When an unexpected event or emergency occurs, you may have to apply for a loan to tide you over. Out of all the available options, the quickest and easiest way to get a personal loan in Singapore is to approach a legal money lender for an unsecured loan.
Despite being relatively less known compared to banks, the money lending industry is well-regulated in Singapore, and money lenders are held to professional standards. Borrowers from all backgrounds and income levels are welcome to apply for a loan — reliable money lenders are willing to work out the best loan packages according to borrowers’ different needs and circumstances. This means that even lower income earners can get loans.
How easy is it to apply for a loan in Singapore from a licensed lender, you ask? Well, all you need to do is to follow the simple steps listed below in this article. But first, dive in and arm yourself with knowledge about secured loans and unsecured loans in Singapore.
Secured Loan & Unsecured Loan in Singapore
Secured Loan
Secured loans are loans that are secured by collateral. In other words, a borrower is pledging the collateral (i.e. asset) as a form of “security” with the money lender. If there is ever a situation where a borrower has to default on the loan, the lender is legally allowed to seize and liquidate the collateral.
Secured loans in Singapore are typically tied to huge, long-term loans like housing loans and car loans. Assets that are pledged as collateral include: new vehicle, used vehicle, high-value assets (jewellery, cars, antiques, etc), equity in your house, and term deposits. There are also some money lenders out there who offer secured personal short-term loans to select borrowers on a case-by-case basis.
But when a lender has monetised your collateral and it still doesn’t fulfil the loan repayment amount, in other words resulting in a shortfall, you’ll need to top up the difference. This is why secured loans give money lenders the assurance they’re looking for.
However, a borrower may not always meet the eligibility requirements of secured loans in Singapore; which is where unsecured loans come into the picture.
Unsecured Loan
‘Unsecured loans’, as its name suggests, don’t require any collateral. This means that a money lender is at a higher risk, which translates to the smaller loan amounts and higher interest rates offered to borrowers.
And while it is true there are no collaterals that may be seized, it doesn’t mean that you can just default on a loan anytime you wish; there are still repercussions — one being your credit score taking a hit and affecting future loan applications. If worse comes to worst, it’ll affect your eligibility in getting a credit card or make it difficult to secure a job, particularly in the finance and banking industry.
Unsecured loans include payday loans, personal loans, debt consolidation loans, credit card instalment plans, etc.
What’s the difference between a secured loan and an unsecured loan in Singapore?
The main difference between a secured loan and an unsecured loan is that a secured loan requires you to put down some form of valuable collateral in exchange for the loan while an unsecured loan does not require you to do so.
In summary, here are the differences between secured loans and unsecured loans in Singapore.
| Secured loan | Unsecured loan | |
| Interest rate | Lower than unsecured loans due to the possession of collateral | Higher due to the increased risk for lenders (and if a borrower’s credit score is low) |
| Assets/Collateral | Collateral is required, and it includes assets like:
|
None, but income and credit worthiness are assessed to determine loan eligibility |
| Eligible loan types | Loan types include business loans, home loans, education loans, and car loans | Loan types include personal loans, credit card loans, and personal line of credit |
| Borrowing limits | Higher borrowing amounts compared to an unsecured loan | Typically for smaller loan amounts ($100,000<) |
| Approval duration | May usually take longer as collateral and income assessment are required | May usually be quicker compared to secured loans due to lesser upfront documents required |
| Loan tenure | Longer | Shorter |
| Consequences of defaulting on loan repayment | Lender is legally allowed to seize your collateral | May heavily impact your credit score and affect your eligibility in getting a credit card or loan in the future |
How to apply for a loan in Singapore
1. Work out how much you need
Firstly, work out how much you need to borrow. Try to borrow only what you need, and not more. This is important because the larger your loan, the more interest you have to pay in total — this results in a higher cost of borrowing.
Larger loans are also more difficult to manage, and you may need a longer loan tenure to pay off your loan. This will, again, result in more interest being paid at the end.
Not borrowing more than what you need is especially important when using personal unsecured loans from licensed lenders.
This is because they are allowed to charge interest of up to 4% per month, which may not sound like much on paper but actually adds up to a significant amount over time.
2. Search for a reputable money lender
Once you’ve worked out exactly how much you need to borrow for your loan in Singapore, it’s time to look for a reputable lender.
You will likely encounter many providers offering unsecured loans, but unfortunately, not all of them will be the right fit for you. You may even come across illegal or unlicensed lenders — often via unsolicited SMSes or social media messages — and you should stay far away from them.
Spend some time looking through ratings and reviews of licensed lenders near you; Google is a good place to start. Look for providers that are consistently highly rated, and view the reviews given by other customers. Ask your family and friends for recommendations, too.
Doing this will help you suss out reputable lenders with a track record of offering good service to those looking for loans in Singapore, whether it be an unsecured loan or a secured loan.
3. Submit your loan application online
Once you’ve narrowed down the registered money lender which you are keen to apply for a loan from, you can go ahead and submit your loan application online. This can be easily done on most money lenders’ websites.
Once your application has been submitted, it will inform the money lender of your interest in taking a loan and kickstart the loan application process.
In response, a registered lender will get in touch with a loan offer, and more importantly, inform you about the terms and conditions of the loan.
You should pay attention here, as you will be receiving important information such as:
- The interest charged on the unsecured loan, which may be up to 4% per month
- The tenure of the loan, or how long you can take to repay your loan
- Admin fee, late interest charge, and any other fees and charges
- How soon you can receive the funds
You should consider the loan offer —along with its terms and conditions— carefully before deciding whether to accept the loan or not.
Note that a loan offer is just that, an offer. You do not have to accept the loan if you do not find the terms acceptable. You can walk away at any time.
4. Sign the loan contract in person
Assuming that you find the loan terms acceptable after pondering and wish to proceed with the loan, you can do so by paying a visit to your money lender’s premise during their business hours.
Licensed lenders are required by law to explain the loan terms and conditions to their borrowers. All details of the loan must also be recorded in a loan contract, which must be signed by both parties in person.
Hence, while you may first apply for a loan through a lender’s website, you are not bound to any loan offers — until you have signed the loan contract at the lender’s office.
5. Receive your funds in cash or via direct deposit to a bank account
Once you’ve understood the loan terms and conditions, and signed the loan contract, all that’s left to do is to wait to receive your loan.
Licensed lenders are able to move quickly once all the paperwork has been settled, and are often able to disburse your loan on the spot. You can choose to receive your loan in cash or request for the funds to be directly deposited into your bank account.
Use personal secured loans and unsecured loans responsibly
After applying for your loan and receiving the funds you need, you should focus on paying off your loan diligently in accordance with your repayment schedule.
Note down your loan instalment due dates and strive to make your repayments on time. Otherwise, the late fees and late interest charges incurred will hamper your efforts to clear your debt.
If possible, consider making a larger repayment from time to time to accelerate paying off your debt. But if not, don’t worry too much about it — just be sure to meet each monthly instalment.
Synergy Credit is a leading provider of personal loans in Singapore with flexible terms and favourable interest rates. Our online loan approval takes 20 minutes or less, and we strive to offer same-day loan disbursal in all eligible cases. We offer 100% legal loans in Singapore that are customisable to meet your specific financial needs. Contact us today to discuss the ideal loan package for you.
