Personal Loans

The Best Personal Loans in Singapore with the Lowest Interest Rate 2018

best personal loan singapore

Clara Lim

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If you’re in urgent need of money, and you’re too paiseh to borrow from your family and friends – what can you do? The answer is to go to a bank for a personal loan.

Of course, your friends and family won’t do a thorough check of your credit history before lending you the money, and they won’t charge interest. (Well, unless they happen to be in the business of splashing red paint on walls and putting up pig heads…)

Getting a personal loan, on the other hand, imposes significantly more requirements (like a minimum annual income) and costs (like processing fee and annual interest).

Before you go down to the bank and start applying for the first thing you see, here are a few things you need to know:

 

Term loan vs credit line – which should you choose?

Pick a bank, any bank – let’s say DBS – and visit their personal loans page. You’ll be confronted with 8 different options! Which should you choose? Most of these will fall into 1 of 3 types of products.

A term loan is a fixed sum with a fixed repayment plan that you agree on before you see the cash. Typically we recommend looking at these which you can pay back slowly and steadily – and most importantly you pay much lower interest rates.

A personal line of credit (sometimes called a credit line, revolving loan, or even “flexible repayment loan”) is a pre-approved amount of money you can cash out in part or whole, but you need to pay back ASAP or else face sky-high interest rates. Don’t fall for it unless you’re absolutely confident you can pay the money back immediately.

These days, most banks base their personal loans on either your personal line of credit or credit card limit. So you will need either credit card or credit line to get the loan. Understand that your credit cards with this bank will be as good as dead because you’ll effectively have “spent” your credit on a cash loan.

 

How long should your loan tenure be?

Term loans usually range from 1 to 7 years, and you’ll need to commit to a loan tenure beforehand. The longer the term, the smaller the monthly repayment – but the more interest you’ll be charged! So don’t be too eager to lock yourself into a 7-year loan.

Instead, choose the shortest tenure you can manage to minimise your interest, but make sure that the monthly instalment is within comfortable limits.

 

Interest rate vs effective interest rate (EIR) – what does it all mean!?

Most banks will show you two percentages on their personal loans. The lower one is annual interest rate and it will be in a huge font on their marketing collaterals, e.g. “Personal loan at just 5% p.a.!!!” Somewhere in the vicinity you should find subtle grey text stating something like “(EIR: 12.5%)”. That’s the higher effective interest rate or EIR.

Annual interest rate is easy to calculate. If you borrow $10,000 at 5% p.a. for one year, you pay the bank $500 in interest. Borrow it for 2 years, and you pay $500 x 2 years = $1,000 in interest. And so on.

EIR (effective interest rate) is much more complicated as it also takes into account any processing fees (e.g. 2% of the loan) plus your repayment schedule.

For example, if you borrow $10,000 and repay it in full at the end of 1 year, you would have $10,000 to play with all year. You’ll be “rich” the whole year. But if you have to repay your $10,000 in monthly instalments, you’ll be rich the first month, then slightly poorer and poorer with every passing month as the amount of money dwindles. Everything else being equal, the EIR of the first loan is lower than that of the second.

It also takes into consideration how much of your monthly loan repayment goes to returning the borrowed money and how much goes to paying off interest.

 

The best personal loans in Singapore (as of 27 Jun 2018)

Personal loans are pretty dynamic as all depend on how much you want to borrow and for how long.

So what we’ll do is take the case study of Ms Lee, who earns $5,000 a month and wants to borrow $10,000 over 3 years. We find out how much each of these loans would cost her today and rank them from cheapest to most expensive.

 

Personal loan Interest rate Processing fee** Monthly instalment (x 36)
DBS Personal Loan (for DBS customers, drawing on your personal line of credit or credit card) As low as 3.88% p.a.* (EIR 7.9% p.a.) 1% x $10,000 = $100 $310
CIMB CashLite (for CIMB cardholders, drawing on your credit card limit) As low as 4.5% p.a.* (EIR 8.41% p.a.) None $315
Citibank Ready Credit (for new Citibank customers only) 4.55% p.a. (EIR 8.5% p.a.) None $316
HSBC’s Personal Loan 4.8% p.a. (EIR 9.0% p.a.) $88 (currently waived) $316
UOB Personal Loan (for UOB customers, drawing on your credit card limit) 4.99% p.a. (EIR 9.89% p.a.) 1% x 10,000 = $100 $319
Standard Chartered CashOne 5.68% p.a. (EIR 11.21% p.a.)  $199 (currently waived) $325
Bank of China $martLoan 6.52% p.a. (EIR 14.69% p.a.) 3% x $10,000 = $300 $332
Maybank CreditAble Term Loan (for Maybank customers, drawing on your personal line of credit) 6.88% p.a. (EIR 13.77%) 2% x $10,000 = $200 $335
OCBC ExtraCash Loan 8.27% p.a. (EIR 17.73% p.a.) 2% x $10,000 = $200 $347

