Explore all types of loans available in Singapore. This complete guide covers personal, business, car, home, and education loans to help you choose the right one.
We all know that sinking feeling when your money seems to vanish faster than usual, thanks to the rising cost of living. You are definitely not the first person to start Googling quick ways to fix it. Whether you are on the hunt for the best personal loan in Singapore or trying to figure out your loan eligibility, we got you covered.
This complete guide will walk you through all types of loans available in Singapore, from personal loans to business financing, helping you understand your options and how to choose the best loan in Singapore that fits your needs.
Types of Loans Available in Singapore
Singapore offers a wide range of loan options to suit different goals and financial situations. Knowing how each one works is the first step to making informed, confident borrowing decisions.
1. Personal Loans
Personal loans in Singapore are unsecured and do not require collateral. You repay them in monthly installments over a fixed period, usually ranging from 1 to 5 years. Both banks and licensed moneylenders offer these versatile loans for purposes such as debt consolidation, medical expenses, education, travel, or emergencies.
2. Business Loans
In Singapore, business loans are typically available to Private Limited (Pte Ltd) companies and Limited Liability Partnerships (LLPs) that have been operating for at least six months and maintain an active corporate bank account. Such loans may require collateral and detailed financial documentation, depending on the lender and loan type. Various types of business loans are available, such as working capital loans for daily operations and trade financing for import/export activities. Additionally, equipment financing helps with purchasing machinery or tools.
3. Home Loans
Home loans, or mortgages, serve as long-term secured loans for purchasing property. They typically carry lower interest rates than personal loans because the property itself backs the loan as collateral. In Singapore, these loans are mainly offered by banks and other financial institutions, and are available in different structures such as fixed-rate packages and floating-rate packages pegged to the Singapore Overnight Rate Average (SORA).
4. Renovation Loans
A renovation loan is often offered as a separate product by banks and, in some cases, a select number of licensed moneylenders. These loans are specifically designed for home improvement and renovation projects. Lenders usually require applicants to provide proof of a renovation quotation or contractor’s invoice before approving the loan. Renovation loans generally offer lower interest rates than personal loans, but you can only use the funds for approved renovation expenses like flooring, painting, electrical work, or built-in carpentry.
5. Car Loans
Car loans, or auto financing, typically follow a hire-purchase structure, where the loan is secured against the vehicle. The lender legally owns the car until you fully repay the loan. This form of auto financing in Singapore is offered by banks, financial institutions, and some licensed moneylenders, and is available for both new and used cars.
6. Education Loans
Education loans help finance tuition fees and cover related expenses like course materials, accommodation, and other study costs. Students or their parents can take them out, and they have lower interest rates with flexible repayment terms. In Singapore, education financing options include bank-issued student loans, CPF and MOE Education Scheme loans for approved local courses, and government-backed loans such as the Tuition Fee Loan (TFL) available at local universities and polytechnics. These loans may offer interest-free study periods. Repayment typically starts after graduation, making them a practical option for managing higher education costs.
Loan Eligibility Criteria in Singapore
Whether you are applying for an unsecured loan like a personal loan or a secured loan such as a home or car loan. Lenders evaluate your application based on specific criteria.
Unsecured Loans (e.g. Personal Loans, Renovation Loans)
- Age: 21 years and above.
- Minimum Income: Banks and licensed moneylenders typically require a minimum annual income starting from around $20,000 for locals and $40,000 for foreigners.
- Employment: Lenders give preference to applicants with stable employment or consistent income. Self-employed individuals and freelancers must provide verifiable earnings statements.
- Credit History: A good Credit Bureau Singapore (CBS) score and a positive Moneylenders Credit Bureau (MLCB) report are important factors in determining loan eligibility.
Secured Loans (e.g. Home Loans, Car Loans)
- Age: 21 years and above.
- Minimum Income: Income requirements tend to be more flexible due to the collateral provided.
- Employment: Strong preference for stable employment or verifiable business income.
- Credit History: Lenders may be more lenient when collateral backs the loan.
- Collateral: Ownership of property or a vehicle acts as security, reducing lender risk and often allowing for larger loan amounts or longer tenures.
How to Choose the Right Loan for Your Situation
The “best” loan for you depends on your financial goals, how much you can comfortably repay each month, and how quickly you need the funds. Different loans serve different needs, so choosing the right one means balancing these factors carefully.
- If You Need Flexibility: A personal loan is often the best choice. It is ideal for covering general expenses, emergencies, or consolidating debts.
- If You Have a Lower Income: Some licensed moneylenders offer smaller personal loans specifically designed for low income borrowers. Especially if you do not meet traditional bank criteria.
- If You Need Fast Disbursement: Licensed moneylenders typically process applications faster than traditional banks. Eligible applicants with complete documents can get quick loan approval. Cash can be disbursed the same day, making it a convenient option for urgent needs.
Tips for Securing Low Interest Loan Rates
A low interest personal loan can save you hundreds or even thousands of dollars over the loan tenure by reducing the amount of interest you pay. Even a small difference in interest rates can add up significantly, so it is important to compare offers carefully.
1. Compare Effective Interest Rate (EIR)
The Effective Interest Rate (EIR) gives you a clear picture of the true cost of a loan by including not just the headline interest rate, but also fees and other charges. Comparing EIRs helps you understand which loan is genuinely cheaper in the long run.
2. Maintain a Strong Credit Score
Your credit score plays a crucial role in securing low interest rates. To keep your score healthy, avoid late payments, keep your credit utilisation low, and minimise multiple loan applications within a short period. A strong credit profile can unlock better loan offers and more favorable terms.
3. Use Loan City to Compare
Use loan comparison platforms like Loan City to easily compare loan options side-by-side. This helps you find the best rates and terms without the hassle of contacting multiple lenders individually.
Make Your Loan Journey Easier with Loan City
Navigating loan applications, comparing rates, and checking eligibility can be time consuming. Loan City simplifies the process by providing side-by-side comparisons of the best personal loans in Singapore all in one platform.
With Loan City, skip browsing multiple sites and borrow smarter, faster, and with confidence.
