5 Best Personal Loans in Singapore with Lowest Interest Rates (2021)

best personal loan singapore

If you’re in urgent need of money, but too paiseh to borrow from your family and friends, your best bet is probably a personal loan.

With a personal loan, you borrow cash from a bank or financial institution and pay them back in fixed instalments over an agreed period. But you’d typically need to meet a minimum income requirement and the bank will check your credit history.

Still, it’s generally much cheaper and safer to get a personal loan rather than a moneylender. Here’s a look at the loans with the lowest interest rates in Singapore right now.

Best personal loans in Singapore (2021)

Here are the current starting interest rates on offer by the most popular personal loan providers in Singapore, valid in May 2021. We’ll use the example of a Singapore citizen earning $2,500 a month, who wants to borrow $5,000 and repay it over 1 year.

Personal loan

Interest rate

Processing fee

Monthly repayment

Citibank Quick Cash

0% (EIR: 7.85%)

$175

$417

Standard Chartered CashOne

3.84% (EIR: 10.4%)

None

$431

HSBC Personal Loan 3.6% (EIR: 6.5%)

3.6% (EIR: 6.5%)

None

$432

DBS Personal Loan

3.88% (EIR 8.99%)

$50

$433

Friday Finance Personal Loan

18%

2%

$492

What do interest rate, EIR and processing fees mean?

There’s quite a bit of jargon here, so let’s go through some questions that may have come up.

Interest rates: Notice a whole bunch of interest rates along the lines of “from X%”? That’s because personal loans are pretty dynamic as all depend on (a) who you are, (b) how much you want to borrow and (c) for how long. Banks often personalise your interest rate when you submit an application, so, typically, you’ll see the final interest rate only after your application is approved.

EIR: EIR stands for Effective Interest Rate, and it is a more accurate reflection of the cost of borrowing because it also takes into consideration the other fees (like processing fee; see next point) and loan repayment schedule.

Processing fee: This is the main hidden cost of personal loans and is worth highlighting. The processing fee is deducted from the principal, meaning, for a $10,000 loan with a $100 (or 1%) processing fee, you get only $9,900 in cash. As a borrower, you might not “feel” it, but it does eat into your funds and increase the cost of borrowing.

Now, let’s walk through the 5 personal loan packages highlighted.

1. Citibank Quick Cash

Citibank logo

Per Month

S$432

Per Month
MoneySmart Exclusive
Interest Rate*
EIR: 6.5%
3.56%
Total Amount Payable
S$5,178
Processing Fee
S$0
Per Month
S$432
MoneySmart Exclusive:

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Valid until 14 Dec 2021

Citibank Quick Cash is available to Citibank Ready Credit customers or Citi credit cardholders. The idea is that the bank converts your existing credit limit into cash, so you don’t have to worry about submitting income documents or having to show up in person to sign a contract.

Just log into the Citi Mobile App, key in the amount of cash you need and you can get the funds instantly.

The loan is open to Singapore Citizens and PRs aged 21 to 65 with a minimum annual income of $30,000. However, you don’t need to worry about these requirements since, as an existing customer, you would already have been vetted previously by Citibank.

You can get 0% interest on Citibank’s personal loan with a 1-year tenure. BUT, and it’s a big but, you need to pay a hefty processing fee of 3.5%. So, even with the 0% interest, your 1-year loan is going to cost you an Effective Interest Rate (EIR) of 7.85%.

For loans with tenures of 2 to 5 years, interest rates are about 3.99% per annum, with no processing fees, and you pay a fixed EIR of 7.5% with a minimum loan amount of $20,000.

That said, don’t take our word for it. Rates are customised, so what you get might not be exactly the same as the above examples.

2. Standard Chartered CashOne

Sponsored
Standard Chartered logo

Per Month

S$431

Per Month
MoneySmart Exclusive
Receive cash in 15 mins!
Interest Rate*
EIR: 10.4%
3.48%
Total Amount Payable
S$5,174
Processing Fee
S$0
Per Month
S$431
MoneySmart Exclusive:

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Valid until 07 Dec 2021

Standard Chartered CashOne personal loan is open to Singapore Citizens, PRs and foreigners with a Singapore Employment Pass aged 21 to 65. The minimum annual income requirements are $20,000 for Singaporeans and PRs and $60,000 for foreigners.

You can apply for this personal loan online and receive your loan disbursement within 15 minutes. There’s no need to be an existing Standard Chartered customer to get this personal loan.

So, it’s fast, but is it also cheap? Standard Chartered charges an initial fee of $199. From the second year onwards, you won’t have to pay anymore processing fees — UNLESS you miss any instalments, in which case you will pay $50 for that year.

Because of the $199 fee, CashOne is more worthwhile if you’re taking out a big loan. A $10,000 loan would mean you’d be paying a fee worth 1.99% of your principal amount.

Interest rates are being advertised as starting from 3.48%, working out to an EIR of 6.95% and above. In reality, interest rates are personalised, so yours might differ from this example.

3. HSBC Personal Loan

HSBC logo

Per Month

S$432

Per Month
MoneySmart Exclusive
Interest Rate*
EIR: 6.5%
3.6%
Total Amount Payable
S$5,180
Processing Fee
S$0
Per Month
S$432
MoneySmart Exclusive:

Get the Bose SoundLink Revolve+ II Bluetooth® Speaker (worth S$499) when your HSBC Personal Loan application is approved! Additionally, get up to S$3100 Cashback from HSBC!

