These loans are a popular choice in Singapore for various needs, enabling individuals to manage significant expenses like education or home renovations through manageable payments.

Typically, borrowers receive a lump sum and repay it in fixed, scheduled amounts over a defined period, making budgeting predictable.

An instalment loan in Singapore is a straightforward way to borrow a specific amount of money upfront, which you then repay over a set period. Typically, these loans come with a fixed interest rate, meaning your monthly payments will remain consistent throughout the loan term, making budgeting simpler.

Common loan terms can range from around six months to five years for personal or car loans, providing flexibility depending on the loan amount and the borrower's financial situation. 

>> Read: Deciphering secured vs unsecured loans: Key differences explained

While variable-rate options exist, fixed-rate instalment loans are more prevalent in Singapore, offering stability and protection against interest rate fluctuations.

A personal loan

Personal loans are widely offered by established local banks and financial institutions across Singapore, including major players like DBS, UOB and OCBC. These loans typically provide borrowing amounts ranging from SGD 1,000 up to SGD 100,000, catering to various financial needs. Repayment tenures for personal loans in Singapore generally span from 1 to 5 years, offering flexibility in managing debt.

Interest rates for personal loans in Singapore can vary depending on the lender and the borrower's credit profile, but typical ranges often fall between 3% to 6% per annum. To better understand the potential monthly repayments and total interest payable, it's highly recommended to utilise an instalment loan calculator.

>> Read: The different types of credit lines in Singapore and how you can use them

A mortgage

Mortgages are a prevalent instalment loan form in Singapore, enabling homebuyers to finance their property purchases over extended periods. These loans typically involve long repayment tenures, often ranging from 20 to 30 years, designed to make homeownership more accessible.

Interest rates for mortgages in Singapore vary depending on the specific loan type and lender, with rates generally between 1.5% and 2.5% per annum. Homebuyers often have the choice between government-backed HDB loans (for HDB flats) and loans from commercial banks, each with its own set of eligibility criteria and terms.

>> Read: What is a home equity loan? A beginner’s guide 

A car loan

Car loans in Singapore are instalment loans specifically designed for purchasing new or pre-owned vehicles, with typical loan terms ranging from 1 to 7 years. Interest rates for car loans vary among financial institutions, and borrowers should also factor in down payment requirements, which are often a significant portion of the vehicle's price.

It's also crucial to note Singapore's unique Certificate of Entitlement (COE) system, a mandatory permit that significantly influences the overall cost of owning a car in the country, which should be considered alongside the loan amount and repayment terms.

>> Read: Auto loans vs. personal loans: What’s the difference?

A student loan

For students pursuing higher education in Singapore, instalment loans are available through various avenues, including government-backed schemes like the CPF Education Scheme, private loans offered by banks and specific loan programmes administered by universities themselves.

Interest rates and repayment structures for these student loans typically commence after graduation, often with a grace period to allow graduates to secure employment before starting repayments. It's essential for students to carefully evaluate the terms and conditions of each loan option to choose the one that best suits their future financial situation.

>> Read: Best student loans in Singapore 2025

Buy now, pay later options

The "Buy Now, Pay Later" (BNPL) trend has gained significant traction in Singapore, with services like Atome, GrabPay Later and Shopee PayLater becoming increasingly popular. These platforms essentially offer a form of instalment loan, allowing users to split the cost of their purchases into a series of smaller, interest-free (in many cases if paid on time) instalments over a few months.

>> Read: What is “Buy Now, Pay Later”?

Taking out an instalment loan in Singapore can have a notable impact on your credit score, primarily through your repayment behaviour. A consistent history of making timely payments on your loan is a significant positive factor, demonstrating your creditworthiness to lenders and contributing to an improved credit score over time. Conversely, missed or late payments can severely damage your credit rating, signaling higher risk to future lenders.

In Singapore, the Credit Bureau Singapore (CBS) plays a central role in reporting and tracking individuals' credit histories, including their instalment loan repayment records. This information is crucial for financial institutions when assessing loan applications, as it provides insights into an applicant's past credit behaviour and their likelihood of fulfilling future obligations. A good credit history, as reflected in your CBS report, enhances your eligibility for various loans and may also secure you more favourable interest rates.

