When choosing a personal loan, one of the most important factors to consider is the interest rate offered. The interest rate on a loan (along with any admin fees and/or late charges) represents the cost of borrowing; the lower the interest charged, the cheaper the loan.
Hence, it is important for borrowers to not only pick a loan that is affordable, but to strive to get the lowest interest rate possible. This will help you save money and lessen your debt burden. In fact, there are many personal loans for lower income earners. To help you along, we’ve picked out the five cheapest loans in Singapore (as of the time of writing).
Before we jump in, let’s first have a quick discussion on the different types of personal loans in Singapore.
Broadly speaking, loans in Singapore belong to one of two categories – secured loans and unsecured loans.
Secured loans require the borrower to put up assets as collateral to secure the loan. The lender has a legal right to take possession of the collateral should the borrower fail to pay back the loan.
This reduces the risk to the lender, allowing secured loans to be offered at lower interest rates.
Some common examples of secured loans are:
In contrast to secured loans, unsecured loans do not require collateral to be pledged. If the borrower defaults on the loan, the lender does not have the right to seize any assets to make up for the loss and must instead pursue other debt recovery actions.
Because of this heightened risk, unsecured loans have comparatively higher interest rates than secured loans. Some common examples of unsecured loans are:
In this article, we will be focusing on unsecured personal loans.
|Advertised interest rate
|CIMB CashLite Personal Loan
|From 3.38% per annum (EIR 6.32% per annum)
|1 to 5 years
|Citi Quick Cash
|From 3.45% per annum (EIR 6.5% per annum)
|1 to 5 years
|Standard Chartered CashOne Personal Loan
|From 3.48% per annum (EIR 6.95% per annum)
|1 to 5 years
|UOB Personal Loan
|From 3.77% per annum (EIR 6.89% per annum)
|1 to 5 years
|HSBC Personal Loan
|From 4% per annum (EIR 7.5% per annum)
|1 to 7 years
Note: EIR = Effective Interest Rate, which takes into account fees and charges
The CIMB CashLite Personal Loan starts from as low as 3.38% per annum (EIR 6.32% per annum), making it the cheapest loan in Singapore. While this is no doubt an attractive rate, it comes with some caveats.
The rate is only offered to new customers who take a loan with a tenure of between three and five years. If you choose a tenure of one or two years, your interest rate starts from 4% per annum.
With interest rates from 3.45% to 3.56% per annum (maximum EIR 6.5% per annum), the Citi Quick Cash personal loan is among the cheapest personal loans in Singapore.
There aren’t any especially exciting promotions at the moment for this loan – the only perk is a waiver of admin fee – but this personal loan is notable for its EIR capped at 6.5% per annum across all loan tenures (1 to 5 years).
This could render the Citi Quick Cash loan a cheaper option than its counterparts, as some loans have higher EIRs, especially at shorter loan tenures.
A close contender of second place, it is none other than the Standard Chartered CashOne Personal Loan, which has an interest rate starting at 3.48% per annum (EIR 6.95% per annum).
This personal loan also offers cashback of up to S$3,100 to eligible borrowers of up to S$3,288 (with a S$188 bonus). Here’s a quick look at what you can expect from the CashOne Personal Loan promotion:
|Approved loan amount
|Maximum cCashback earned
|3, 4, or 5 years
|S$10,000 to S$50,000
|S$$207.95% of the loan amount
|S$50,000 to S$250,000
|S$$639.77% of the loan amount
Once again, you’d have to borrow a rather large sum (at least S$10,000) to be eligible for the cashback, which means this loan may not be as attractive if you’re looking to borrow a smaller amount.
The UOB Personal Loan may not have the absolute lowest interest rate, but it is nonetheless a worthy contender for the title.
This is because on top of having an interest rate starting from 3.77% per annum (EIR 6.89% per annum), applications also stand to receive cashback equivalent to up to 2.2% of the approved loan amount so long as their loan tenure is at least 2 years, as follows:
|Approved loan amount
|S$5,000 to S$9,999
|1.0% of the loan amount
|S$10,000 to S$39,999
|1.09% of the loan amount
|S$40,000 to S$79,999
|1.40% of the loan amount
|S$80,000 and above
|2.2% of the loan amount
Yes, you’ll have to borrow at least S$5,000 to be eligible for the cashback, which means this loan may not be the best for those not looking to borrow such a large amount. You will also need to choose a loan tenure of between 2 and to 5 years.
However, for those who do qualify, the cashback will very likely make this the cheapest loan in Singapore.
Taking last place on our list is the HSBC Personal Loan, which is currently being offered at an interest rate starting from 4% per annum (EIR 7.5% per annum).
One reason to consider this loan is that it comes with a longer loan tenure of up to 7 years, making it a great choice for those in need of a longer loan tenure. With the ability to spread your repayments over 84 installments (instead of 60), your monthly loan repayments will be lower and thus easier to meet.
Also, HSBC is waiving the admin fee for this loan, further cementing it as one of the cheapest loans in Singapore. The admin fee waiver is valid for as long as HSBC runs the promotion.
You’d have noticed that the cheapest personal loans in Singapore are all bank loans. This is not surprising; it is their dominant position that allows banks to offer such low interest rates.
However, in exchange, bank personal loans come with a slew of eligibility requirements, which may place them out of reach for certain borrowers.
In particular, these requirements may pose a challenge:
- Annual income: Bank loans require a minimum annual income of S$20,000 or S$30,000.
- Credit score: Borrowers with poor credit scores may be rejected.
- Higher-than-advertised interest rates: The actual interest rate offered varies according to individual borrower profile, and may be higher than the advertised rate.
- Longer waiting time: Many banks require borrowers to have an account with them to disburse the loan. This can prolong the duration you have to wait before receiving your loan, especially if you’re not an existing customer.
- Early repayment fee: There is a fee charged if you choose to pay off your loan early, which increases your total cost of borrowing.
Bank personal loans are undoubtedly among the cheapest loans in Singapore, but they may not be suitable for all borrowers.
If you’re not able to qualify for a bank loan – perhaps because of a bad credit score or a low annual income – you may wish to consider applying for a licensed moneylender loan instead.
Licensed moneylenders in Singapore do not take into account your credit score, and neither do they have an annual income threshold. You will be able to apply for a loan even if your income is less than S$10,000 per year.
Additionally, loans are disbursed on the same day – often in less than 30 minutes – and you can choose to have the loan deposited directly into your bank account or given to you in cash.
Synergy Credit offers fast cash loans with simple interest rates starting from 2.27% per month and flexible repayment terms of up to 12 months. Contact us to find out how we can help with your urgent financial needs today.