• Best Personal Line of Credit in Singapore
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    Best Personal Line of Credit in Singapore

    A personal line of credit works more or less like a personal loan, but offers much lower interest rates and flexible repayments while also giving you the benefit of using only the amount you need from time to time in line with your approved credit limit. As a product, the personal line of credit has risen in prominence, with several credit users preferring a credit line to a credit line, mostly because of lower interest rates, and flexible repayments.

    Several top banks in Singapore offer lines of credit to Singaporean citizens, Permanent Residents and Foreigners (in select cases). A personal line of credit, quite akin to a credit card, comes with an annual fee, late payment charges and other related charges. Upon successfully getting approved for a personal line of credit, you will receive a complimentary chequebook and an ATM card that will allow you to withdraw money from ATMs across the globe.  

    Let’s take a look at what you can expect from a personal line of credit and why these products have become popular in the present day.

    Features of the Personal Line of Credit

    Let’s take a look at some prominent features associated with the product:

    • Personal lines of credit combine the flexibility of credit card with the features of personal loans.
    • Most banks offering you a personal line of credit allow you to borrow up to 4 times, or in some cases, 6 times your monthly income.
    • The interest throughout the tenure is fixed. Repayments, however, are flexible. You only have to pay interest on the amount that you use out of the total allotted credit limit.
    • In order to qualify for a personal line of credit product, you should meet the minimum income criteria specified by the bank. Depending on your annual income, you will be accordingly be allotted your credit limit.
    • Some personal lines of credit come with a tenure. Meaning, you will have to clear the entire outstanding amount by the end of the tenure. In most cases, the tenure can stretch for a maximum period of 5 years.
    • Credit lines are associated with an annual fee, just like a credit card. The annual fee will have to be paid on a yearly basis.
    • Most banks require you to pay a minimum of 3% of your total outstanding balance by the due date in order to avoid late payment and other penal charges.
    • Certain other charges are applicable as well – late payment charges, overlimit charges, cancelled cheque charges, minimum interest charges, etc.
    • In some cases, customers are also given a credit card to go along with the personal line of credit. The credit card offered will come with an annual fee and all other credit card related charges will hold applicable.

    Fees and Charges for Personal Line of Credit Products Offered by Top Banks

    DBS Bank

    Annual Fee S$100 – first year fee waived
    Minimum Interest Charged S$10
    Returned Cheque S$40 per cheque
    Late Payment Fee S$105
    Overlimit fee S$40

    UOB

    Annual Fee S$80
    Returned Cheque S$40 per cheque
    Late Payment Fee S$90
    Minimum payment 2.5% of the total outstanding amount

    HSBC

    Annual Fee S$60
    Minimum Interest Charged S$10
    Late Payment Fee S$75
    Minimum payment 3% of the total outstanding amount

    OCBC

    Annual Fee S$80 – first year fee waiver if income exceeds S$30,000
    Minimum Interest Charged S$5
    Returned Cheque S$40 per cheque
    Late Payment Fee S$85 – S$125 (if income exceeds S$30,000) S$80 (If income is less than S$30,000)

    Maybank

    Annual Fee S$80 – two-year fee waiver.
    Minimum Interest Charged S$5
    Returned Cheque S$40 per cheque
    Late Payment Fee S$80

    Eligibility Criteria to Apply for a Personal Line of Credit in Singapore

    In order to apply for a personal line of credit, the following parameters need to be met:

    • The applicant should be at least 21 years of age.
    • The minimum income required to apply for a line of credit (as is the case with most banks in Singapore) is S$20,000 p.a.
    • The applicant needs to be either a Singaporean citizen or a Permanent Resident. Some banks also offer the product to foreigners. We’ll look at that later.
    • All documents as specified by the bank need to be submitted. Inconsistencies in information in submitted documents will lead to rejection of the application.

    Documents to be Submitted to Apply for a Personal Line of Credit

    • Salaried individuals:
      • Copy of NRIC, latest computerised salary slips, Income Tax Notice of Assessment.
    • Self-employed individuals:
      • Copy of NRIC, CPF contribution history for the last 1 year, Bank statement (last 3 months), Notice of Income Tax Assessment.
    • Individuals with varied income:
      • Copy of NRIC, Income Tax Notice of Assessment, Bank statement (last 3 months)

    How to Apply for a Personal Line of Credit

    If you want to apply for a personal line of credit offered by a particular bank, you have to visit the bank’s official website and fill out the online application form. You will also need to submit your supporting documents, after which the bank will get in touch with you to help you complete other aspects of your application. Your application will then be processed and reviewed by the bank.

