Personal Loan FAQs

    Personal loans are usually unsecured loans that can be used for all your personal financial needs from paying off your credit card debts to wedding and travel expenditures. Banks in Singapore offer different types of personal loans at varying interest rates to suit your needs.

    General FAQs about Personal Loans in Singapore

    Listed below are some frequently asked questions about personal loans in Singapore:

    • What are the types of personal loans available in Singapore?
    • Personal instalment, credit line, and balance transfer are the 3 different types of personal loans available in Singapore.

    • What is a personal instalment?
    • A personal instalment loan is where the lender and you agree upon a loan amount that you have to repay in fixed monthly instalments over a fixed repayment period.

    • What is a credit line?
    • Banks offer you a line of credit based on your income. You only have to pay for what you borrow.

    • What is a balance transfer?
    • You can transfer all your outstanding debts from several accounts to a single account for a lower interest rate. In this way, you can save money on paying interests with a balance transfer at 0% interest rate for 3 months to 1 year.

    • What are the uses of a personal loan?
    • Unlike a car loan or a home loan, you can use the personal loan amount for any personal financial need such as credit card debt payment, medical emergency, wedding or travel expenditure.

    • Do I need to be a Singaporean to apply for a personal loan?
    • Banks offer personal loans to Singapore citizens, permanent residents, and foreigners.

    • What is the credit limit of a personal loan in Singapore?
    • Your loan amount will be up to 4 times your monthly income depending on your credit history.

    • What will be the interest rate of my personal loan?
    • The interest rate depends on your loan amount and tenure.

    • What are the types of personal loan repayment methods?
    • Loan repayment methods include GIRO, AXS Stations, SingPost, SAM kiosks, bank transfer, and cash or cheque deposited at bank branch counters.

    • What are unsecured loans?
    • Personal loans are unsecured loans for which you don’t have to put up your assets as collateral. Based on your credit history and income, the banks will offer you a line of credit without the need for a collateral or guarantor.

    Personal Loan Application FAQs

    Listed below are some frequently asked questions about the personal loan application process:

    • Who can apply for a personal loan in Singapore?
    • A personal loan applicant has to be 21 to 65 years old with a steady income to apply for a personal loan. He or she can be a Singapore citizen, permanent resident or a foreigner.

    • What is the eligibility criteria for a personal loan application?
      • Age: 21 to 65 years old.
      • Income: A minimum annual income of S$30,000 for Singaporeans and S$45,000 for foreigners.
    • What are the documents required for a personal loan application?
      • Identity proof in the form of your IC (Identity Card), Passport or Employment Pass.
      • Address proof in the form of your utility bills.
      • Income proof in the form of the last 3 or 6 months’ salary slips with income tax documents and CPF statements.
    • How to apply for a personal loan?
    • Visit the nearest bank branch, fill in the personal loan application form, and submit it along with the required documents.

    • How to choose a personal loan?
    • Compare the different interest rates offered by various banks in Singapore and choose the one with the lowest interest rate. Determine your reason for applying for a personal loan. Compare the maximum loan amount offered by each bank and choose the one that best suits your needs.

    • Based on what factors will the banks approve or reject my personal loan application?
    • You must have a good credit rating for banks to approve your personal loan. Applicants with a bad credit score will not be given a personal loan. Banks will approve or reject your personal loan application based on factors like your credit rating, credit history, income, and age.

    • Who calculates your credit rating?
    • The Credit Bureau of Singapore (CBS) calculates your credit score based on your credit history. Your payment information submitted by financial institutions to the consumer and commercial credit bureaus makes up your credit history.

    • What is a hard enquiry?
    • Banks request the CBS for your credit report in support of your loan application which is known as a hard enquiry. Too many hard enquiries will negatively affect your credit score. If you apply for too many loans at the same time it will be perceived as financial desperation by your lenders.

    • How to improve my credit score?
      • Pay your loan EMIs and credit card bills on or before the due date.
      • Don’t default on your payments.
      • Have a combination of credit payments such as loans and credit cards.
      • Don’t declare bankruptcy.
      • Don’t apply for too many loans simultaneously.
    • What are the things to consider before applying for a personal loan?
      • Loan amount: Depending on your financial need, choose a bank that offers you sufficient loan amount. You can borrow up to 4X your monthly income.
      • Interest rates: Personal loans have fixed interest rates and Effective Interest Rates (EIR). Choose the bank that offers you the lowest interest rate per annum.
      • Credit rating: You have to a have a good credit rating to get a low interest rate for your personal loan.

    Personal Loan Payment FAQs

    Listed below are some frequently asked questions about personal loan payment:

    • How can I repay my personal loan?
    • Personal loans can be repaid in the form of Equated Monthly Instalments (EMIs).

    • What are the acceptable repayment methods for personal loans?
    • Most banks accept cheque or cash deposit at one of their bank branch counters, online bank transfer, GIRO, AXS Stations, SingPost or SAM kiosks.

    • How do I calculate my loan repayment amount?
    • Your monthly loan repayment amount is calculated based on your fixed and effective interest rates.

    • What is EIR?
    • The Effective Interest Rate of your personal loan is calculated using the actual interest rate and the repayment period which can be compounded monthly, quarterly or annually.

    • What happens if I fail to repay my loan EMI by the due date?
    • You will be charged a late payment fee for defaulting on your loan EMIs.

    • What are the various fees charged for a personal loan?
      • Processing fees
      • Annual fees
      • Late payment fees
      • Repayment charges
      • Early repayment fees
    • Can I prepay my personal loan in full?
    • Whether you want to repay your personal loan partially or fully before the end of your loan tenure, you have to submit a written request to the bank, one month prior to the repayment due date, notifying the bank officials of your intent. You will be charged an early repayment fee.

    • What is the processing time for a personal loan?
    • Most banks will process your loan within 7 working days.

    • What are the various banks in Singapore offering personal loans?
    • DBS Bank, Maybank, POSB, UOB, Standard Chartered Bank, Citibank, HSBC Bank, and OCBC Bank are some of the popular banks offering excellent personal loan deals in Singapore.

    • As an expat, can I apply for a personal loan in Singapore?
    • Expats with a Q, P1 or P2 employment pass can apply for a personal loan in Singapore.

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