Episode 1: Instalment Loan, Balance Transfer, or Credit Line?

|Posted by | Personal Loans

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Don’t make the mistake of getting the first personal loan you see – it could be completely wrong for your needs.

This is Episode 1 of the continuing Story of Rose and Jack, your average unhappy Singaporean couple. See them at SingSaver.com.sg’s first TV commercial and watch what happens when you don’t compare your options.

When we last left Rose and Jack, Rose was determined to find the right personal loan. But little did she realise that there is more than one kind of personal loan in Singapore.

Jack: Aiyoh, we need to do something about my S$10,000 debt!

Rose: Selling off your toy collection might be a good place to start…

Jack: Weren’t you just looking at some loans?

Rose: Yes, and if you keep quiet I might just figure out what personal loan we can use to get out of this mess.

Jack: Just get the first loan you see. How different can they be?

personal loan comparison in singapore

Rose: There are personal instalment, credit lines, and balance transfers. Each one is so different from the other lah.

Jack: Instalment – that’s when you pay a fixed amount every month, is it? I think I could have paid for the PlayStation 4 using instalments…

Rose: That’s right. You need to know how much you’re going to borrow, and for how long. Then you repay the loan through a fixed amount every month.

Jack: Sounds like the solution to our problem. Just get it leh!

Rose: It’s not that simple. You have to compare personal loans first. Some loans have lower interest rates, and you save a lot of money on interest when you find the loan with the lowest rate.

Jack: You mean you need to pay interest when you get a loan?

Rose: Why you so like that? Of course you do! Do you think banks just give money for free?

Jack: I don’t know! Do I look like a banker to you?

Rose: *sigh* That’s how we got into this mess in the first place…

Jack:Did you say something?

Rose: Anyway. There are other loans besides the personal instalment. Maybe something else is better, though I don’t think a credit line can help us.

Jack: What do you mean, credit line? Don’t you mean credit card?

Rose: Nope, credit line. It’s like a credit card – you have a credit limit, and you can borrow as often as you want, and just pay for what you borrow. And like an ATM, you can use it to withdraw cash.

Jack: So it’s like a credit card, but you can get cash instantly through an ATM?

Rose: Exactly. But it’s not so useful now.

Jack: Why not?

Rose: Because if we borrow S$10,000 on a credit line to pay the credit card, we have to pay S$10,000 in full the next month. Otherwise, you get charged around 20% interest if you can’t pay.

Jack: So what then?

Rose: That leaves us with a balance transfer. Actually, this could be a good solution.

Jack: Balance transfer?

Rose: Yes. Basically you move your credit card debt to a balance transfer account, and pay lower interest. Some balance transfers even let you pay interest-free for 6 or 12 months!

Jack: So why not we just get it?

Rose: Let me think. If you can’t pay the full amount within the interest-free period, then the balance transfer will charge interest. And the interest can be as high as 20%.

Jack: We can pay it in one year right?

Rose: If we get a balance transfer for 12 months interest-free, we have to pay around S$833 a month.

Jack: Wah lauh eh!

Rose: But if we can get a personal instalment loan for 36 months, then we only pay around S$300+ per month, including interest.

Jack: But I don’t want to pay money on interest.

Rose: That’s why you need to compare loans lah. If you compare and find the lowest rate, you pay less interest and save money. And you even pay a lower amount per month!

Personal Loans Lowest Interest Rate (P.A.) * Total Amount Repayable

Monthly Payment

OCBC ExtraCash Loan 4.76% (EIR 10.76%) S$11,428 S$317.44
HSBC Personal Loan 4.70% (EIR 8.5%) S$11,410 S$316.94
Citi Ready Credit Paylite 4.83% (EIR 8.5%) S$11,449 S$318.03
ANZ Moneyline Term Loan  7.8% (EIR 14.67%) S$12,340 S$342.78
Standard Chartered CashOne 8.38% (EIR 16.63%) S$12,514 S$347.61
POSB Loan Assist 6.99% (EIR 13.96%) S$12,097 S$336.03
DBS Personal Loan 6.99% (EIR 13.96%) S$12,097 S$336.03

* Rates assume annual income of S$30,000 or more. Rates may vary depending on annual income and credit score. Rates valid as of 8 June 2016
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