Types of loans
Personal loans can be broadly split into two categories – secured and unsecured loans.
Secured loans require the borrower to pledge his/her assets as collateral to the lender. The asset is then evaluated by the bank to determine its value to determine how much loan a person can take. If the asset value falls short of the loan amount, a borrower may opt to repay parts of the loan or top up with more assets as collateral. The assets are seized in the event that the borrower is unable to repay his/her debt.
Unsecured loans, on the other hand, do not require pledging of assets as collateral. However, these loans usually have higher interest rates due to a higher perceived risk of loaning by the lender.
How much can I borrow?
Personal loans also come with their own set of repayment terms, namely the term loans and revolving loans. Term loans are loans that have to be repaid within an agreed amount of time, usually via instalments over the loan period. These types of loans typically apply to larger loan amounts and have a longer loan period.
For revolving loans, borrowers are allowed to take out sums of money up to a set credit limit. Borrowers can draw out the same loan amount when the outstanding credit has been entirely repaid.
Where can I get the cheapest loans in Singapore?
To help you obtain the cheapest loans in Singapore, we’ve listed down the top 5 personal loans with the lowest interest rates in Singapore, accurate as of 14 Sept 2021. However, you should always check with the bank if there are any extra charges or fees that need to be paid upfront, as these can add to the cost of obtaining loans. Further, interest rates are subject to changes, so these rates may not remain the same by the time you apply.
1. HSBC Personal Loan
The HSBC Personal Loan offers one of the best loans with the lowest interest rate so far, at 3.4% per annum, with an effective interest rate (EIR) of 6.5%. The maximum loan tenor on this loan stands at 7 years, which is a good option if you are looking for a longer-term loan. There is no processing fee for this loan but this is subject to eligibility on the processing fee waiver. Singaporeans and PRs with a minimum annual income of S$30,000, or foreigners with a minimum annual income of $S40,000 can apply. See terms and conditions here.
2. Citibank Quick Cash Personal Loan
If you are a new Citibank customer, then the bank has a special rate just for you, at 3.45% per annum, or 6.5% EIR per annum. You will need to have a Citibank Ready Credit or Citi Credit Card account, which allows you to borrow up to 90% of the credit limit without having to sign any documents. Foreigner borrowers need to have a minimum annual income of S$42,000, while Singaporeans and PRs can apply with a minimum annual income of S$30,000. Read more terms and conditions here.
3. Standard Chartered CashOne Personal Loan
The Standard Chartered CashOne Personal Loan offers an interest rate of 3.48% per annum, 6.95% EIR per annum. There are no processing fees for this loan but Standard Chartered charges an annual fee of S$199 for the first year and S$0 for the second year up till the expiry of instalment tenor. The good news is, Singaporeans and PRs can apply if they have a minimum annual income of S$20,000, which is comparatively lower than many other banks offering personal loans. Foreigners residing in Singapore will need a minimum annual income of S$60,000 to be eligible to apply. More information here.
4. UOB Personal Loan
The UOB Personal Loan offers a competitive interest rate of 3.48% per annum, or 6.86% EIR per annum regardless of your loan tenure. UOB offers a loan tenure that ranges between 1 and 5 years. Borrowers can take out up to 95% of their credit limit, the funds of which will be disbursed through your existing UOB account. It however has a processing fee of 1% as well as a cancellation fee of S$150, or 3% of outstanding approved loan amount, whichever is higher.
5. DBS/POSB Personal Loan
For borrowers with a minimum annual income of S$120,000 and above, the DBS/POSB Personal Loan allows you to borrow up to 10 times of your monthly income. Its interest rate stands at 3.88% per annum, or 7.56% EIR per annum, with a minimum loan amount of S$500. While most banks require borrowers to have a minimum annual income of S$30,000, the DBS/POSB Personal Loan allows those with an annual income of between S$20,000 and S$30,000 to borrow, albeit at higher interest rates and processing fees.
With all that said about obtaining the best and cheapest loans in Singapore, we should also consider the time it takes for the funds to be disbursed. Most banks require you to have at least an account with the bank, or a stipulated credit card. If you do not yet have an account with the bank you wish to borrow from but are in urgent need of cash, you can also opt to borrow from licensed moneylenders, including a reputable Clementi money lender. Feel comforted by the fact that a personal loan and payday loan are just a click away!
To find out more about fuss-free loans, you may head down to Clementi money lender, Synergy Credit. Alternatively, read here to learn how to apply for a loan from a licensed money lender in Singapore.