88% (EIR from 7.67%)||Waived|
|UOB Personal Loan||4.25% (EIR from 7.75%)||1%|
|HL Bank Personal Loan||From 3.88% (EIR from 8.78%)||1.5% or S $100|
|OCBC ExtraCash Loan||From 5.42% (EIR from 10.96%)||2% or S $200|
What’s the Difference Between Interest Rate and Effective Interest Rate
An interest rate will usually have a percentage range rather than an accurate percentage figure because it’s a dynamic process. Banks provide you with the possible minimum and maximum interest rate because they’ll have to consider your employment, average income, total borrowing amount, and loan tenor.
If your documentation establishes your excellent credentials, character, and optimal credit score, you won’t need to worry about getting the ceiling personal loan interest rates. Otherwise, you’ll find it challenging to gain application approval, which makes licensed moneylenders, such as Raffles Credit, the best option if you have poor credit scores.
Effective interest rates (EIR) consider other inclusive fees in their final percentage. The processing and penalties play a role in increasing your interest rates. Therefore, this makes EIRs a more accurate figure and the exact maximum interest rates you’ll likely pay for.
Comparing to Find the Best Low-Interest Loan
We’ve mentioned this earlier: finding the best lowest interest loan for personal use in Singapore depends on your income, work stability, total amount, and loan tenor. Comparing available low-interest loans in the market is the best way to find the perfect loan.
Be aware that a few more items and processes will contribute to your overall expenses. When you have accurate figures or estimates for these, you can make the best comparison that can significantly save you money.
1. Application, Administrative, and Penalty Fees
When applying for a loan, you’ll need to pay an application fee. This amount pays for your credit investigation and loan administrative processes. For some banks, these fees are deposits, meaning you can get them back partially or fully if your application fails.
Additional fees include penalties, which you’ll need to pay when you miss scheduled payments. These penalties continue to increase and drastically put irresponsible borrowers into deep debt. Therefore, it’s crucial to know them before jumping right into any transaction.
2. Early Payment Permissions and Account Closing
Some financial products in Singapore prevent you from paying your debts early to avoid huge interest rates. However, it’s a great advantage if you can have early payment permissions. Truthfully, you can pay your debts on time, but you don’t have guarantees that your interest rates become lower in the next repayments.
Early payment permission and account use much more resources from banks because they’ll have to move their fiscal calendars to adjust to your early repayments.
3. Loan Tenor and Available Loan Amounts
You’ll want to find a loan amount that suits your needs but won’t cause a significant dent to your budget with repayments. Furthermore, borrowers will want a loan tenor that’s stretched out enough, but not too elongated with high-interest rates.
In most financial product comparison sites, you can enter data into filters to find the perfect financial product with the right loan tenor and loan amounts with equally fitting interest rates and terms.
Alternatives to Borrowing from Banks
You need an outstanding credit grade and score from CBS to get the favor and best options from banks. To do this, you need to have done well with your credit history by paying on time, closing accounts completely, minimizing penalties, and more.
Sometimes, personal loans from banks have stringent requirements. Additionally, you might not need a specific loan amount and would like to have revolving credit. Here are three excellent alternatives to borrowing a personal loan from banks.
1. Line of Credit
Personal loans give you a fixed amount to borrow and pay. You have a fixed interest rate until the end of your loan tenor.
A line of credit gives you interest rates higher than personal loans in Singapore. However, you have a revolving credit line that allows you to advance cash for payments in case of emergencies or situations you need an enormous amount of cash.
2. Credit Cards with Cash Advance
All credit cards function similarly to credit lines. Their significant difference is the presence of a card and a smaller credit limit than credit lines. However, credit cards are portable credit enhancers in case you have poor scores and grades. By performing well — paying your loans on time and managing your debts effectively — you can have a relatively better score.
3. Licensed Money Lenders in Singapore
Licensed lenders in Singapore provide you with ample personal loans. While these amounts do not parallel the offers of banks, it’s sufficient for individuals looking for cash to tide them over a time-sensitive situation where a viable figure is needed.
How to Find Legitimate Moneylenders in Singapore
Truthfully, Singapore is well known for having plenty of “ah longs” or loan sharks. However, Singapore’s Ministry of Law has recognized the necessity of microlending for Singaporeans and foreigners in the country.
All Singapore moneylenders have undergone a series of tests that enable them to understand their responsibilities and liabilities to Singapore’s borrowing population. When they’ve passed, the Ministry of Law includes them in the Registry of Moneylenders and provides them with a license number that they display in their respective websites and publications.
Licensed moneylenders cannot approach borrowers directly to offer their loans. They can only advertise through their respective website and physical establishment. You can expect you’re talking to a loan shark if you received a text or call offer for substantial financing.
Why Consider Moneylenders the Best Personal Loan Alternative?
Singapore’s licensed moneylenders operate with the best interests of borrowers. Furthermore, the law protects both moneylenders and borrowers from possible service abuse.
The profession and income-based investigations of moneylenders and their fast approval and payouts make them hugely appealing for many Singapore borrowers. Without relying on CBS’ credit scores, even those with terrible credit grades can take out a loan with a workable, effective interest.
Maximum Moneylender Personal Loan Lending Amounts
Most moneylenders can provide you more than four times your monthly salary. However, you’ll receive immediate loan approval for payday personal loans, which are helpful if you need an exact amount to tide you over the following month. Truthfully, the maximum loan amount varies with every moneylender.
Usual Requirements of Moneylenders
Singaporeans and Permanent Residents need to be at least 21 years old and earning an income at S $18,000 and above.
Foreign workers in Singapore must earn S $24,000 and above qualify for a moneylender’s personal loan offer.
Keep in mind that you can still push for your application if you’re earning less than the amounts we listed above. However, moneylenders will prioritize those who can fulfill the requirements in full.
- Work permit/S-Pass/Employment Pass (for foreigners)
- Passport (for foreigners)
- Latest bank statement employer credited your previous pay
- Identity Card or NRIC
- Recent bills, a letter addressed to their residence, and other proof of residence
- Tenancy agreement (for renters)
- Employment letter
- Recent 3 months of your payslips
Documents You’ll Need to Provide
Below are the typical documents moneylenders will ask you to present for the immediate evaluation and possible approval and release of your financing.
It’s Easy to Find the Perfect Moneylender for All Your Financing Needs!
If you have yet to find a trustworthy moneylender in Singapore, you can count on us at Raffles Credit to provide exceptional offers. We approve of your loans in less than a week! Check our loan offers and chat with us today to learn more about everything that we can provide you!