Sometimes, all that you need to move to the next level of your life is a helping hand. Whether you plan to buy a new car, acquire another property, or get fast cash for a holiday to a tropical destination, a personal loan can help you get there faster. However, which loan is the best option for you? Is taking a loan a good idea? To help you answer these questions and others, here is our complete guide about personal loans in Singapore.

Personal loan interest rate in Singapore

What are Personal Loans?

This is financing extended by a bank or lender, allowing the borrower to use the funds for different personal purposes. The loan is issued by the lender as a lump sum, and the interest starts to accrue from the moment the money is deposited in a borrower’s account.

Personal loans are also referred to as consumer loans and are not backed by collateral. When you apply for a personal loan, the lender checks your Singapore credit score to gauge your creditworthiness and then determines the interest to attach on a loan. If your credit score is good, the interest charged on the personal loan will be lower compared to another person with a poor credit rating.

Once your personal loan in Singapore is approved, you are expected to repay the principal together with interest over an agreed period. Taking a personal loan can be an excellent idea if you have financial issues to fix urgently. It also allows you to make big purchases and repay slowly at your own pace without causing major disruptions in your life.

Where can You Get Personal Loans in Singapore?

In Singapore, personal loans are offered by a wide range of financial services providers, including the following:


Most banks in Singapore offer personal loans to their clients. Before they can approve the loan and credit cash into your bank, they require you to have a good credit score. In some cases, banks allow their customers to apply for personal loans without visiting their branches because they already have all the details, such as personal information and transaction history.

Traditional moneylenders

Moneylenders are financial institutions that support their clients with personal loans, credit cards, revolving credit, and at times auto loans. Before approving loans, moneylenders carry thorough checkups on the borrower’s creditworthiness. They also stand out because of their competitive interest rates.

At times, moneylenders can be more flexible on the parameters they use to gauge an applicant's creditworthiness and even approve loans where banks would have declined. So, if your application for a personal loan in a bank was rejected, it might be a good idea to check with the moneylenders. Make sure to only engage with licensed moneylenders that are allowed to operate in accordance with Ministry of Law’s (MoL) restrictions.

Virtual Banks

To make financial services available to more people, virtual banks will become more and more common in Singapore. Virtual banks offer services just like the traditional banks but do not require physical presence. By operating virtually, they are able to cut down costs associated with running multiple branches in busy cities. These institutions have the ability to offer personal loans and other products. Because virtual banks are relatively new, their personal loans are more competitive than those of competitors.

"Online-based" Moneylenders

Online-based lenders are lenders who mainly focus on utilising the internet and technical innovation to provide a faster and more convenient way for consumers to get a loan. These lenders provide flat-rate quotations and are normally faster when it comes to loan approval rates. The growing competition in the personal loans market has made online lenders craft more effective methods of winning clients. For example, using online-based lenders can come with added benefits, such as zero fees and flexible disbursement.

Peer-to-Peer Lending (P2P)

Peer-to-peer lending is a new financing model that allows people to borrow money through web-based platforms without using a registered intermediate financial institution. The primary goal of the P2P model is cutting out the middleman from the lending system, meaning that the cost of personal loans is pretty low.

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9 Benefits of Using a Personal Loan in Singapore

When you get the best personal loan in Singapore, it comes with a number of advantages, including the following:

1. There are No Restrictions on the Way You should Use the Money

This is one of the main advantages of taking a personal loan over other types of credit. Unlike other types of loans, such as renovation loans or car loans, which must be used for a specified purpose, a personal loan is open. Once the loan is approved, you are free to use the money the way you want. So, whether you want to use the funds for buying farm machinery and part of it for house renovation, it is okay.

2. The Loan does Not Require a Collateral

Unlike common secured loans that require you to use collateral, such as a car or land, a personal loan is unsecured. Therefore, the lender disburses the funds based on the assessment of your credit rating and ability to repay. This implies that none of your assets will be at risk in the event that you are unable to repay the loan.

