You may have heard that it’s difficult to get a personal loan without a high income, especially from a bank. Well, it’s not strictly true that you need a large salary to get a personal loan. What is true, however, is that you’ll need to meet the annual income requirement (among other personal loan eligibility criteria).
This can be a problem if you’re just starting in your career, or are a foreigner working in Singapore. Most bank loans require a minimum annual income of at least S$30,000 for citizens and PRs, whereas foreigners will need to clear at least S$42,000 – if they can find a bank willing to lend to them in the first place.
So, are there any options available for those who need a personal loan but don’t have a high income? Yes, there are, and here are three of them.
1. Standard Chartered CashOne Personal Loan
Standard Chartered CashOne Personal Loan has the lowest annual income requirement in Singapore.
The minimum annual income required to qualify is S$20,000 – significantly lower than most other bank loans, which require at least S$30,000 per annum to qualify. Foreigners, though, are out of luck – a minimum income of S$60,000 is required to be eligible.
As such, Standard Chartered CashOne Personal Loan is likely to be the default option for locals whose yearly income does not reach S$30,000. However, the disadvantage here is that those seeking a personal loan without high income have to accept higher interest rates.
Standard Chartered states on its website that the loan’s Effective Interest Rate (EIR) may go up as high as 16.06% per annum, based on factors such as personal income profile, loan amount, loan tenure, and credit history.
Nevertheless, Standard Chartered CashOne Personal Loan is still worthy of consideration as it is available in a wide range of tenures – up to five years. A longer loan tenure allows you to spread out your debt into smaller monthly instalments, which makes repayments easier to manage.
On the flip side, the longer you take to pay off your loan, the more interest you pay in total. Hence, it’s best to pay off your loan sooner rather than later.
Another loan with a low annual income requirement of S$20,000 is the POSB Personal Loan. One advantage is that this low-income requirement applies to both Singaporeans and foreigners. However, know that the maximum EIR for this loan can go as high as 20.01% per annum.
2. Cash-out refinancing using your vehicle
If you own a car or vehicle, you can use it to obtain a sum of cash without selling it away.
This is a practice known as cash-out refinancing, and it simply means cashing out the equity of your vehicle by taking a loan against its value.
Here’s a simple example of how cash-out refinancing works.
Let’s assume you own a car that has a market value of S$40,000. The remaining loan on the vehicle is S$15,000. You can refinance your car loan for the full market value of the car (S$40,000) and pay off the remaining S$15,000. You can then cash out the remaining S$25,000 (S$40,000 – S$15,000) to meet other financial needs.
Doing this will mean that you now have a brand new S$40,000 car loan to pay off. Hence, you should strive to refinance at an affordable interest rate and should ensure you can see this new loan to completion. This means searching for car loans with reasonable loan tenure periods and attractive interest rates.
The main drawback of this method is that you will need to first own a vehicle that still has a market value. The amount you can “cash out” will also be limited to the difference between your outstanding car loan amount and the market value of your vehicle.
Nonetheless, this could be a viable solution for those in need of a personal loan but without a high income, especially when you consider that car loans have lower interest rates than personal loans.
3. Borrow from a licensed moneylender
A third, and perhaps the most fuss-free option is to apply for a personal loan from a private money lender in Singapore.
Lenders offer flexible and fast loans with speedy approval and minimum credit checks required. They also cater to borrowers of all income levels, so you likely won’t face much difficulty in obtaining a personal loan.
However, how much you can borrow will be capped according to your income level; this is due to prevailing rules and regulations set by the government to encourage responsible borrowing.
Additionally, you should also familiarise yourself with the fees and interest charges involved. In particular, note that licensed moneylenders are allowed to charge up to 4% per month in interest – this makes moneylender loans among the most costly options for borrowers.
Also, most licensed moneylenders offer relatively short loan tenures of up to 12 months, which makes such loans better suited for short-term needs rather than long-term borrowing.
Still, licensed moneylenders can fulfil the needs of those looking for personal loans without a high income, provided care is taken to pay off the debt on time.
Synergy Credit offers quick and convenient personal loans catered to borrowers of all income levels. Our loan approval takes 20 minutes or less, and we offer up to 12 months of loan tenure for easier repayment. Speak with our friendly loan specialists today!
About the Author
Formed in 2009, Synergy Credit is your trusted financial partner that delivers customised loan packages and well-researched blog content for anyone and everyone, seasoned borrowers and greenhorns alike.
