What’s the Average Personal Loan Interest Rate in Singapore?

As we venture further into 2025, understanding the dynamics of personal loan interest rates in Singapore becomes crucial for both new borrowers and those considering refinancing. Historically, rates have been influenced by a myriad of factors ranging from global economic conditions to individual credit scores. 

Currently, individuals with robust credit ratings tend to enjoy lower rates, which is reflective of a lender’s confidence in their financial stability. As the economic landscape adjusts, it's more important than ever to stay informed about how these changes could affect your borrowing costs. 

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In Singapore, online lenders offer varied Effective Interest Rates (EIR), tailored to accommodate the diverse financial profiles of borrowers. These digital platforms often provide competitive rates that may differ substantially based on the applicant's creditworthiness.

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The average flat interest rate in the market today is around 6% p.a. The actual personal loan rate offered by the bank can vary by loan amount, loan tenure, annual income, existing or new bank relationship and creditworthiness. This is important to remember, and this is also why personal loan interest rates differ for person to person, from bank to bank. 

*Exclusive rate only available on the SingSaver platform, not at the bank 

**Estimated rate — actual rat varies depending on bank's approval based on your credit profile

Credit co-operatives in Singapore stand out by being member-driven entities focused on financial empowerment rather than profit. These organisations aim to offer accessible, affordable financial solutions to their members, who are also the primary stakeholders, fostering a community-centric financial environment.

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Credit scores play a pivotal role in your ability to secure personal loans and the interest rates you might incur. In Singapore, credit scores are formulated based on several key financial behaviours and patterns, reflecting a borrower's reliability and risk to lenders.

• Credit Applications and Utilisation: Applying for multiple credit lines or loans within a short timeframe can raise red flags for lenders. This suggests potential financial stress or over-leveraging, which might lower your credit score.

• Payment Timeliness (Delinquency): Consistent late payments, or delinquency, tarnish your credit reputation. Regularly missing due dates significantly impacts your score, as timely repayments are a critical measure of creditworthiness.

• Length of Credit History: A long-standing credit history provides a clearer picture of your financial habits. Lenders favour extensive records of punctual payments over newer or sparse histories.

• Available Credit: Possessing numerous credit accounts can be a double-edged sword. While this shows you are trusted by multiple financial institutions, excessive open credit lines might suggest potential financial overextension.

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Credit scores in Singapore range from 1,000 to 2,000, where a higher score indicates lower risk. The ratings span from HH, signalling high risk, to AA, which represents the lowest risk. These scores influence not only the likelihood of loan approval but also the interest rates offered. Better scores often secure lower rates due to perceived lower risk.

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• Credit Rating and Loan Approval: Your credit score is crucial for lenders when deciding on your loan application. It affects their confidence in your ability to repay and dictates the terms of the loan, including the interest rate.

• Other Considerations: Lenders also consider factors such as your annual income, employment duration, and any history of bankruptcy when making their decisions.

• Credit Report Inquiries: When lenders check your credit score, these inquiries are noted and remain on your record for two years, affecting your score. Additionally, different types of default records can remain on your report for up to three years or even indefinitely, depending on their status.

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If your score has dipped, the good news is that credit scores in Singapore are recalculated on a 12-month rolling basis. By ensuring your payments are consistently on time over the next year, you can positively influence your score.

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In Singapore, personal loan interest rates remain relatively stable. Despite recent stabilisation efforts, rates have not seen significant decreases, mirroring the cautious monetary policy stance. This is in contrast to the refinancing and repricing of mortgage loans among private homeowners and Housing Board flat owners which saw a notable increase in 2024, following a drop in fixed mortgage rates to below 3% starting from the second quarter.

Lenders determine personal loan interest rates based on various factors that gauge an applicant's risk and repayment capacity. The variability in rates is influenced primarily by the borrower’s creditworthiness, the loan's term length, and the type of lender.

• Risk Assessment: Lenders evaluate potential risk through a borrower’s credit score, income levels, and debt-to-income ratio. A higher credit score suggests a lower risk, often resulting in more favourable interest rates. Conversely, indicators of financial stress or mismanagement, such as high debt levels or poor payment histories, could lead to higher rates due to perceived higher risks.

• Loan Term Length: The duration of the loan also impacts the interest rate. Longer loan terms might come with higher interest rates due to the increased uncertainty over extended periods, whereas shorter terms often attract lower rates due to the quicker repayment expectation.

• Lender Type: The nature of the lender plays a crucial role in the rates offered. Online lenders may cater to specific segments of borrowers, adjusting their rates to match the risk associated with those segments. For example, some online platforms may offer competitive rates to excellent-credit borrowers while charging higher rates for those with less favourable credit histories to mitigate risk.

• Traditional banks generally offer the lowest rates to existing customers with good credit records, valuing the established relationship and lower perceived risk. Co-ops, on the other hand, can afford to offer lower rates because of their not-for-profit status and member-focused nature.

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While lenders often keep their specific underwriting criteria confidential, many reputable banks, co-ops, and online lenders in Singapore offer pre-qualification options. This allows you to explore potential loan terms, including loan amount, interest rate, and repayment period, without impacting your credit score.

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