    Personal Line of Credit and Credit Score

    In order to apply for a personal line of credit, your credit score has to be high. Making timely payments towards loans or other credit products will ensure a high credit score. A credit score is obtained from your credit report and takes into account various aspects including your total debt, total number of debt sources, your debt to income ratio, and your credit history.

    If you’ve had multiple instances of late payments and defaults, your credit score will take a mighty hit. It will reduce your chances of getting your personal line of credit application approved. As such, in the case of any credit product, your credit score fundamentally determines the approval or rejection of your application.

    Personal Line of Credit for Foreigners

    There are some banks that offer the product to foreigners – most banks only offer personal lines of credit to Singaporean citizens and Permanent Residents. Citibank, for instance, offers PLC for foreigners, and the minimum income required to qualify for the product is S$42,000. HSBC also offers personal line of credit to foreigners if their income is at least S$40,000 per year.

    Documents to be submitted (for Foreigners)

    • Copy of Passport.
    • Employment letter obtained from the employer.
    • Employment pass with a minimum validity of 1 year.

    Personal Line of Credit vs Credit Card

    The question of a PLC is closely related to a credit card is often posed. Well, they are quite similar. A line of credit, just like a credit card, has a credit limit. While in most cases credit cards have a credit limit equivalent to 2 or 3 times your monthly income, a personal line of credit will give you a credit limit of up to 4 times your monthly income. In some cases, you can also get a limit of 6 times your monthly income.

    The eligibility parameters for both PLC and credit card is more or less the same. While most credit cards are available to foreigners (besides being available to PRs and citizens), PLCs are mostly available to PRs and citizens. There are very few banks that offer PLCs to foreigners.

    A PLC, just like a credit card, lets you use amounts in accordance with your approved credit limit. Also, just like a credit card, a PLC will require you to pay an annual fee, interest charges, minimum payments (mostly about 2.5% -3% of your outstanding balance), and late payment and overlimit charges if they may be applicable.

    Upon successfully applying for a PLC, individuals will receive a complimentary chequebook as well as an ATM.

    Note that cash advances are one of the biggest advantages that PLCs hold over credit cards. While credit cards are not particularly suitable for cash withdrawals owing to high interest charges and cash advance fees (these fees are beside finance interest charges levied on transactions), PLCs can be easily used to withdraw money at no additional charges other than already specified interest charges for using the line of credit.

    PLCs also let you perform fund transfers. You can transfer funds from your account to other bank accounts, something that isn’t possible with credit cards.

    Personal Line of Credit vs Personal Loans

    PLCs are similar to personal loans, only that you already have an approved limit in the case of PLC and you can use whatever amount you require, at whatever time your requirement deems necessary. Applying for a personal loan on the other hand would mean that the entire loan amount will be transferred to your bank account and you’ll have to pay monthly interest on the entire loan amount.

    In the case of a PLC, you only have to pay interest on the amount you use. Interest payments amounting to about 2.5% or 3% of your outstanding balance need to be paid every month, and the principal amount can be paid in part payments. This isn’t the case with personal loans as these loans require you to pay both interest as well as the outstanding loan amount in fixed instalments on a monthly basis over a fixed tenure (a tenure of your choice).

    PLCs have an annual fee while personal loans don’t. Also, while PLCs allow you to borrow up to 6 times your monthly income, personal loans at times allow you to borrow more.

    FAQs

    1. Which banks offer a Personal Line of Credit to foreigners?

      A. Citibank and HSBC are among the top banks in Singapore that offer PLCs to foreigners.

    2. Can my Personal Line of Credit overshoot the limit? If yes, what are the consequences?

      A. Yes. You could overshoot the limit on your PLC. You will be charged with an overlimit fee if it occurs, and your interest charges will go up.

    3. If I run out of cheque leaves, will I receive a new chequebook?

      A. Yes, you will receive a new chequebook if you run out of leaves in your chequebook. You can apply for the same by visiting the bank’s website.

    4. Are Personal Lines of Credit given for a tenure?

      A. Yes, in the case of PLCs offered by some banks, you will have to repay the principal amount over a fixed tenure. The maximum tenure can stretch up to 5 years.

    5. How long will my application take to be approved?

      A. Banks usually take about 5-7 business days after you’ve submitted your application along with your supporting documents. 

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