* Interest rate is personalised after the bank assesses your risk profile

** Processing fee is deducted from the principal, so for a $10,000 loan with $100 processing fee, you actually only get $9,900 in cash

 

DBS Personal Loan

Eligibility Singaporean or PR. 21 to 65 years old
Minimum annual income $20,000
Maximum loan amount 4X your monthly salary

10X if your annual income is $120,000 and up

Interest rate As low as 3.88% p.a. depending on your risk profile
Processing fee 1%
Late payment charge $100 (credit card personal loan) or $105 (Cashline personal loan)
Early settlement penalty $150
Promotions $120 NTUC vouchers for new DBS customers (min. $3,000 loan)

Processing fee waiver up to $1,000 (min. $30,000 loan)

(Promotions expire 30 Jun 2018)


DBS personal loans
are based on either your credit card or personal line of credit. If you have (a) DBS/POSB credit card or DBS Cashline and (b) DBS/POSB deposit account, you can apply through internet banking and get your loan processed immediately and credited straight into your account,

If you don’t have (a) you can still get this loan, but you have to furnish your income documents and obviously you won’t get the funds right away. If you don’t have (b)… eh, you sure you Singaporean or not?

Note that DBS does not publish their interest rates online. The actual interest rate is “personalised” based on your risk profile and credit history. Although DBS claims to have the lowest interest rates in Singapore right now, you might actually get a higher interest rate when you apply.

 

CIMB personal loan (CIMB CashLite)

Eligibility Singaporean or PR. 21 years old and up
Minimum annual income $30,000 (21 to 54 years old) or $15,000 (55 years old and up)
Maximum loan amount 80% of available CIMB credit limit
Interest rate As low as 4.5% p.a. depending on your risk profile
Processing fee None
Late payment charge $100
Early settlement penalty 3% of outstanding principal amount or $250, whichever is higher
Promotions None

The CIMB CashLite personal loan is based on your (available) credit card credit limit, so you have to be a CIMB cardholder to apply. Good thing CIMB credit cards have no annual fees.

Similar to DBS, CIMB doesn’t publish their interest rates online. The actual interest rate is “personalised” based on your risk profile and credit history so you might very well end up with a higher interest rate than advertised.

 

Citibank personal loan (Citibank Ready Credit)

Eligibility Singaporean, PR or foreigner. 21 to 65 years old
Minimum annual income $30,000 (Singaporean/PR) or $42,000 (foreigner)
Maximum loan amount 4X your monthly salary
Interest rate 4.55% p.a. (only if you’re new to Citibank, otherwise 5.39% p.a.)
Processing fee None
Late payment charge If payment is overdue by 2 months, the loan will be terminated and any outstanding loan amount will be charged
Early settlement penalty 3% of outstanding principal amount or $100, whichever is higher
Promotions $100 Grab credits if you apply through MoneySmart (min. $10,000 loan)

$100 Redmart vouchers if you apply through the Citi Mobile App (min. $7,500 loan, existing customers only)

$300 Redmart vouchers if you apply through the Citi Mobile App (min. $12,500 loan, existing customers only)

Citibank Ready Credit personal loan has the current lowest published interest rates on the market AND no processing fees, although with the caveat that the promo rate is for new-to-Citi customers (i.e. you don’t have a Citibank credit card or Ready Credit account).

For people who need money fast, Citibank promises approval of your loan within 1 hour, subject to eligibility, of course. Upon approval, funds will be deposited the next working day (Citibank account) or up to 5 working days later (non-Citibank accounts).

 

HSBC Personal Loan

Eligibility Singaporean, PR or foreigner. 21 years old and up
Minimum annual income $30,000 (Singaporean/PR) or $42,000 (foreigner/self-employed)
Maximum loan amount 4X your monthly salary

8X if your annual income is $120,000 and up

Interest rate As low as 4.8% p.a. (those with annual income of $80,000 and above enjoy rates as low as 3.7% p.a.)
Processing fee $88 (currently waived)
Late payment charge 2.5% + prevailing interest on overdue amount
Early settlement penalty 2.5% of outstanding principal amount
Promotions $50 cashback for online applications

If you need to borrow a large amount but cannot afford a big monthly repayment, consider HSBC as HSBC’s Personal Loan offers the longest loan tenure (7 years!) in Singapore. Of course, that also means you’ll be paying 7 years’ worth of interest.

HSBC is also great for those who need cash urgently. You can get approval-in-principle within 1 minute(!) and receive the money the next working day.

At 3.7% p.a., HSBC offers the best personal loan interest rate currently, but it’s only for those earning $80,000 and above annually. If you don’t earn $6,667 a month, consider going with DBS/POSB’s 3.88% p.a. instead.

