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How do personal loans work? Here’s the process in 8 simple steps

Find out how a personal loan works every step of the way.

Compare a range of personal loans in Singapore

Name Product Interest Rate From Loan Amount Processing Fee
Standard Chartered CashOne Personal Loan
3.48%

EIR: 6.95%

S$1,000 – Up to 4x your monthly salary, subject to a cap of S$250,000
S$0
Get up to $1,200 cashback and Interest Rate as low as 3.48% p.a. (EIR 6.95% p.a.). T&Cs apply. Valid till 30 September 2021.
UOB Personal Loan
3.4%

EIR: 6.22%

S$1,000 – Up to 95% of your available credit limit
S$0
Get up to S$600 Cashback if you choose a loan of S$30,000 or more with a term between three and five years. This online offer ends on 30 September 2021.
HSBC Personal Instalment Loan
3.4%

EIR: 6.5%

S$1,000 – S$200,000
S$88
Apply online and get cashback of up to SGD3,100 on approval. Offer ends 30 September 2021. T&Cs apply.
DBS Personal Loan
3.88%

EIR: 7.56%

S$500 – Up to 10x your monthly salary
1% processing fee
Apply today and receive an interest rate from 3.88% p.a. (EIR 7.56% p.a), plus a 1% processing fee. Loans of up to 10x your salary may be available.
POSB Personal Loan
3.88%

EIR: 7.56%

S$500 – Up to 10x your monthly salary
1% processing fee
Enjoy a fast approvals service and an interest rate starting at 3.88% p.a. (EIR 7.56% p.a), plus a 1% processing fee.
Apply for a Personal Loan with Lendela
Apply for a Personal Loan with Lendela
5.3%

EIR:

S$1,000 – S$100,000
0
Receive a customised personal loan that meets your financial needs.
loading

Compare up to 4 providers

Looking to apply for a personal loan in Singapore but want to know more? Find out how they work and how you can apply. Whatever you’re looking to take out a personal loan for – to finance a new or used car purchase, consolidate debt, pay for a holiday or even cover wedding costs – there are a variety of personal loans to choose from.

Compare a range of personal loans in Singapore

Name Product Interest Rate From Loan Amount Processing Fee
Standard Chartered CashOne Personal Loan
3.48%

EIR: 6.95%

S$1,000 – Up to 4x your monthly salary, subject to a cap of S$250,000
S$0
Get up to $1,200 cashback and Interest Rate as low as 3.48% p.a. (EIR 6.95% p.a.). T&Cs apply. Valid till 30 September 2021.
UOB Personal Loan
3.4%

EIR: 6.22%

S$1,000 – Up to 95% of your available credit limit
S$0
Get up to S$600 Cashback if you choose a loan of S$30,000 or more with a term between three and five years. This online offer ends on 30 September 2021.
HSBC Personal Instalment Loan
3.4%

EIR: 6.5%

S$1,000 – S$200,000
S$88
Apply online and get cashback of up to SGD3,100 on approval. Offer ends 30 September 2021. T&Cs apply.
DBS Personal Loan
3.88%

EIR: 7.56%

S$500 – Up to 10x your monthly salary
1% processing fee
Apply today and receive an interest rate from 3.88% p.a. (EIR 7.56% p.a), plus a 1% processing fee. Loans of up to 10x your salary may be available.
POSB Personal Loan
3.88%

EIR: 7.56%

S$500 – Up to 10x your monthly salary
1% processing fee
Enjoy a fast approvals service and an interest rate starting at 3.88% p.a. (EIR 7.56% p.a), plus a 1% processing fee.
Apply for a Personal Loan with Lendela
Apply for a Personal Loan with Lendela
5.3%

EIR:

S$1,000 – S$100,000
0
Receive a customised personal loan that meets your financial needs.
loading

Compare up to 4 providers

How does a personal loan in Singapore work?

Personal loans work similarly to any other type of loan. You borrow a certain amount of money from a bank or lender so that you can pay for the things you need. A personal loan in Singapore may be used for a range of expenses, including medical emergencies, vehicle costs, education expenses or debt repayment.

Essentially, a personal loan in Singapore helps you fill a short-term or long-term need for finance. You apply for a loan from a lender who then assesses your suitability for the loan, and if you are approved, the lender will send you the funds for the loan. Your repayments will include the principal loan amount plus fees and interest. If you make your repayments as set out in your loan contract, your entire loan will be repaid when your loan term ends.