3. The Documentation is Easy

When applying for a personal loan, the last thing that you want is being required to prepare dozens of documents. In Singapore, the process of documentation is pretty simple, especially if you use Lendela to find the best personal loan. All that you need is providing proof of identity, address, recent salary slips, and bank statement for 3-6 months (depending on the lender). If you are going for a personal loan with a bank (through Lendela’s service or not), you will need to present these documents at their branch offices.

If you choose to move forward with a personal loan offer from an online lender, you only need to upload these documents on the Lendela platform before final confirmation. Before the documents are uploaded, you will need to fill out our application form. See – with Lendela it is possible to submit the application, upload all necessary documents, compare multiple personal loan offers and get approved for the loan that you choose, without leaving your house.

4. Using Monthly Repayment Model Helps to Reduce the Financial Burden

When a personal loan is approved, the funds are released in a lump sum into your account. However, the repayment is done in monthly instalments. This implies that you will not be overburdened with the need to pay large chunks of money at any one moment. However, it is important to appreciate that when you take longer to pay a personal loan, the total amount payable will also be higher.

5. Personal Loans are More Cost-Effective than Credit Card Loans

Although credit card loans are easy and fast to secure, a personal loan is a better option because it is cheaper. The interest rates on credit cards are very high, while personal loans can be as low as 5% per year.

6. Personal Loans are Processed fast

Most of our lenders take less than 24 hours to process personal loans in Singapore. Once you have filled out our loan application form and provided all the required documents, the decision to approve your loan is made almost instantly by our partnering lenders. This makes personal loans very convenient, especially if you are looking for urgent cash.

7. The Money is Credited to Your Account Quickly

After final approval of a personal loan (which happens at the lender’s office), the funds are deposited into your account immediately on the spot. Please note that some lenders are closed during public holidays or weekend days, which will affect the speed of the disbursement. If you are an old customer of the lending financial institution, the money will be credited into your account even faster.

8. Personal Loan Repayment Period Flexibility

The tenure of the personal loan depends on the principal and interest rate. You will be provided with a wide range of payment options, from one to five years. Some lenders might even allow a longer tenure of up to ten years. Ensure to discuss the loan tenure with the lender to ensure you only settle for what works for both parties.

9. Personal Loans Come in Different Types

Personal loans are not merely fixed schemes. Rather, they come in a plethora of loan deals designed to suit every party. Most lending institutions have personal loans designed for professionals in various industries, such as doctors, lawyers, investors, and engineers. Farmers and women also get plans with low-interest rates because of their social characteristics.

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Alternatives to Personal Loans in Singapore

Personal loans are considered flexible financing solutions for those who qualify. Depending on your credit score and personal needs, you might want to compare personal loans with some alternatives. So, here are some options worth reviewing:

Personal Savings

When you take a personal loan, the repayment will include interests and applicable fees. If you can cover your expenses with personal savings, it will be a good way to avoid paying the interest and fees attached to personal loans. Note that if you have a qualified retirement scheme, early withdrawal might come with a penalty.

Secured Loans

As we have highlighted, a personal loan is a form of an unsecured financing, and the lender puts a lot of weight on the borrower’s credit score. If your credit score is poor, you can opt for a secured loan which requires you to have a guarantor or collateral, such as a house.

The guarantor will be responsible for paying the remaining amount of the loan if you default. If you used land, car, or house as collateral, the lender will take its possession until the loan is cleared. The collateral can also be sold to recover the loan plus the interest if you are unable to repay.

Using Your Credit Card

If you compare personal loans to credit cards, the latter comes with higher interest rates. However, a credit card loan might be a better alternative if your credit score is poor. If you opt to borrow from your credit card, the interest rates are very high. Also, it is important to repay on time because the penalties can be very high.

