Personal loans can come in handy during a period of cashflow difficulty. Some of such situations include sudden medical costs, weddings, funerals, divorces and more. Rest assured that the bank won’t require you to get personal on personal loans and share the reason for taking it up during the approval process.

Advertised Interest Rate: The advertised rate, or nominal interest rate, is used when calculating the interest charge on your loan. For example, if you are considering a loan for $200,000 with a 6% interest rate, your annual interest charges will come up to $12,000 per year, or a monthly payment of $1,000.

Effective Interest Rate (EIR): The EIR reflects the true cost of borrowing to the consumer. This interest rate is usually higher than the advertised rate because it includes service fees, annual fees or one-time processing fees for processing and approving your loan application.

0% Interest Personal Loans: Some banks offer 0% interest rate personal loans for short-term loans. However, these tend to come with higher processing fees. This means that you will still be paying the bank for the loan, with the main difference being that the bank collects your money upfront rather than through interest payments in the future.

Yes, as long as you fulfil the eligibility criteria. These requirements can vary from bank to bank, but generally, personal loan applications for foreigners require you to:

• Hold a valid Singapore employment pass
• Have a residential tenancy agreement (or any other proof of your residential address in Singapore)
• Produce a bank statement (reflecting account activities for the past 6 months)
• Meet the minimum annual income requirement for foreigners (usually $40,000 to $45,000 p.a.)

Besides the processing fee that is charged, other fees involved when taking up a personal loan include:

• Late payment fee: Charged if you miss your monthly repayment.
• Early repayment fee or cancellation/termination fee: If you choose to repay your loan early, or cancel your loan.
• Change of tenor: Fee incurred if you change your loan tenure.
• Annual fee: To be paid every year (this fee could differ from the first year and subsequent years).

A personal loan can help you clear your debts and have more manageable repayments at lower interest rates. The personal loan can have a positive effect on your ability to manage debt responsibly, as long as you make repayments on time and pay off the full amount required during the term of the loan. This could then help to improve your credit score.