How To Apply For A Personal Loan in Singapore

Before getting a personal loan, it’s helpful to understand how the process works, what’s involved, and what could impact your application. Here’s your complete guide on how to apply for a personal loan in Singapore. 

Whether it’s for large expenses, more cash liquidity or emergencies, you can apply for a personal loan in Singapore if you need to cope with unexpected situations that need a large sum of money. With fixed monthly repayments, affordable interest rates, and a range of loan durations, personal loans make debt manageable as long as you adopt a disciplined approach. 

Understanding how to apply for a personal loan and the various factors involved can help you avoid poor choices and have an optimal experience. Let’s have a look at loan applications and what you should take note of. 

Table of contents

• How does applying for a personal loan work in Singapore?
  • Credit check
  • Total Debt Servicing Ratio
  • Pre-qualification for personal loans
• What is the loan application process?
  • Application process when applying from a bank
  • Application process when applying via SingSaver
• How to choose the best lender and loan for you?
  • Interest, fees and charges
  • Eligibility criteria
  • Required documents
  • How much loan are you allowed to take?
  • How long are you allowed to repay the loan?
• Frequently Asked Questions (FAQs)

How does applying for a personal loan work in Singapore?

Credit check

When you apply for a loan with a financial institution (e.g. banks), the lender will conduct a credit check when processing your application. This entails looking up your credit score and credit history from records kept by Credit Bureau Singapore (CBS). 

Banks conduct credit checks to ascertain your creditworthiness. This is measured via frequency of payment defaults – i,e., whether you have missed any debt payments (partially or in full), how often it happens and how recently it has happened. 

Missing payments once or twice won’t damage your credit worthiness very much, but if you demonstrate a prolonged history of defaults, that will cause your credit score to go down. 

Another thing banks look out for how often credit checks have been triggered on your account. If there have been several credit checks in quick succession, this may be a sign that you are looking to borrow heavily and/or displaying a reckless attitude that marks you as a more risky borrower. 

Based on your credit checks, your loan may be subject to higher interest rates or even denied altogether. 

Hence, it is important to always pay off your debts in full and on time. You should also space out your applications when applying for unsecured facilities such as loans or credit cards.

Total Debt Servicing Ratio

Another check that banks will make is on your Total Debt Servicing Ratio (TDSR). Simply, the total amount of debt repayments each month cannot exceed 55% of your gross monthly income. This includes all sources of debt, including car loans and home mortgages.

If granting your loan would cause your TDSR to be exceeded, your lender is not allowed to approve your loan. Hence, it is important to take note of your outstanding debts so you don’t exceed your TDSR, or if possible – clear them off before you apply for a new loan. 

Pre-qualification for personal loans

If you have a credit card account with a bank, you may already be pre-qualified for a personal loan. This comes from your credit limit, which is a sum of credit that you have been pre-approved to make use of.

How can you tell if you have been pre-qualified for a loan? Well, you’ll be told that the maximum loan amount you can borrow is up to 90% of your existing credit limit. 

One potential advantage of taking a pre-qualified loan is speed. Since your credit limit is pre-approved, and you’re not asking for additional credit, your bank can grant your loan in as little as a few minutes. 

However, do note that taking a loan against your credit limit would reduce said credit limit. This makes it necessary to plan ahead so you don’t find yourself in a jam. 

What is the loan application process?

In general, applying for a personal loan can be conveniently and quickly done via online banking or your mobile banking app. Here’s a general outline of the process, but do note that you may encounter variances between different banks and lenders or when applying during a promotion. 

Application process when applying via SingSaver

1. Browse and compare available loan packages on our loan comparison page. You can filter according to different providers using the sidebar. 
2. At the top of the page, enter your loan amount and preferred tenure. This will generate the estimated monthly repayment amount, interest rate and processing fee (if any) for different loans. You can also see the deals and rewards that are currently on offer.
3. Click “Product Details” to find out more about a loan package, such as fees and charges, offer details and other pertinent information. 
4. Select the personal loan package you want to sign up for. Click the “Apply Now” button and follow the on-screen prompts. You can receive exclusive, attractive rewards when you apply for a loan via SingSaver.
5. Complete and submit your loan application. If your loan is approved, you will also be eligible to receive the offer you selected. 
6. Once you receive your loan, look out for your loan repayment date in your bank statement. Be sure to make your repayments before the due date.

