A personal loan can help a lot especially during rainy days. This is where you apply for a loan from the bank or a financial institution for some extra cash which you might need for many reasons. As the name suggests, a personal loan is when you apply for extra cash for your own personal reasons. In most cases, you do not need to disclose such information.
Criteria in getting personal loan in Singapore
Personal loans in Singapore can be easily accessed via many channels. You can actually apply for it through most of the major banks in Singapore or you can talk to registered moneylenders to get a short-term loan as well. When it comes to such loans, you need to take note of several factors.
- amount borrowed
- repayment tenure
- eligibility to borrow
Purpose for borrowing
Anyone with a stable income would be able to apply for a personal loan or any licensed money lender. However, you would know for a fact that if your application is successful, you will effectively enter into a multiple-year commitment contract with the bank. In other words, you need to payback a certain amount monthly for a few years. Hence, you must decide if you really need to borrow from the bank. The personal loan is an unsecured instalment loan and you can use it for any reason you like. This differs quite significantly as compared to other types of more specialized loans like education and business.
As such, once your application has been approved and the funds disbursed, you are free to use it anyway you like as long as you pay back according the agreed schedule. Hence, be it a family emergency or a shopping spree in Orchard, it is entirely your call.
While each bank has its own set of terms and conditions, you will need to fulfill certain criteria in order to apply for a personal loan. Basically, each bank will be more than happy to let you apply as long as you are eligible. Generally, to apply for a personal loan, you should be:
- A Singapore citizen or a Permanent Resident
- Age not younger than 21 and not older than 65
- For local Singaporeans, your income must be more than SGD20,000 per year. This is applicable for PRs as well
- For foreigners and expatriates, your annual income must not be less than SGD40,000
In most cases, you are free to decide on how much you want to borrow from any licensed money lender, the bank or financial institution. That gives you a figure or amount to work with before you enter into any form of negotiations. Fundamentally, each individual is allowed to apply between 2 and 6 times of your own monthly income. In other words, if you earn SGD2,000 per month, then, you can apply between SGD4,000 and SGD12,000 for the loan. The cap here is at SGD200,000.
Very much like any other forms of loans offered by the banks and financial institutions, there is a loan tenure that you must decide. Once you have confirmed on the amount to borrow without having to disclose any further information, then it is where you need to decide on how long you want to take in repaying the amount. For most banks, this could range between 1 and 7 years which means you can drag the payment to a longer time.
This is where you must be extremely careful because the banks are very quick and efficient when it comes to collecting debts. The loan tenure is decided by the bank in most situations. Anyone who has borrowed from the bank will be aware that these firms would want to keep their customers for the longest possible time as that is where more interests get charged and then imposed onto the principal amount.
In most cases, there is a nominal processing or administrative fees involved. Some banks have higher rates as compared to others. The rule of thumb is that they should not charge more than 3% of the approved loan amount when it comes to these fees. There will be some ‘hidden’ costs which should be communicated to the customer before he decides on anything.
How to apply from bank or licensed money lender
In other words, what documents are needed for a personal loan? When you are interested to apply for a personal loan, you must be very sure of what documents is required. This is to help with verification and validation purposes. For the applicant, the documents that need to be submitted include
- Photocopy of NRIC for both sides
- the latest e-statement will be required from a full-time or part-time salaried employee.
- alternatively, the CPF contribution history statement for the last 12 months can be used to apply for the loan
- latest Income Tax Notice of Assessment
On the other hand, if you are a self-employed individual, then you must produce your Income Tax Notice of Assessment for the last 2 years.
Unlike other forms of loans where they have floating and fixed rates, personal loans are slightly different. Singapore banks offers between 6 and 8% per year depending on the applicant’s choice. On top of that, the tenure involved could be between 1 and 7 years.
Below are some of the personal loans offered by major banks across Singapore.
POSB/ DBS Personal Loan
The POSB/DBS Personal Loan is among the most convenient and quickest when it comes to the process. You can now enjoy instant cash once your application is approved. This loan is specially catered for credit card and Cashline customers of the bank. Apply up to 10 times your monthly salary and enjoy a flexible and affordable repayment scheme. On top of that, get competitive rates of less than 8% per annum of up to 5 years.
