Are Personal Loans Considered Interest-Bearing in Singapore?

Singapore’s financial system requires aspiring loan applicants to have a solid understanding of its rules and regulations. Knowing whether or not your desired loan will generate interest is paramount. Thus, it begs the question, “Do Singapore’s personal loans yield interest?” Let us delve deeper into this topic to satisfy your curiosity.

What are Interest-Bearing Loans?

The word “interest-bearing loan” has likely been thrown around before, but what does it refer to? In essence, it is a loan where you pay interest on top of the principal. Interest is the term given to this charge, which is a proportion of the loan’s principle. You must thus return the loan principle in addition to the accrued interest.

But here’s the thing: not all loans with interest rates are the same. Interest rates, payment schedules, and available loan kinds might vary substantially across institutions. Mortgage, auto, and unsecured loans all have different requirements depending on your credit history and current financial status.

Personal Loans in Singapore

When it comes to financial flexibility, personal loans in Singapore are a popular choice for good reasons. Without the need for collateral, borrowers can obtain funds to address various needs, from consolidating debt to handling unexpected expenses.

However, there is a downside to personal loans in Singapore. The interest rates are typically higher than secured loans, as lenders consider them riskier. This means you’ll end up paying more in interest over time, making it important to weigh the pros and cons before signing on the dotted line.

Are Personal Loans in Singapore Interest-Bearing?

It’s a known fact that personal loans in Singapore are interest-bearing. This means that you’ll be paying a specific rate on the amount borrowed, expressed as an annual percentage rate (APR).

The lender takes various factors into account when setting the interest rate, including fees and repayment terms. To determine the interest on your personal loan in Singapore, use this simple formula:

Interest = (Loan Amount x Interest Rate x Loan Tenure) / 12

For example, if you borrow S$10,000 at an interest rate of 5% per annum for a loan tenure of 3 years, the total interest payable would be:

Interest = (10,000 x 0.05 x 3) / 12 = S$125

Factors that Affect Interest Rates on Personal Loans

Unraveling the mystery of personal loan interest rates in Singapore can be a daunting task. It’s a complex web of factors that influence the final rate. However, there are several key factors that every borrower should know to get the best deal possible.

Credit Score

Credit scores are the backbone of the lending industry, with good reason. Lenders love borrowers with high credit scores because they’re more likely to be responsible with their finances, paying their bills promptly and managing their debts effectively.

A good credit score unlocks the door to lower interest rates, making borrowing more accessible and affordable. However, a low credit score increases the chances of loan defaults, creating more stress and higher interest rates.

Loan Amount

Most individuals think that more is better when it comes to loans. However, borrowing more cash than you need might sometimes cause more issues than it can fix. The potential benefits cannot justify the hefty costs, which include exorbitant interest rates and rigid payment schedules.

That’s why savvy borrowers know that less is more. You may save money on interest, have more control over your payments, and avoid going into debt by borrowing just what you need.

Loan Tenure

Loan tenure is a crucial factor that affects your loan’s interest rate. It’s the duration of your loan repayment period, and it can make or break your loan experience. If you choose a more extended tenure, the lender may see it as a higher risk and charge you a higher interest rate.

Think about it. When you borrow money for a more extended period, there’s a higher likelihood of something going wrong. But if you go for a shorter tenure, the risk to the lender is lower, and you’ll likely enjoy a lower interest rate.

Importance of Comparing Interest Rates on Personal Loans

Taking out a personal loan in Singapore? Don’t forget to compare interest rates and APRs from various lenders. Even a marginal variance in interest rates can greatly impact the total amount you’ll have to pay back over the loan term.

By conducting a diligent search and contrasting loan offers, you’ll be able to land a personal loan with the lowest interest rate and optimal terms for your financial needs. 

Check out the leading providers of competitive personal loans in Singapore for 2023. Compare the interest rates of each offer to maximize your savings.

Personal LoanInterest Rate 
Accredit Personal LoanUp to 4% per month 
HSBC Personal Loan4% (EIR 7.5% p.a.)
SCB CashOne Personal Loan3.48% (EIR 7.99% p.a.)
CIMB CashLite Personal Loan3.38% (EIR 6.38% p.a.)
UOB Personal Loan3.99% (EIR 7.49% p.a.)
DBS/POSB Personal Loan3.88% (EIR 7.9% p.a.)
Citi Quick Cash Loan4.55% (EIR 8.5% p.a.)
OCBC Personal Loan5.43% (EIR 11.47% p.a.)

Regulations for Personal Loans in Singapore

 In Singapore, personal loans are not a lawless arena. The Monetary Authority of Singapore (MAS) and the Ministry of Law’s Registry of Moneylenders oversee the lending landscape. These regulations mandate that licensed moneylenders and financial institutions abide by certain rules, including clear disclosure of fees and interest rates.

Licensed Moneylenders

In Singapore, borrowers can rest easy knowing that regulations are in place to safeguard their interests. For instance, licensed moneylenders are restricted to a maximum interest rate of 4% per month. Late payment fees are also capped at $60 per month, providing clarity and certainty for borrowers.

Financial Institutions

Licensed moneylenders aren’t the only ones bound by regulations when it comes to lending. Financial institutions are also held to certain standards, particularly regarding fees and interest rates. These guidelines exist to promote transparency and equity in the borrowing process. Armed with this knowledge, borrowers can confidently weigh their options and make informed decisions about taking out a loan.

Parting Words

In Singapore, interest charges for personal loans are calculated based on several factors determined by the lender. Before applying for a personal loan, it’s essential to evaluate the interest rate in comparison to other types of loans and thoroughly research potential lenders to find one that offers the best terms and conditions. Following these guidelines will enable you to make an informed decision with confidence when it comes to taking out a personal loan in Singapore.

Find Affordable Interest Rates with Accredit Moneylender

If you’re searching for a way to secure reasonable interest rates, look no further than Accredit Moneylender. Our personalized loan services in Singapore provide fast approvals and flexible repayment options, so you can easily manage your loan without added stress. 

With our commitment to transparency and fair lending practices, you can rest assured that you’re making a smart financial decision. Don’t let high-interest rates hold you back from achieving your goals – turn to Accredit Moneylender for the affordable loan options you need. 

Contact us today to learn more.

Accredit Pte Limited has 4 locations island-wide, to bring our transparent services closer to you.


Tampines Branch
(+65 6226 2662)
Yishun Branch
(+65 6219 2662)
Hougang Branch
(+65 6245 2662)
Clementi Branch
(+65 6261 2662)

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