When you apply for an instalment loan in Singapore, lenders typically perform a "hard" credit check to assess your creditworthiness. This type of inquiry can result in a small, temporary dip in your credit score. It's different from "soft" credit checks, which might occur when you check your own credit score or when financial institutions pre-approve you for offers, as soft checks do not affect your score. Understanding this distinction is important when applying for multiple loans within a short period.

Instalment loans offer a structured approach to financing in Singapore, but it's wise to weigh their advantages and disadvantages against other financial options:
Pros:

• Allows you to manage substantial purchases over a defined period.

• Fixed-rate options provide predictable monthly payments, aiding budgeting.

• Consistent, on-time repayments help build a positive credit history with the Credit Bureau Singapore (CBS).

• Refinancing opportunities may exist to potentially secure better interest rates or loan terms.

Cons:

• Once the loan amount is disbursed, accessing additional funds typically requires a new loan application.

• Interest rates can be higher, particularly for individuals with lower credit scores.

• Failure to make timely payments can negatively impact your credit score with the CBS.

• Longer repayment periods can result in a higher overall interest cost over the life of the loan.

• Unlike a line of credit, where you can redraw funds as you repay, an instalment loan typically doesn't allow you to easily borrow more without applying for a new loan.

1. Check your credit score: Before applying, obtain your credit report from the Credit Bureau Singapore (CBS) to understand your current credit standing. A good credit score increases your chances of approval and securing more favourable interest rates from banks and financial institutions.

2. Compare instalment loans: Research and compare various instalment loan options available in Singapore from different lenders, including major banks like DBS, OCBC and UOB, as well as licensed moneylenders. Pay close attention to interest rates, fees, repayment terms and the total cost of borrowing.

3. Get pre-approved (optional but recommended): Many banks in Singapore offer a pre-qualifying process for personal loans and other instalment loans. This allows you to get an estimate of the loan amount and interest rate you might qualify for without a hard credit inquiry. Pre-approval helps you gauge affordability before formally applying. Note that licensed moneylenders may have different pre-assessment procedures.

4. Boost your application: To strengthen your loan application, ensure you have a stable income and a low debt-to-income ratio. If your credit score is borderline, consider options like having a guarantor (though less common for personal loans) or, in some cases, offering collateral for secured instalment loans.

5. Apply: Once you've chosen a lender, complete their loan application form. Banks in Singapore typically have online application portals and may require a direct login via Singpass for easier information retrieval. Licensed moneylenders may have in-person application processes at their physical locations. Be prepared to submit the required documents, which commonly include your NRIC or passport, proof of income (e.g., payslips, CPF statements) and bank statements for verification. 

Securing an instalment loan in Singapore with a low credit score can present challenges, as traditional banks and financial institutions typically prefer borrowers with a good credit history. A poor credit score signals higher risk, potentially leading to loan rejection or less favourable terms, including higher interest rates.

Borrowers in this situation might find licensed moneylenders in Singapore as a more accessible option for instalment loans, although it's crucial to be aware that these loans often come with significantly higher interest rates compared to those offered by banks.

For individuals with terrible credit in Singapore seeking instalment loans, it's advisable to focus on improving their creditworthiness before applying. Practical steps include diligently paying off existing debts, keeping credit card balances well below the credit limit (and even considering low interest credit cards) and ensuring all bills are paid promptly.

Consistently demonstrating responsible credit behaviour over time can gradually improve your credit score, potentially opening doors to more affordable loan options from mainstream lenders in the future.

>> Read: Best Co-signed or Joint Loans in Singapore in 2025

Navigating instalment loans in Singapore requires caution, particularly concerning high-interest rates, which can rapidly inflate your debt, especially with loans obtained from some licensed moneylenders.

While traditional banks in Singapore typically offer personal loans with average interest rates ranging from about 4% to 7% per annum, rates from licensed moneylenders can be significantly higher, potentially reaching 15% to 20% or even more, depending on the loan tenure and risk assessment. It's crucial to recognise this disparity and the potential for rapid debt accumulation associated with high-interest loans.

To avoid the pitfalls of high-interest instalment loans in Singapore, it's imperative to meticulously compare loan offers from various financial institutions, and ensure you are dealing only with licensed moneylenders regulated by the Ministry of Law.

Exploring alternative options such as government assistance schemes, low-interest personal loans from reputable banks, or even considering credit card balance transfers for smaller amounts can be prudent steps to secure more affordable financing and manage your debt effectively.