Personal loans are the most common loans in Singapore, with not just banks but other regulated financial institutions also offering them to Singaporean citizens. Personal loans attract a higher rate of interest in comparison to car loans and home loans, mostly because these loans are unsecured loans – loans that do not require any form of collateral or security as an asset guarantee against the loan amount. Personal loans are unsecured mostly because the amount isn’t usually as huge as a car loan or a home loan. Several top banks in Singapore offer home loans at varied interest rates. If you wish to apply for a personal loan, it is important to examine various personal loan products of different banks and choose the one that has the most accommodating interest rate.
Most top banks in Singapore offering personal loans have an instant approval mechanism wherein your loan will almost instantly be approved depending on parameters including your income and whether or not your company is registered with the bank in question. The approval, however, is only temporary – your loan will be sanctioned and disbursed only if various other parameters such as the validity of your documents and your credit score obtained from the credit report meets the bank’s requirement.
Anybody applying for personal loan would want their loan to be approved and sanctioned swiftly, right? Well, here are some top banks that offer fastest personal loan approvals:
While the approval in the case of these banks is almost instant, processing of your loan application will take about 2 working days. You can expect to receive the money in your bank account in 3-4 working days after applying for your loan.
Personal loans offered by most banks in Singapore carry an Effective Interest Rate of anywhere between 4% and 10% p.a. The Effective Interest Rate is fundamentally dependent on the tenure period of your loan. Depending on the amount, the tenure can stretch up to 5 years – the longer the tenure, lower the interest rate. Different banks have different EIRs on their personal loan offerings, again, depending on the tenor.
Before you see “instant approval” on a bank’s website and get too excited, let’s warn you that there’s more to it than meets the eye. Most banks only offer instant approval when you apply online. That means if you apply offline, you may not be eligible for this facility. You may not find these restrictions clearly promoted but you’ll surely find them under the terms and conditions section, provided they exist.
While there may not be enough clarity surrounding “instant cash/approval” and “in-principle approval”, let’s tell you that your belief that the two are practically the same is wrong. In-principle approval means that the bank has given you a provisional nod and has decided to extend you the loan or the credit line that you have applied for. This will, however, be subject to fulfilment of the bank’s requirements and the eligibility criteria as mentioned on the website and the letter of instruction. But, instant approval means that as soon as you hit the submit button, the application is accepted and the disbursal process is initiated.
While you may have thought that an instant approval and/or disbursal will be granted irrespective of when the application is submitted, the reality may be starkly different. You may find that the bank will only offer this facility if your application is submitted during a certain time window on a business day. If you apply online at other times, your application will be kept on a pending status. DBS, for example, has a downtime between 11:45 p.m. and 8:00 a.m. on a daily basis. Any application submitted during this window will be put on hold till the time the system is up. Similarly, your loan application made via phone will be approved within one hour under Citi’s 1 Hour Loan Approval Program only if you make a call between 9:00 a.m. and 5:00 p.m. (Singapore Standard Time), Monday to Friday.
Even if you have all your documents as required by the bank in order, you may still not qualify for instant approval. The truth is that not all lenders have this facility. Moreover, even if they have the provision, it could still be subject to fulfilment of conditions.
While most lenders use modes such as SMS, phone, or email to notify you of a provisional approval or the status of the review of your application, you can’t sue them if their message doesn’t reach you due to technical glitches or other issues. There are some banks that will send you a letter detailing the outcome of your application, no matter what the outcome is.
Some lenders may have a separate set of criteria for their instant approval programmes. So, even if you meet the general loan criteria, you may not be able to qualify for the instant approval process. For instance, to get your application approved under the Citi 1 Hour Loan Approval Program, you’ll have to be a Singaporean citizen or PR, aged below 62, be an owner of a Citi credit card and/or a Ready Credit account or apply for a card and/or Ready Credit line along with your personal loan application. Instant approvals can really speed up the process of vetting and formal approval. However, misconceptions can lead to wrong decisions and choices. Hence, steer clear from these myths, do a thorough comparison of the loan products available in the market, and then apply.
When you apply for a personal loan, although you may receive instant approval (which of course is temporary), there are other factors that influence your loan application. Remember, the instant approval is only a temporary mechanism in place and is mostly dependent on your income. If your requested loan amount matches your income slab, you’ll receive an instant approval by the bank.
Your credit score is the most important parameter that banks will assess while reviewing your loan application. Your credit score is obtained from your credit report and gives banks/financial institutions a concrete idea of how good a manager of credit you are. Your credit score includes many aspects such as your credit history, total debt, type of debt and percentage of credit utilised against your total available credit limit.
Your credit score will include all your past loan/credit card applications and make a record of your payments. A good credit score would mean that you’ve managed your credit effectively in the past, giving banks an idea that a default isn’t a probable scenario. A bad credit score, on the other hand, would work against you, causing your application to be rejected.
Your credit history is the most crucial parameter as it gives banks information about your payments – instances of late payments and defaults will be recorded promptly in your credit report. So if your credit score isn’t good because of bad management of your credit card debt, you might want to drink the good luck potion Felix Felicis like Harry Potter in order for your personal loan application to be approved.
After applying for your loan, you are required to submit all the necessary documents as requested by the bank. Your bank will reject your loan application if you haven’t submitted all necessary documents required to process your loan application. Here is a tentative list of documents that banks require you to submit:
You can apply for a personal loan by visiting the official website of the bank you wish to apply your loan from and placing a request for a personal loan. The bank will require you to fill out the online loan application form and upload your relevant documents. Once this is done, an executive from the bank will get in touch with you and request you to confirm your application details, following which the bank will process and review your loan application.
Well, different banks have different timelines for processing and reviewing personal loan applications. Ideally, even in the case of the fastest loan sanctions, banks take a minimum of two or three working days (or maybe even more) to process, review, approve and sanction your loan application. So ideally, if you’ve applied for your loan from one of Singapore’s top banks, you can expect to receive the money in your account in about 3-4 working days from the date of applying.
While a bad credit score will most likely result in the rejection of your loan application, there are some parameters that banks consider and can work in your favour.
If you have an existing relationship with the bank you’ve applied for your loan from, your case might come through. Sometimes, you can apply for a debt consolidation loan from the bank you have an existing relationship with and direct all your debt into one single instrument, making repayments and debt management much easier.
If your income level is way higher than the corresponding amount you’ve requested for, your loan application might be approved even if your credit score is bad. Having an existing relationship with the bank as well as a good annual income might work well for you in light of a bad credit score.
So, if you wish to take a personal loan in Singapore, keeping these points in mind will help you get the right idea about how personal loans work, how banks approve your loan and how long it’ll take the bank to sanction and disburse your loan.