Car Loan

If you are looking forward to buying a car, one alternative to consider is a car loan. You can opt for a conventional car loan, which has the interest rate calculated on the basis of the set funds. The interest rate can be set on a fixed or floating basis

Personal Line of Credit

Unlike personal loans that are disbursed as lump sum, line of credit financing allows borrowers to access the funds to a specific limit on a-needed basis. With this option, you only pay interest on the borrowed amount. The line of credit loans can be a good option for people with expenses spread over several months.

Home Equity Loan

If you own a home in Singapore, a home equity loan might be a good alternative to personal loans. A home equity loan is a financing option that is backed by the equity of the borrower’s home.

Myths to Avoid when Looking for the Best Personal Loan in Singapore

If you are taking your first loan, there are many myths and misconceptions that you might come across. Here, we are going to list them so that you can avoid them and get your loan approved.

Personal Loans are Good Only for the Salaried Candidates

One of the common fallacies that you will come across out there is that personal loans are only good for those with salaries. When you make an application for a personal loan, the lender is interested in understanding your ability to repay the money plus the interest. So, all you need to do is proof of a reliable source of income and good credit score.

Even people who are employed might get their application for personal loans declined if they are considered high-risk parties. To know if you are eligible for a personal loan, check with various lenders to see their requirement for personal loan approval.

Personal Loans have High-Interest Rates

Some people hold the view that the interest rates on personal loans are always high. However, this is not always the case. When you place an application for a personal loan to a selected lender, the interest rate is based on two most crucial components; your credit score and repayment capacity.

If you have a good repayment capacity, lenders consider you a low-risk party and will charge a low-interest rate. Contrary, if your credit score is excellent, the interest rate will be high. In some cases, people with very low credit score and poor repayment capacity get their applications for loans rejected.

Personal Loans can Only be Provided by Banks

Another common misconception about personal loans is that they are only offered by banks. Although it is true that banks form the majority of the financial institutions that offer personal loans, there are other lenders that can help you with credit in Singapore. For example, you might want to try borrowing from online-based lenders or peer-2-peer lending organisations.

Indeed, you should compare the offers provided by multiple lenders and only work with the one offering better terms and conditions.

Personal Loans are Not Available to People with Existing Loans

This argument is another common misconception you are likely to grapple with when looking for a personal loan. Most financial institutions will approve an application for a personal loan even if the borrower has another loan as far as he can comfortably service both loans. Therefore, if you have an urgent need for money and you are still repaying another loan, do not shy from making an application for a personal loan.

Personal Loans Lack a Prepayment Option

This argument is incorrect. The reason why some people believe that personal loans do not have a prepayment option is because their tenure is shorter compared to other types of loans, such as mortgages. However, borrowers can repay their loans before the loan tenure ends.

Most lenders, especially banks, tend to have a minimum tenure for borrowers to make the monthly instalments. Once the minimum tenure for the personal loan is over, you can foreclose the personal loan after paying a fee for prepayment.

The Processing Time for Personal Loans is Long

While this might have been true years ago, things are very different today. All financial institutions that we partner with in Singapore today are technically integrated with our platform, which makes the vetting of applicants fast. Today, applying for a personal loan or a wedding loan via Lendela and getting it disbursed into your account, can be completed within 24 hours.

As more lenders adopt the paperless model of operation and competition in the lending niche intensifies, you can expect personal loan processing times to be considerably shorter.

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Questions to Ask When Applying for Personal Loans

Taking a personal loan is a good alternative to using a credit card because you are able to finance a big purchase and save on interest. Before you can apply for a personal loan, it is important to ask the following questions:

1. How Much Will You Pay as Interest?

When a lender approves a personal loan, you will be required to repay the principal amount together with interest. In Singapore, different lenders have varying interest rates, and it is crucial to do your research and identify the most affordable. Remember that the interest rates for personal loans are determined based on the borrower’s credit rating and repayment ability.

2. Can You Afford the Monthly Instalments?

Once you have established the interest rates charged on personal loans by different lenders, you need to move a step further and ask, “Can I afford the monthly instalments?” In some cases, people opt for longer loan tenure to enjoy lower monthly payments, but this is not always a good idea. With longer loan tenure, the total amount payable will be higher.

