Personal Loans

The Best Personal Loans in Singapore with Lowest Interest Rates (2019)

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:

 

The best personal loans in Singapore (2019)

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)
HSBC Personal Loan MoneySmart exclusive: 3.7% p.a. (EIR 7% p.a.) $0 $309
Standard Chartered CashOne MoneySmart exclusive: 3.88% p.a. (EIR 7.97% p.a.) $199 (currently waived) $310
DBS Personal Loan / POSB Personal Loan Starting from 3.88% p.a.* (EIR 7.9% p.a.) 1% x $10,000 = $100 $310
CIMB CashLite Starting from 4.5% p.a.* (EIR 8.41% p.a.) None $315
Citibank Quick Cash 4.55% p.a. (EIR 8.5% p.a.) None $316
UOB Personal Loan 4.99% p.a. (EIR 9.89% p.a.) 1% x
$10,000 = $100
$319
OCBC Cash-on-Instalments 5.8% p.a. (EIR 12.12% p.a.) 2% x $10,000 = $200 $326
Maybank CreditAble Term Loan 5.86% p.a. (EIR 12.00%) 2% x $10,000 = $200 $326
Bank of China $martLoan 6.52% p.a. (EIR 14.69% p.a.) 3% x $10,000 = $300 $308

* 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. 

 

HSBC Personal Loan

Eligibility Singaporean, PR or foreigner. 21 to 65 years old
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 Starting from 4% p.a. (those with annual income of $80,000 and above enjoy rates as low as 3.7% p.a.)
Processing fee $0
Late payment charge $75 for each monthly repayment that is not received in full by the monthly repayment due date
Early settlement penalty 2.5% of outstanding principal amount

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. Apply via MoneySmart before 31 May 2019 for a loan tenure of between 2 and 4 years and you can get an exclusive 3.7% interest rate (EIR 7% p.a.).

Sponsored Message

Need cash urgently? HSBC’s Personal Loan offers one of the lowest interest rates of 3.7% p.a. Find out more here.

 

Standard Chartered personal loan (Standard Chartered CashOne)

Eligibility Singaporean, PR or foreigner. 21 to 65 years old
Minimum annual income $20,000 (Singaporean/PR) or $60,000 (foreigner)
Maximum loan amount 4X your monthly salary
Interest rate 3.88% p.a. through MoneySmart 
Processing fee $199 (currently waived)
Late payment charge $80
Early settlement penalty 3% of outstanding principal amount or $250, whichever is higher

Standard Chartered personal loan’s published rates aren’t that great, but you get a much lower interest rate if you apply through MoneySmart for your loan amounts of $1,000 to $250,000. Like Citibank and HSBC, SCB promises next-day cash.

 

DBS Personal Loan / POSB 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 Starting from 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

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 Starting from 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

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 (Quick Cash)

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.
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

Citibank personal loan, called Quick Cash, 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 (e.g. you don’t have a Citibank credit card).

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).

MoneySmart exclusive: If you are borrowing a minimum of $20,000, you enjoy 3.99% p.a. for a 3-year loan tenure. Promotion is valid until 30 June 2019.

 

UOB Personal Loan

Eligibility Singapore citizen or PR. 21 to 60 years old
Minimum annual income $30,000
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

To apply for a UOB Personal Loan, you’ll need either a UOB CashPlus account or UOB credit card to apply 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.

It’s one of the few banks that provide instant approval for personal loans for submissions between 7am to 8pm by new UOB customers.

 

OCBC personal loan (OCBC Cash-on-Instalments)

Eligibility Singaporean, PR or foreigner. 21 years old & up
Minimum annual income $20,000 (Singaporean/PR) or $45,000 (foreigner)
Maximum loan amount 4X your monthly salary / 6X if your income is $120,000 and up
Interest rate 5.8% p.a.
Processing fee 2%
Late payment charge $80
Early settlement penalty $100

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.

 

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 5.86% p.a. (for 3-year loan)
Processing fee 2%
Late payment charge $80
Early settlement penalty 3% of outstanding principal amount or $200, whichever is higher

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.

 

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

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.

 

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.

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.