Singaporean personal loan statistics 2020

Thinking about funding your next purchase with a personal loan? You’re not alone. Finder’s latest survey of 1,008 Singaporeans aged 16+ reveals that nearly 1 in 3 (that’s 32% or 928,000 people) have taken out a personal loan in the past 12 months.

Why are Singaporeans taking out personal loans?

It seems that covering basic expenses is a priority for those who’ve taken out a loan, with just over 1 in 10 Singaporeans taking out personal loans to keep themselves afloat or to help their families and friends (13% and 11%, respectively).

Financing a mortgage is another popular reason for needing a loan, along with buying a car or paying off credit card debt, with 1 in 10 Singaporeans (10%) taking out a loan for each of these reasons.

Men more likely to take out a loan than women

It may or may not come as a surprise, but it turns out men are significantly more likely to take out a personal loan than women. Only about 1 in 4 Singaporean women (24%) have taken out a personal loan in the past 12 months, while around 2 in 5 men (41%) say the same.

The biggest difference between genders? Men are significantly more likely to take out loans so they can help their families or friends. Just under 1 in 5 men (17%) take loans out for this reason, compared to just 5% of women. Men are also much more likely to take out a loan to buy a car (15% of men compared to 5% of women).

Middle-income earners are most likely to need a loan

Although lower-income earners (those earning less than $3,000) are taking the brunt of the pandemic’s economic impact, it’s actually middle-income earners (those earning $6,000-$8,999 and $9,000-$11,999) that are most likely to take out a personal loan.

Not only that, but across all income brackets, Singaporeans earning $6,000-$8,999 are also the most likely to take out a loan so that they can cover daily living expenses (21%). By comparison, only 14% of low-income earners (those earning less than $3,000) took out a loan for this reason.

It seems that personal loans aren’t just for low to middle-income earners. In fact, more than a quarter of high-income earners (those earning more than $12,000) have taken out a personal loan in the past 12 months. Top reasons cited by people in this income bracket include financing a mortgage (10%), buying a car (8%) and covering daily living expenses, paying off credit debt and helping family and friends (7% each).

Employed people are more likely to take out a loan than the unemployed

The good news is that people who aren’t currently employed (and therefore can’t service the debt) are less likely to take out a personal loan than those with a job. Only 24% of unemployed people took out a loan in the past year, compared to 34% of people with jobs.

Of the unemployed, those that are currently seeking a new job are most likely to take out personal loans (33%), followed by those who are studying (29%) and homemakers (18%). Meanwhile, retirees (9%) and those not looking for a job (8%) are the least likely to take out a loan.

Nearly half of renters have taken out a loan

A breakdown of different living situations suggests that Singaporeans who pay their own rent are most likely to take out a loan, with nearly half (47%) saying they’ve done so. Nearly a third of first-time homeowners (32%) have taken out a loan, while those who are not financially responsible for their home, are living with relatives or are not first-time homeowners are slightly less likely to have taken out a loan (30% each).

Funding life’s big events

If you’ve recently gotten engaged, gotten married, moved house or had a child in the past 12 months, then there’s more than a 50% chance that you’ve taken out a personal loan. The recently engaged and home movers are most likely to have taken out personal loans, with roughly 3 in 5 (61%) doing so in the past 12 months.

1 in 3 recent home movers (33%) have taken out a personal loan to cover daily living expenses, while 30% have used the loan to fund renovations and 29% have used the loan to finance a mortgage. Just 16% have used the loan to pay for a boat and 20% have used the loan to pay for a wedding-related expense.

No surprises here – the recently engaged are more likely than others to be using a loan to pay off a wedding, engagement ring or proposal, with 32% of people at this life stage using a loan for this reason.

Unfortunately, nearly half of recent retirees still find the need to take out a personal loan. In fact, more than a third (35%) have done so just to cover their daily living expenses.

Sports car owners more likely to take on debt

The type of car you own could have an impact on whether or not you’ll need a personal loan. Sports car owners are most likely to take our loans, with roughly 9 out of 10 (92%) doing so. The most popular reason isn’t actually related to vehicles – a whopping 83% of sports car owners have needed to take out a loan in the past 12 months just to cover their daily expenses. Other top reasons cited by this group include paying off credit card debt, helping family and friends and, of course, buying a car (67% each).

Tips for paying off your personal loan faster

As with any type of debt, the faster you pay it off the better. Here are some tips to help you pay off your personal loan faster:

1. Look for the best option for your circumstances. Ensuring timely payment of your loan starts even before you take out the loan. Before loaning any amount, it’s best to look at all viable options and determine which one best fits your current circumstances. Luckily, there are guides available that will help make the decision easier for you.
2. Make extra repayments. By exceeding your typical monthly payment, you can chip away at your loan while saving on interest. Another sneaky trick is to make bi-weekly repayments. By paying off your loan in half-repayments every two weeks, it can feel like you’re paying the same amount each month while actually shaving off at least a couple of weeks.
3. Refinance or consolidate. The marketplace is always changing so it’s important that you stay alert to find the best rates possible and jump on them when you can. And, if you consolidate multiple loans, you’ll save yourself the headache of having multiple payments each month.
4. Save your change. You’d be surprised by how fast your nickels and dimes add up. Look for an app that will round up change from purchases made with a card and use your savings for an extra payment.
5. Take advantage of discounts. Some lenders will offer you a slight discount for either going paperless or enrolling in autopay. Don’t sleep on these savings.

• Methodology

  This data was collected from a survey of 1,008 Singaporeans aged 16 and above, conducted by Milieu in October 2020.