As a general rule, you should target spending no more than 30% to 40% of your income on debts. This is important because, in addition to repaying the personal loan, you will also need money for other expenditure, such as medical bills, utility bills, education for kids, and rent.

3. Does the Personal Loan have a Processing Fee?

Personal lenders might have additional charges, such as sign-up or originator fee, but it is possible to also get some that only have the interest. A sign-up fee is a one-time upfront charge that lenders subtract from the loan to meet the processing or administration costs.

If you are borrowing $10,000 and the loan has a sign-up fee of 1%, it implies that the amount that will be deducted when the loan is deposited into your account is $100. In some cases, you might be able to negotiate for a lower sign-up fee or have it waived off altogether.

4. Is My Credit Score Good Enough?

To approve personal loans, lenders strongly rely on your credit rating. If you have a poor score, the lender will attach a higher interest rate to the loan. To be sure about your credit score, it is advisable to check it before applying for a personal loan. This will give you the opportunity to see your personal credit score and correct errors if any.

Incorrect credit scores can arise from wrong entry of your personal information or omission. If details of your previous loans were entered incorrectly or are missing, the credit score will be incorrect. In such situations, you only need to provide documents proving the correct position. Then, the credit reference agency will recalculate your score.

If the credit score is low and you want to enjoy lower interest rates, it might be a good idea to improve it first before making an application. You might also go ahead and take the loan, and ask for refinancing when the credit score improves.

5. How Will the Personal Loan Impact Your Credit Score?

When calculating a borrower’s credit score, credit agencies incorporate a number of factors, including the credit mix. Therefore, if you already have other lines of credit, such as credit cards, getting a personal loan will strengthen the credit mix. The overall impact is improving your credit score.

When talking about the credit mix, it is important to be careful because it means you have a combination of debts. Ensure to only borrow what you can afford to pay on time.

6. How Soon Do I Need the Funds?

The lovely thing about personal loans is that they are processed pretty fast. Most organisations only take about two days to approve the loan and send funds to your account. However, some financial organisations still take longer and might not be of help if the funds are needed urgently. Carefully review different lenders to see their terms and conditions, including the approval period.

7. Do You Want to Pay Creditors Directly or Have the Money Deposited in Your Account?

Once a personal loan is approved, the funds are deposited into the borrower’s checking account. However, you can opt for a different channel if you are working on debt consolidation. Instead of having the money sent to your checking account, simply ask the lender to deposit it directly to other lenders. This will be a great way to avoid getting the temptation of using the money for other purposes.

How to Identify the Best Personal Loan Provider in Singapore

If you want to get the best personal loan Singapore, it is important to look for the right lender. However, it can be challenging because there are so many of them. This brings about one key question, “How do you identify a good personal loan provider?” Here are some useful tips to guide you:

Registered to Offer Financial Services in Singapore

To avoid falling into the hands of scammers, you should only work with lenders registered to offer financial services in Singapore. These organisations strictly follow the rules outlined in their licenses to access the Singapore market. Therefore, start by confirming the license number of the lender before submitting your application and signing a personal loan. One way to make sure that you only compare licensed lenders is to fill out an application with Lendela. We only partner with serious lenders who will walk the extra mile to help you with your loan needs.

Feedback by Previous Clients

To identify a good lender, you can also check the feedback provided by the previous clients. What did they have to say after using personal loans from the selected lender? If many borrowers have positive feedback about a lender, that might be a good option.

Make sure to also check what expert reviewers have to say. With professional reviews, you can get finer details of individual lenders and make a more informed choice on who to work with.

Should Not have Hidden Fees

When you secure a personal loan, it should not have hidden fees that can unnecessarily increase the total repayable amount. As you review different lenders, put emphasis on the difference between the principal and total amount payable. If the interest does not cater for the entire difference, the chances are that there is an additional hidden charge. If there are additional charges, has the lender disclosed them in the agreement? With Lendela, you only get introduced to lenders who are 100% transparent about all their fees. Furthermore, you will get a clear picture of each lender’s terms and all the costs involved with the loan in the comparison stage. Once you know all the details, you select the offer and lender you want to proceed with.