 

UOB Personal Loan

Eligibility Singaporean, PR or foreigner. 21 years old and up
Minimum annual income Typically $30,000 (Singaporean/PR) or $40,000 (foreigners) depending on the credit card
Maximum loan amount Your credit limit
Interest rate 4.99% p.a.
Processing fee 1%
Late payment charge $90
Early settlement penalty 3% of outstanding principal amount or $150, whichever is higher
Promotions Promotional rates until 17 July 2018

You’ll need either a UOB CashPlus account or UOB credit card to apply for a UOB Personal Loan as UOB draws from your credit card limit. If you’re new to UOB, you can apply for a credit card and personal loan at the same time. The terms & conditions (such as the fee schedule) of the credit card will also apply to your UOB Personal Loan.

 

SCB personal loan (Standard Chartered CashOne)

Eligibility Singaporean, PR or foreigner. 21 years old and up
Minimum annual income $20,000 (Singaporean/PR) or $60,000 (foreigner)
Maximum loan amount 4X your monthly salary
Interest rate 5.68% p.a. 
Processing fee $199 (currently you’ll get $199 credit to offset this)
Late payment charge $80
Early settlement penalty 3% of outstanding principal amount or $250, whichever is higher
Promotions 0.8% cashback for loan amount up to $50,000 (capped at $1,088)

1% cashback for loan amount $50,000 or more (capped at $1,088)

$50 cashback for online applications

4.98% p.a. if you apply through MoneySmart (min. $50,000)

Standard Chartered personal loan’s published rates aren’t that great, but you get a much lower interest rate if you apply through MoneySmart and your loan amount exceeds $50,000. Like Citibank and HSBC, SCB promises next-day cash. Plus as an extra sweetener, there are several cashback promotions going on PLUS the processing fee will be offset. 

 

 

Bank of China personal loan (BOC $martLoan)

Eligibility Singaporean, PR or foreigner
Minimum annual income $1,700 monthly income ($20,400 annual)
Maximum loan amount 4X your monthly salary
Interest rate 6.52% p.a.
Processing fee 3% (min. $150)
Late payment charge 2% of minimum payment sum or $100, whichever is higher
Early settlement penalty $100
Promotions None

Going head-to-head with HSBC for 7-year personal loans is the relative newcomer, Bank of China, who has been very aggressive in Singapore these past few years. Although Bank of China $martLoan’s interest rates are on the high side, BOC is generally more lenient than most other banks here and has a lower minimum annual income. Terms of conditions from BOC’s MoneyPlus personal line of credit also apply for $martLoan.

 

Maybank personal loan (Maybank CreditAble Term Loan)

Eligibility Singaporean or PR. 21 to 65 years old
Minimum annual income $30,000
Maximum loan amount 2X your monthly salary
Interest rate 6.88% p.a.
Processing fee 2%
Late payment charge $80
Early settlement penalty 3% of outstanding principal amount or $200, whichever is higher
Promotions $120 credit for first 500 applicants (min. $9,000 loan)

Maybank does not offer a “proper” personal loan but its term loan is linked to its personal credit line product. You need to sign up for CreditAble (note the terms & conditions and annual fee) in order to cash your credit line using the Maybank CreditAble Term Loan. However, the loan amount is small while interest is high, so it’s best to avoid this one.

 

OCBC personal loan (OCBC ExtraCash Loan)

Eligibility Singaporean, PR or foreigner
Minimum annual income $20,000 (Singaporean/PR) or $45,000 (foreigner)
Maximum loan amount 6X your monthly salary
Interest rate 8.27% p.a.
Processing fee $200 or 2%, whichever is higher
Late payment charge $80
Early settlement penalty 3% of outstanding principal amount (min. $1,000)
Promotions None

OCBC actually has 2 distinct personal loan products. The OCBC ExtraCash Loan is a “true” personal loan that allows you to borrow up to 6X your monthly salary. However, the interest rate is pretty high.

If you don’t require that much money, consider the OCBC Cash-on-Instalments loan which is slightly cheaper. It is drawn from your personal line of credit (OCBC EasiCredit) or OCBC credit card, basically converts the available credit limit into cash.

 

Related Articles:

The 7 Most Important Things You Need to Know About Personal Loans

What Can Debt Collectors in Singapore Legally Do and How do You Deal With Them?

Getting a Personal Loan from Licensed Money Lenders – What You Need To Know

 

Would you ever take out a personal loan? Why or why not?

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Clara Lim

I used to be MoneyDumb. I hung out at H&M every day and thought that a $50 lunch set was a good deal. These days, I spend my time researching the crap out of life and trying to maximise utility on micro-decisions. I'm not sure if that's an improvement.