You may have heard that it’s difficult to get a personal loan with a low 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 qualifying criteria).
This can be a problem if you’re just starting in your career, or are a foreigner working in Singapore. While some bank loans have relatively low income thresholds for Singapore Citizens and PRs, foreigners generally face higher minimum income requirements. So, are there any options available for those who need a personal loan even with a low income? We have good news for you—yes! Keep reading to find out more.
#1 Taking a Bank Personal Loan
If you’re looking for a personal loan with low income requirements, you might want to consider the POSB Personal Loan. Singapore Citizens and Permanent Residents need to earn at least S$20,000 per annum to qualify, while most other banks require borrowers to earn at least S$30,000 annually.
However, note that this lower income threshold does not apply to foreigners. Foreigners must meet a higher minimum annual income requirement of S$60,000 to be eligible for the loan.
Another potential option for personal loans with low income requirements is the OCBC ExtraCash Loan, which also requires borrowers to earn at least S$20,000 per annum to qualify. However, only Singapore Citizens and PRs are eligible to apply for the OCBC ExtraCash Loan.
That said, meeting the minimum income requirement is only one factor to consider. Before applying for a personal loan with a low income, it is always a good idea to compare the effective interest rates (EIRs) and the total cost of borrowing to make an informed decision.
#2 Cash-Out Refinancing Using Your Vehicle
Apart from seeking a personal loan with a low income, did you know that you can use your vehicle to obtain a sum of money without having to sell 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.
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 with a low income, especially when you consider that car loans have lower interest rates than personal loans.
#3 Borrow From a Licensed Money Lender
A third, and perhaps the most fuss-free option is to apply for a personal loan from a licensed money lender.
Licensed money lenders in Singapore offer flexible personal loans with fast 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—even with a low income.
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 money lenders are allowed to charge up to 4% per month in interest – this makes money lender loans among the most costly options for borrowers.
Also, most licensed money lenders 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 money lenders can fulfil the needs of those looking for personal loans with a low 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 30 minutes or less, and we offer up to 12 months of loan tenure for easier repayment. Apply now or 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.