Should Have Multiple Loan Options

Although today you are interested in a personal loan, it could be an advantage if the lender also has other interesting financial products. This implies that instead of working with a different company when looking for another type of credit, such as a renovation loan, it will be easy to stick with the current lender.

Good Customer Support

One pointer that you should use to note a good financial institution is the customer support. If a lender has good customer support, it implies that customer issues can be sorted faster and professionally. Good customer support would particularly come in handy when you are researching the best personal loans in Singapore. Some components of a good customer support include:

  1. Multiple communication channels, such as a chat line on their website and a phone number.
  2. Knowledge base pages that contain information to help clients decide on the financial services to take from the organisation.
  3. Demonstration videos showing borrowers how to go about making loan applications.
  4. The website should also have a good layout to make it easy for borrowers to navigate through, upload documents, and complete loan applications.

At Lendela, we are priding ourselves when it comes to customer support and transparency. We stay with you all the way from initial application, via document upload and loan comparison, to the appointment at the lender’s office where the final agreement and disbursement take place. Feel free to use our service for free anytime, and get access to multiple loan offers from reliable and licensed lenders in Singapore. If you have any questions, let us know and our experienced Customer Service will help you.

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Dos and Don’ts When Dealing with a Personal Loan in Singapore

When used properly, a personal loan can be a reliable and convenient financial tool. Here are some of the dos and don’ts to help you get the best out of personal loans in Singapore.

Ensure You can Comfortably Meet the Monthly Payment

The main reason why lenders approve personal loans is because they are convinced that you can afford the monthly payments. Therefore, you need to relook at your budget and factor the loan repayment so that you do not default. If your budget is tight, consider foregoing some of the unnecessary things and allocate more cash to repaying the loan.

Being late with monthly payment can have serious implications on your financial health. For example, it is likely to attract penalties and pull down your credit score. This might compromise your ability to secure credit from financial institutions in future.

Consider Refinancing Your Loan

If your credit rating has improved significantly since the time of application, there is a chance to make some savings through refinancing. Because the credit score is one of the components used to determine the interest rate for a personal loan, refinancing might help you to make some significant saving on monthly payments. In most cases, refinancing does not attract a prepayment fee.

Do Take Action If You will Miss a Payment

If, for one reason or another, you know that your payment will be late, it is prudent to contact the lender immediately. Most personal loans are marked delinquent when you miss a payment. If this report is forwarded to credit reference agencies, your credit rating is likely to fall.

Do Not Borrow More than You Need

Because a personal loan does not have restrictions on the way you use the money, it is advisable to resist the temptations of borrowing more than you actually need. If you get a larger loan, the interest will be higher and repayment period longer. The larger monthly payments are likely to restrict the available cash and impact your financial wellbeing.

Don't Give False Information to the Lender

When you provide documents and personal details in addition to your initial loan application, the lender will verify the information. If you are found to have provided false information, the loan is likely to get canceled.

How to Apply for a Personal Loan in Singapore

Before you can secure a personal loan, you have to start by filling out an application form. This is done online with Lendela, in a fast and simple way. We send your free application to banks and licensed lenders in Singapore to make them fight for you as a customer for a personal loan. In order to get the best loan Singapore, here are the main steps to follow:

1. Start by Comparing Personal Loan Options

As you fill the application for a personal loan, make sure that this type of loan is the one that suits you the best. Do some research on other types of loans to be sure that the personal loan is the best option. For example, you might want to compare the personal loans with credit card loans, payday loans, and car loans.

2. Know Your Eligibility

Applying for a loan that you do not qualify for can waste a lot of precious time that could otherwise have been used to do more constructive work. Therefore, if you don’t meet the standard requirements for taking up a personal loan in Singapore, spend some time on stabilising your financial situation and once you meet all the criteria, apply.

