How Do Personal Loans Work in Singapore?

Have you ever been in a position where you had to face a long list of obligations or an unexpectedly large expenditure but had no funds to fall back on? It’s a financially annoying scenario to be in, that’s for sure.

But fear not, dear borrower! There is a solution – a personal loan. Before you start jumping for joy and sprinting to your nearest lender, however, take a moment to educate yourself on what exactly a personal loan is and how it works. 

Decoding Personal Loans: The Basics You Need to Know

Personal loans are a financial tool that provides a significant amount of cash for various expenses. Whether it’s funding a vacation or home renovation, personal loans can be useful. However, it’s crucial to understand the terms and conditions attached to these loans. 

In Singapore, personal loans feature steep interest rates and fees that could turn unsustainable without due diligence. Failure to settle payments on time or loan defaults may impede future credit approvals, significantly impacting your creditworthiness.

The Distinctions Between Secured and Unsecured Loans

Personal loans come in two distinct types: secured and unsecured loans. These classifications vary substantially, and it’s imperative to grasp their distinctions.

Secured personal loans Unsecured personal loans 
A secured personal loan needs collateral to back them up. To qualify for one, you should offer up an item with value. This could be a car, house, jewelry, etc.Unsecured personal loans are a type of financing that doesn’t require any collateral, unlike secured loans. To determine your eligibility, lenders will examine your credit report.

What Are the Common Uses of Personal Loans?

The beauty of personal loans lies in their versatility – the funds can be used in a multitude of ways as the borrower sees fit. Some of the most common applications include:

How Does a Personal Loan Work?

Anyone in Singapore seeking to tap into the financial resource of personal loans must first understand its inner workings. This financial tool involves borrowing a predetermined sum of money from a lender, which is then repaid with interest within an agreed timeframe.

The loan can be utilized for a multitude of purposes, from financing a new vehicle to covering sudden medical costs. If you’re new to the world of personal loans, your first step should be to research and identify a lender whose terms and eligibility requirements fit your needs. 

From there, you’ll submit an application and undergo a thorough assessment to determine your suitability as a borrower. With approval in hand, you can revel in the joy of accessing the funds necessary to fulfill your aspirations.

Understanding Key Terminologies for Personal Loans

When it comes to personal loans, a fundamental element is grasping the terminology involved. To aid in your comprehension, here is a list of key terms you should familiarize yourself with. 

  • Loan Amount: The borrowed sum, comprised of principal, interest, and any additional fees, is what makes up the grand total of your personal loan.
  • Interest rate: It is usually seen as a percentage of the principal amount. The interest rate can show you the cost of borrowing money from a lending institution. 
  • EIR: The total amount it costs to borrow money is the effective interest rate. It is the combination of interest rates, processing fees, etc. And it is usually higher than the stated interest rate. 
  • Processing fees: It is also called administrative fees, which you have to pay so that your loan application can process by the lender. 
  • Loan term: It is sometimes called loan tenure. It is the total amount of time you have to repay the loan amount. 

Where Can I Get a Personal Loan in Singapore?

When funds are tight, exploring available options is crucial. Fortunately, several personal loan options are available in Singapore to cater to diverse financial requirements.


Singaporean banks are renowned for providing personal loans featuring competitive interest rates, flexible repayment periods, and substantial loan amounts. Nonetheless, aspiring borrowers must satisfy the lenders’ set eligibility requirements to qualify for these favorable terms. Typically, these prerequisites comprise a stable income, an impressive work history, and an unblemished credit score.

Licensed moneylenders

Licensed lenders offer a viable alternative to traditional banks by catering to borrowers with low incomes and poor credit. These lenders operate under the purview of the Ministry of Law, providing a sense of security for borrowers. In addition to their regulatory oversight, licensed lenders boast a straightforward and efficient loan application process. Funds can often be disbursed within hours or even minutes.

Requirements for Obtaining a Personal Loan in Singapore

While each financial institution may have its unique conditions, there are some common requirements to keep in mind. 

Requirements BanksLicensed moneylenders
Age21 to 65 years old 21 to 65 years old 
Minimum income for Singaporeans and permanent residents$30,000Less than $10,000
Minimum income for foreigners residing in Singapore$40,000 – $60,000Less than $10,000

How Much Can I Get From a Personal Loan in Singapore?

Now that you know the specific income requirements to apply for a personal loan in Singapore. Here is a table that shows the general sense of how much money you can borrow. 

Loan providersMinimum Loan AmountMaximum Loan Amount
Licensed Moneylenders $3,000 for Singaporeans and PRs
S$500 for foreigners 
6x times your monthly salary 
BanksS$500 or $1,0004x times your monthly salary or 10x times your monthly salary  

What Documentation Do I Need to Get a Personal Loan in Singapore?

If you decide to take a personal loan from a lending institution, here is some documentation you need to prepare.

Singaporean/Permanent Residents 

  • Identity card
  • Singpass Info
  • Proof of residence (for resident)
  • Tenancy agreement (for renter)
  • Payslip (lastest 3 months)
  • Employment letter (currently employed for less than 6 months)

Foreigner residing in Singapore 

  • Employment Pass / S Pass
  • Passport 
  • Singpass Info
  • Proof of residence (recent bill, a letter with an address, etc.)
  • Proof of employment/employment letter
  • Payslip (lastest three months)
  • Bank Statement (latest version)


Personal loans offer Singaporeans a fantastic solution for various financial needs, ranging from unforeseen emergencies to renovating a home, taking a vacation, or consolidating debt. Those aspiring to borrow money must meet eligibility criteria, such as displaying creditworthiness and stable income, to obtain a loan from traditional banking institutions. However, licensed moneylenders present a viable option for those who face the obstacle of poor credit or limited income. 

Accredit Moneylender –  Your Partner for Responsible Lending

When it comes to financing options, Accredit Moneylender is the go-to solution for many. With Accredit Licensed ML, you can get a personal loan in Singapore without any worries. Our promise of complete transparency ensures that you won’t have to deal with any sneaky fees, and our interest rates are some of the best in the market. Make the right move and choose Accredit Moneylender as your reliable lending partner.

Take the first step today and enjoy the perks of working with a trustworthy moneylender. Apply now!

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