Choosing a personal loan in Singapore

Jump ahead to one of the steps in the personal loan process to find out more about it.

ComparisonEligibilityApplicationApprovalLoan fundingRepaymentLoan closure

Step 1: Explore loan options

Finding the right personal loan is the first step of the process. Here is a breakdown of the main types of personal loans available in Singapore:

Step 2: Compare personal loans in Singapore

After you’ve decided what type of personal loan you want to apply for, here’s how to compare the personal loan offers from different banks and lenders.

  • Loan amount. What are the minimum and maximum amounts the lender allows you to apply for and is it sufficient?
  • Loan terms. What are the minimum and maximum loan terms? Usually, terms of between one and seven years are available, but terms differ between providers.
  • Fees. Check for upfront fees such as establishment or application fees and ongoing fees such as monthly or annual fees. These will need to be incorporated into your loan amount.
  • Interest rate. Is the rate competitive?
  • Repayments. Once you know your loan amount and terms, you can use a loan repayment calculator to see if the repayments will be affordable on your budget.
  • Repayments. Can you choose between weekly, fortnightly or monthly repayments? Can you make extra repayments without a fee? Can you repay the loan early without penalty?

Step 3: Eligibility

Lenders have set minimum eligibility criteria for their personal loans. This can include any of the following:

  • Age. You will need to be at least 21 to apply for a loan in Singapore.
  • Income. You may need to earn more than a certain amount to be eligible to apply for a loan. This may be S$30,000 or lower, for example, S$20,000. Find out more about borrowing on a low income here.
  • Employment. Most lenders will require you to be employed, but some will consider unemployed applicants. Some lenders will also require you to be out of your probation period or to be employed full-time.
  • Residency. You may have to be a Singapore citizen or permanent resident to be eligible for a personal loan, although some lenders consider foreigners.
  • Credit profile. Your credit ratings may affect the interest rates you receive on a loan, especially loans issued by banks. In some cases, poor credit ratings and an unfavourable borrowing history are enough for lenders to deny your loan application.

However, even if you meet the minimum requirements for a loan, you will not be approved unless you can prove that you can afford the repayments. Lenders determine this by looking at your income, your debts and the stability of your employment.

Step 4: Application

The application process for a personal loan differs between lenders. Generally, you will have the option of applying online, in-branch, or over-the-phone. You can find a list of documents and information required to complete the personal loan application on finder Singapore review pages and on the lender’s website and may include any of the following.

  • ID. You will need to provide your employment pass, passport or IC.
  • Proof of address. You will need to provide utility or mortgage bills that include your residential address and full name.
  • Proof of income. Depending on the lender, you’ll need your latest 12 months’ Central Provident Fund contribution history statement or latest Income Tax Notice of Assessment.

Online applications usually take about 15 minutes to complete.

Step 5: Approval

Some lenders can give you an answer instantly while others may take a few days or weeks to approve you. There are two forms of approval: full approval or conditional approval.

Conditional approval usually takes less time but is given pending more information from you, such as additional payslips or documents relating to your assets or debts. Lenders may just ask for this information and not offer any conditional approval. This is to help them make a more informed lending decision.

Full approval is only given when you have supplied sufficient information for the lender to make a decision the lender has to approve you for the loan.

Step 6: Loan funding

Your loan can be funded in many ways depending on the type of loan it is and what you are using it for. For example, when you take out a car loan the lender may pay the car seller directly. This is often the case with a debt consolidation loan as well, with the lender directing funds to your debtors directly rather than to you.

If the loan is an unsecured personal loan, the funds will be sent to an account you nominate. Some lenders can transfer funds on the same day you apply while others might take a few days following approval.

Step 7: Repayment

Most lenders will allow you to choose your repayment structure. That is, weekly, fortnightly or monthly repayments. Generally, the more often you repay your loan, the less interest you will pay. When choosing your repayment structure you may also want to consider additional and early repayments.

  • Find out if your lender will charge fees for additional repayments
  • Check if your lender has restrictions on how much you can repay extra per year (generally fixed rate personal loans have this)
  • If you’re planning to repay your loan early, check if you’ll incur a penalty

Step 8: Loan closure

If you are simply making your repayments as set out in your loan contract, then your loan should be closed following your final repayment. However, if you are planning to repay your loan early, it’s a good idea to call the lender and get a final payout figure if you’re getting close to paying off your loan. This is to ensure the loan will be closed when you make your final payment and you won’t be charged any unexpected interest.

Questions we’ve been asked about personal loans in Singapore

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