Standard Chartered Bank Loan
The Standard Chartered CashOne is known for its no-frills personal loan package. It is actually meant for customers who are in the high income group. This is a loan that offers applicants with a huge loan. However, it has got one of the highest interest rate in the market. The minimum financing amount is SGD1,000 where you can borrow up to 4 times your monthly salary. There is a ceiling amount which is at SGD250,000. You can enjoy a repayment term between 1 and 5 years with a SGD199 annual fee payable for the first year only. Application process is quite fast and once approved, you should get your money on the next day. To be eligible, you should have a minimum gross salary of SGD1,667 per month.
HSBC Personal Loan
This is the one package known for being the best large, long-term personal loan and is perfect for anyone needing a loan which is huge and has a long-term repayment schedule. It is the only one in the market that offers up to 7 years. This is because many other banks usually offer up to 5 years only. interest rates from this bank is between 7 and 9% at the moment. If needed, you can borrow up to 8 times your monthly income. What makes the HSBC Personal Loan so interesting is that you will know if your application is approved within 1 minute of application.
Citibank Personal Loan
Citibank offers the Citibank Ready Credit Paylite which is a great small and short-term personal loan. This is good for entrepreneurs and startup businesses who need some form of cash to help them stay afloat in the first few months of their operations. This loan ranges between 1 and 3 years with an interest rate of around 8.5%. You must be a citizen or Permanent Resident of Singapore to be eligible for this loan. The minimum annual income is SGD30,000 and there is no processing fees involved. Besides that, you should be between 21 and 65 years of age and if you decide to settle your outstanding earlier, there will be a 3% penalty of the principal amount.
This is an interesting product which is perfect for short-term personal line of credit applicants. It has got a higher interest rate as compared to other local banks in Singapore. You will surely enjoy and appreciate its fixed monthly installments of up to 60 months. Application for this loan is very convenient and fast with interest rate as low as 6% per annum.
Maybank Home Loan
Maybank Home Loans are categorized depending on which type of property you intend to buy. The Maybank Home Loan is available if you intend to buy either a HDB Flat or a private property in Singapore. This is available for both new and current customers. On top of that, you can also apply to refinance your current property to free up some cash if you need them for other purposes.
DBS FHR Housing Loan
The DBS FHR (Fixed Housing Loan) is among the lower offerings in the market among the banks in Singapore. Unlike other types of loans, you can enjoy a more stable and fixed loan interest. The rate for this loan is about FHR + 1.45% for the first few years. Besides that, you can enjoy legal fees subsidy from DBS for this package. You can borrow a minimum amount of SGD100,000 with a 2-year lock-in period applicable. This loan package is offered to both new and refinancing customers. However, the bank can change its FHR at its discretion.
BOC Debt Consolidation Plan (DCP)
The BOC Debt Consolidation Plan is a loan package that helps you to save on your monthly commitments. With a low interest rate package, this is where you can now consolidate all your debts by paying back one single source. Typically, this is a debt refinancing package where you bring together all your unsecured loans like your personal loans and credit cards and let Bank of China pay them back for you. You will get a complimentary credit card for this and enjoy a fixed repayment schedule of up to 10 years. You must have an annual income of at least SGD30,000 and be a Singapore citizen or Permanent Resident.
The CIMB Cashlite is typically a personal loan package. The interest rate is about 4.5% per annum where you can borrow up to 5 years. To be eligible for this loan, you must be either a Singapore citizen or Permanent Resident with a minimum annual income of SGD2,500. The application process takes slightly longer than other banks where it will require up to 10 days.
UOB Home Loan
If you plan to buy your own property, UOB offers both types of packages which are either fixed or floating rates respectively. For the floating rate package, you will have to consider its 2-years lock-in period. On the other hand, you can consider the SIBOR Package 2 which comes with only a 1-year lock-in period. This is the package that gives you lower cumulative rates.
With the OCBC ExtraCash personal loan, you can borrow up to 6 times your monthly gross salary. You need to be at least 21 years of age and has minimum monthly gross salary of SGD1,667. There is a processing fee for this application depending on the amount you are borrowing. This process usually take about 7 working days. Take note that the OCBC ExtraCash has a 3% penalty for early settlement of the outstanding principal amount.