Singaporeans had a total outstanding debt of S$70.4 billion on credit cards and personal loans, according to 2017 data from the Department of Statistics Singapore. But if each borrower took time to compare their personal loan options, Singaporeans can collectively over S$500 million on interest payments every year.1
With average interest rates of a personal loan between 6-7%, borrowers can save thousands on interest payments for quantum loan amounts of $10,000 and above. How? Simply by comparing and studying interest rates and offers by each bank. Applying for the first personal loan you encounter is the biggest mistake a borrower can make. If you rush the application process without comparing what else is on offer, you’ll likely miss out on better terms and competitive rates. But if you research and compare loans, you save money by paying less on interest over time.
Cut high interest credit card and personal loan debt by comparing
Here’s an example of how much a borrower can save on a S$20,000 loan with a 3-year tenor by comparing various options:
*Approved interest rate based on risk profile and may differ from published rate
The above table shows that, for a $20,000 loan over 3 years, HSBC has the lowest flat interest rate of 3.7% (contingent on annual salary above S$80,000). The total interest and fees to be paid is S$2,220.
At the other end of the table, Maybank has the highest flat interest rate of 6.88%. The total interest and fees to be paid is S$4,528. That means borrowers can save up to S$2,308 (the difference between HSBC and Maybank offer) on interest and fees if they simply took the time to compare personal loans!
If each borrower took time to compare their personal loan options, Singaporeans can collectively over S$500 million on interest payments every year
When comparing personal loans, the primary consideration is the flat interest rate, and this is dependent on a few factors:
a) income level
b) loan amount
c) loan tenure
d) credit history
The loan with the lowest annual flat interest rate for a given loan term is the least expensive — and usually the best choice, before factoring in special charges like annual fees or processing fees.
1Estimated calculation based on S$70.4B total outstanding personal loan debt. If average interest rate for a 3-year loan is 6% p.a., and SingSaver exclusive rate is 3.88% p.a., Singaporeans can collectively save S$500M on interest payments by picking the lowest rate.
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By Rohith Murthy
Rohith leads Singapore, a financial comparison site aimed at helping consumers in Singapore save money and time by finding the right financial products.