Application process when applying from a bank

1. Check your eligibility (age and income criteria) for the loan. 
2. Check the interest rates offered, according to your loan amount and loan tenure. You can do so by checking the lender’s website, or using the loan repayment calculator, if available. 
3. Once you have settled on the loan package you want, proceed to make your application online. Follow the instructions provided, and take note of information that may pertain to your application.
4. You will be required to submit your personal details and supporting documents. However, you may be able to skip this step if you have SingPass; you can simply grant permission for the banks to retrieve your personal details and other relevant information digitally, saving you the need to submit documents. 
5. Once your application has been submitted, wait for your loan to be processed.
6. Once your loan is approved, you will be informed, and your loan will be disbursed to your bank account. 
7. Be sure to note your repayment date, and get ready to repay your loan. 

How to choose the best lender and loan for you? 

Interest, fees and charges

When choosing a personal loan, one of the foremost features to check is the interest rate, fees and charges on the loan. 

The loan’s interest rate is the most critical. The higher the interest rate, the more interest you have to pay, and the larger amount you have to pay back by the end.

As a general rule, you should strive for the lowest interest rate you can find. One tip to help you accurately gauge the interest of a loan is to check the Effective Interest Rate (EIR). This is especially when you’re comparing between multiple different loans.

However, the interest rate isn’t the only thing that matters. You should also check if the lender charges a separate fee for processing your loan application – this will make your loan more costly. 

You should also check to see what other fees you may incur in the course of your loan. Late payment fees and early redemption fees (for paying off your loan early) are customary, but they can be avoided if you adopt a disciplined approach to your loan repayments. 

Interest rates, admin/processing fees and other charges all factor into the cost of borrowing. The key is to choose a lender and loan package that would give you the lowest cost of borrowing (barring late fees).

Eligibility criteria

Personal loans come with certain eligibility criteria. Applicants who do not fulfil them will not be granted the loan. 

Take note of the following when applying for a personal loan in Singapore. 

• Age: 21 to 70
• Annual income:
  • For Singaporeans and PR – Minimum S$20,000 or S$30,000
  • For foreigners – From S$45,000 to S$60,000 or more 
• Employment pass: Foreigners only 

Required documents

You will also need to submit supporting documents, which may vary according to your employment type and residency statements. 

• Full-time salaried employees: 
  • Latest payslips or CPF statements
  • Copy of NRIC front and back
  • Proof of address (for foreigners)
• Commission earners or self-employed persons
  • Latest Notice of Assessment or recent commission statements
  • Copy of NRIC front and back
  • Copy of valid employment pass and proof of address (for foreigners)

Note for SingPass users

If you have a SingPass, you may be able to skip the hassle of preparing and submitting multiple documents. Simply sign in to your SingPass and authorise the bank to retrieve your personal details and relevant information during the application process. 

How much loan are you allowed to take?

For personal loans, banks in Singapore generally allow you to loan up to 4x your monthly income. For those with high incomes – at least S$120,000 or more each year – you may be allowed to borrow up to 8x or 10x your monthly income. This is at the discretion of the lender. 

Note that renovation loans are limited to a maximum of S$30,000, no matter how high your income is. 

Notwithstanding the above, your maximum loan amount will still be capped by your TDSR, as explained above. 

Oh, also note that most banks have a minimum loan amount which you cannot exceed. Typically, this is S$1,000. 

How long are you allowed to repay the loan?

For personal loans, most banks allow between 12 months to 60 months to repay your loan. That means the minimum loan tenure starts from one year and goes up to five years in most cases. 

For example, HSBC Personal Loan offers loan tenures of up to seven years, designed for those seeking lower monthly repayments. 

Bear in mind that the longer your loan tenure, the more interest you will pay. Hence, be sure to strike a balance between manageable monthly repayment amounts and the overall cost of borrowing.

Frequently Asked Questions (FAQs)

What to do if your loan application gets rejected?

If your loan application is rejected, you should find out the reason behind it. If the cause is inaccurate information or missing supporting documents, correct the mistake and re-apply. You could also try to borrow from another bank, being sure to avoid the same errors. 

However, if your loan was rejected due to not meeting eligibility requirements, having too much outstanding debt, or having a poor credit score, there’s little point in trying again. Instead, you should wait till you are able to meet the eligibility criteria, clear off your outstanding debts, or work on improving your credit score. 

Are there any alternatives to bank loans?

If you are unable to get a bank loan, you may consider approaching a licensed moneylender for a personal loan. 

However, beware that you will have to pay significantly higher interest rates of up to 4% per month (not per annum), be subject to up to 10% admin fee, and may be limited to short loan tenures of 12 months or less. 

How long does it take to get a personal loan in Singapore?

If you have an existing credit card account in good standing, you may be able to get a pre-qualified loan that is taken out against your existing credit limit. Such a loan is likely to get instant approval and be disbursed as quickly as the same day. 

Otherwise, a personal loan may take between a few business days to a week from application to loan disbursement. This will depend on the level of checks, verifications, and documentation required for your application.