Valid until 10 Jan 2022

HSBC’s personal loan is open to Singaporeans and PRs with an annual income of $30,000 and above. If you qualify for it, HSBC actually offers some of the most competitive interest rates at the moment.

The bank is currently advertising promotional interest rates starting from 3.4%, which works out to an EIR of 6.5%, and zero processing fees. Remember, however, that actual interest rates will vary from person to person.

In reality, you’ll be offered a rate from 3.4% (EIR 6.5%) to 8.2% (14%) depending on the bank’s assessment of you. Loan tenures ranging from 1 to 7 years are available.

On the downside, while smaller loans can get approved quite quickly, processing of applications for bigger loans (say, $100,000 and over) might take some time, possibly more than a week. Still, if you can wait, it’s worth it for the low interest rates.

4. DBS Personal Loan

DBS logo

Per Month

S$433

Per Month
Interest Rate*
EIR: 8.99%
3.88%
Total Amount Payable
S$5,194
Processing Fee
S$50
Per Month
S$433

DBS’s personal loan is only open to existing DBS customers. If you already have DBS Cashline or a DBS credit card or currently credit your salary into a DBS or POSB account, you can get the cash disbursed instantly.

The loan is open to Singaporeans and PRs, as well as foreigners with DBS Cashline or credit card accounts. You must be aged 21 to 75 years with a minimum annual income of $20,000 — one of the lowest income requirements among banks.

DBS’s personal loan promises interest rates as low as 3.88%. There is a processing fee of 1%, bringing the lowest possible EIR to 7.56%. Loan tenures of 1 to 5 years are available.

As usual, these are the lowest possible rates and the actual interest rate depends on what DBS is prepared to extend to you. The maximum possible EIR is 20.01%.

To sweeten the deal, there’s a current promotion offering 1% cashback on loan amounts of $10,000 when you use the promo code POSBPL.

5. Friday Finance Personal Loan

Friday Finance logo

Per Month

S$492

Per Month
Easy loan approval
Interest Rate*
18%
Total Amount Payable
S$5,900
Processing Fee
2%
Per Month
S$492
Apply NowApply directly on MoneySmart

Friday Finance, a licensed moneylender, is the only non-bank on this list. Their interest rates might be higher than what banks are offering, but they’re also a lot more forgiving when it comes to approving applications. So, for those with a poor credit score or an unstable income, Friday Finance might be the only option.

Friday Finance charges an admin fee of 2%, half of which will be refunded if you repay your loan in full and on time. Their interest rates are personalised, so you might not get charged the same amount as someone else taking out a similar loan. But the interest rates for a 1-year, $5,000 loan would probably hover at around 18%.

That sounds exorbitant, but it’s actually not that bad as Friday Finance structures their loans a bit differently.

You only pay interest on outstanding amounts remaining on the loan, rather than interest that’s always calculated on the entire principal amount. So the more of your loan you pay off, the lower your interest payments get. For this reason, the EIR can actually be lower than the quoted interest rate.

Unlike many banks, Friday Finance does not charge any early payment fee. So, you can repay your loan earlier in order to keep your interest payments to a minimum.

The application process takes only 5 minutes, but once your loan is approved within 1 to 2 hours, you need to go down to their office at SingPost Centre in person to sign a loan contract before the cash can be disbursed.

Friday Finance loans are only available to Singaporeans and PRs. If you want to borrow more than $3,000, you’ll need an annual income of at least $20,000.

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 materials, 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.

Which personal loan should you opt for?

If you’re just looking for the cheapest personal loan, the HSBC Personal Loan is a good bet. That said, if you don’t get offered the lowest advertised interest rates, you might want to compare with what the other banks are willing to offer you.

If you need the cash ASAP, the fastest options are Citibank Quick Cash (for existing Citibank customers), DBS Personal Loan (for existing DBS customers) or Standard Chartered CashOne.

And if your profile makes it hard to get a bank loan (such as if you’re self-employed and don’t have income documents for the last two years), Friday Finance is your best bet — just try to pay off that loan as fast as possible to save on interest.

Whatever personal loan package you choose, opt for the smallest loan amount and shortest term you can comfortably manage. This would keep your interest payments to a minimum.

Term loan vs credit line — which should you choose?

While researching personal loans, you might have come across many different loan types, some of which do not seem to fit what we described above.

MoneySmart lists only term personal loans, which is when you borrow a fixed sum with a fixed repayment plan that you agree on before you see the cash.

We usually recommend these loans because they have much lower interest rates. You can pay back slowly and steadily at a pace comfortable to your financial situation.

Many banks also offer a personal line of credit — sometimes called a credit line, revolving loan, or even “flexible repayment loan”.

This is pre-approved amount of money you can cash out in part or whole, but you need to repay it 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 a credit card or credit line to get the loan. However, it is still considered a term loan if it comes with a structured repayment plan.

But before you sign up, understand that your credit cards with this bank will be as good as dead because you’ll have effectively “spent” your credit on a cash loan.

Being in debt is not fun…

But it can be prevented. If you must, take out a loan and channel all your energies into paying it off. In the meantime, re-examine your income and budget, making a note of everything you spend on, so you won’t have to resort to loans again.

Ideally, you should draw up a budget that gives you enough leeway to set aside some cash for the future without starving to death.

You should also build up an emergency fund worth a few months’ expenses so you can dip into it when unexpected expenses arise instead of getting into debt.

It’s also a good idea to know what types of insurance you need. We recommend hospitalisation insurance at a bare minimum, and life insurance if you have dependents. Being sufficiently insured ensures that you don’t get hit with huge bills if the unexpected happens.

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