  • Credit Score

Most lenders in Singapore use borrowers’ credit scores to gauge their creditworthiness. This is crucial because the lenders do not rely on collateral to lower the risk of giving out funds. Generally, you are required to have a credit score of between 1825 and 2000 to qualify for a personal loan in Singapore.

  • Employment

Lenders accept applications from borrowers who reside and work in Singapore, and are stably employed or self-employed. This is used to assess your ability to repay the loan if approved. In some cases, you might find the lender expecting you to have an alternative source of income, such as an investment or retirement benefit. Also, most lenders specify that you should be earning at least $1,600 per month to qualify for a personal loan.

  • Residency and Age

Most banks and lenders in Singapore only grant loans to Singapore residents, EP holders, and Permanent Residents. In addition, you will be required to be between 21 and 61 years old to apply for a personal loan in most financial institutions.

Be on the lookout for any other requirements, and provide it for faster personal loan approval.

3. Complete the Personal Loan Application Process

The final process for a personal loan in Singapore might vary slightly from one lender to another. Most lenders require borrowers to visit their branch offices for final approval and disbursement of the funds. Right after the Lendela online application, you will be required to provide some documents that will be used in making the decision to approve or reject the loan. Here are some of the documents that you need:

  • Proof of Income

Proof of income is used to show that you are capable of repaying the loan if it is approved. Lenders will only approve personal loans that will only take a small percentage of your monthly income. If you are employed, proof of income is done by providing recent payslips and bank statements.

For the self-employed applicants, lenders will ask for tax return reports for the last two years. Also, you might be required to provide bank statements for the same period.

  • Proof of Residence

Lenders in Singapore will mainly approve personal loan applications for citizens and permanent residents. Therefore, the lender might also require you to provide proof of residence to confirm that you are a resident. If the documents are a requirement, you should provide a recent local utility bill, credit card statement, local bank statement, or telecommunication bill

4. Wait for Approval Notification

Once you have submitted the application and provided all the required documents in your Lendela account, we will follow up with the selected lender and schedule an appointment for you at the lender’s branch. We will notify you when you are all set to go down to the lender for final approval and disbursement. You can also let us know regarding your preferred appointment by talking to our Customer Service Team or by scheduling an appointment on your Lendela account.

  • Pre-approval Stage

The pre-approval stage, also referred to as a provisional approval phase, takes the shortest time and it entails verifying the borrower’s credentials. The application can also be given the term, in-principal-approved offer, if the lender asks you to provide additional information, such as pay slips. The offers you receive in your Lendela account after your application is submitted, are all in-principle-approved based on the information you provided in the application.

Before the lender can provide full approval, you will need to be evaluated further to ascertain your creditworthiness. Here is where the document complementation and credit check (at the lender’s branch) comes in.

  • The Final Approval Phase

The final loan approval stage is provided once you have provided all the required documents and passed the eligibility test. At this point, the lender provides the loan contract with additional details, including the principal, interest rate, and the repayable amount. This happens at the branch of lender of your selected loan offer.

Before you can accept the agreement, it is important to read through all the details carefully and understand them. Particularly, it is important to understand the interest rate and monthly payments. If there is something that is not clear about the personal loan, get an answer from the lender before signing the loan

5. The Loan is Disbursed to Your Account

After reading the conditions of the loan and agreeing to its terms and conditions, the lender will be ready to disburse the funds. Unlike the car loan or mortgage where the money is sent to the seller of the asset, the personal loan funds are disbursed to your checking account immediately. If everything goes smoothly, it will take not more than 1 day for the money to get into your bank account. Go ahead and use the money as you planned.

Unsecured personal loans have become the go-to forms of financing today because people have the freedom to use them as they like. They are also easy to apply and processed pretty fast to allow borrowers meet their financial obligations more conveniently. Instead of taking more expensive loans such as credit card loans, a bank personal loan will be a better option. To secure the loan and have it processed in less than two days, you only need to follow the above guide.