If you find yourself in urgent need of money but feel hesitant to ask your family and friends for help, a personal loan might be the perfect solution. With a personal loan, you can borrow cash from a bank or financial institution and repay it in fixed installments over an agreed period. While you’ll need to meet certain criteria like a minimum income requirement and a good credit history, getting a personal loan from a bank is generally cheaper and safer than borrowing from a moneylender. So, let’s take a look at the top personal loans with the lowest interest rates available in Singapore right now.
1. At a Glance: Best Personal Loans in Singapore (Aug 2023)
Here are the current starting interest rates offered by the most popular personal loan providers in Singapore. Let’s use an example of a Singapore citizen earning $2,500 a month, looking to borrow $10,000 and repay it over 3 years.
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UOB Personal Loan:
- Interest rate: 3.88% (EIR 7.29%)
- Processing fee: 0%
- Monthly repayment: $310
- Eligibility: Singapore Citizen/PR with an annual income of $30,000 or UOB Credit Card/CashPlus customer
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Standard Chartered CashOne:
- Interest rate: 3.48% (EIR: 6.95%)
- Processing fee: 0%
- Monthly repayment: $307
- Eligibility: Singapore Citizen/PR with an annual income of $20,000 or Foreigner with an annual income of $60,000
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Citibank Quick Cash (New Customers):
- Interest rate: 3.45% (EIR: 6.5%)
- Processing fee: 0%
- Monthly repayment: $307
- Eligibility: Singaporean/PR with an annual income of $30,000 or Foreigner with an annual income of $42,000 (Rates apply to new Citi customers only)
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DBS/POSB Personal Loan:
- Interest rate: 3.88% (EIR 7.9%)
- Processing fee: $100
- Monthly repayment: $310
- Eligibility: Singapore Citizen/PR with an annual income of $20,000 or Foreigners with existing Cashline and/or Credit Card account or Existing DBS customers
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HSBC Personal Loan:
- Interest rate: 4.0% (EIR: 7.5%)
- Processing fee: 0%
- Monthly repayment: $311
- Eligibility: Singaporean/PR with an annual income of $30,000 for salaried workers, $40,000 for self-employed or commission-based workers, or Foreigner with an annual income of $40,000
Not mentioned in this table is OCBC’s ExtraCash personal loan, which offers an interest rate of up to 5.43% (EIR 11.47%) and a monthly repayment of $323, with a $100 processing fee.
2. Hold Up! What Do Interest Rate, EIR, and Processing Fees Mean?
Let’s clear up some jargon before we move forward. Understanding these terms will help you make an informed decision.
Interest rates: Personal loan interest rates are typically quoted as “from X%,” as they can vary based on your credit history, loan amount, and loan tenure. The final interest rate will be determined after your application is approved.
EIR: Effective Interest Rate (EIR) is a more accurate reflection of the cost of borrowing, as it takes into account other fees, like processing fees, and the loan repayment schedule.
Processing fee: This is the primary hidden cost of personal loans. It is usually deducted from the loan amount, reducing the cash you receive. For example, a $10,000 loan with a $100 (or 1%) processing fee means you only get $9,900 in cash. It’s essential to consider this fee as it increases the overall cost of borrowing.
Now, let’s dive into the details of the five highlighted personal loan packages.
3. UOB Personal Loan
UOB’s personal loan is exclusively available to existing UOB credit card or CashPlus customers who are Singaporeans or PRs aged 21 to 65. Additionally, you should be a salaried worker earning at least $30,000 per year. If you’re not an existing UOB customer, you’ll need to get a UOB credit card or CashPlus account to apply for a UOB Personal Loan.
The interest rate for a 12-month loan period is 3.77% p.a., with an EIR of 6.89% p.a. For other loan periods (24, 36, 48, or 60 months), the interest rate is fixed at 3.88% p.a. with an EIR ranging from 7.21% to 7.29% p.a. Previously, UOB waived processing fees only for loan periods of 24 months and above. However, they now waive processing fees for all loan periods.
If you’re an existing UOB customer, you can enjoy instant approval when applying for your personal loan online.
UOB Personal Loan Promotion
Thinking of applying for a UOB Personal Loan? Apply now to get up to $350 cash or an ErgoTune Supreme V3 Ergonomic Chair (worth S$599), and up to 2.2% unlimited cash rebate from UOB. If you’re a new-to-UOB CashPlus customer, you’ll also receive an additional $100 rebate. This promotion is valid until August 31, 2023.
4. Standard Chartered CashOne
The Standard Chartered CashOne personal loan is available 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 (lower than other banks) and $60,000 for foreigners. You don’t need to be a salaried worker to apply; Standard Chartered accepts salaried employees, variable/commission-based employees, and even self-employed individuals.
You can apply for the CashOne personal loan online through SingPass, and your loan disbursement will take only 15 minutes. Being an existing Standard Chartered customer is not a requirement for this personal loan.
While the CashOne loan offers fast approval, it also comes with an initial annual fee of $199 (deducted from your approved loan) for any loan tenure between 1 to 5 years. From the second year onwards, you won’t have to pay any more annual fees unless you miss any installments, in which case, you’ll be charged $50 in annual fees for that year, along with a late payment fee of $100. So, remember to stay on top of your payments!
Due to the $199 fee, CashOne becomes more worthwhile for larger loans. For example, a $10,000 loan would mean you’d be paying a fee worth 1.99% of the principal amount.
While the interest rates are advertised starting from 3.48%, with an EIR of 6.95% and above, the actual interest rates are personalized, so yours may differ from the example given.
Standard Chartered CashOne Promotion
From now until August 31, 2023, apply via MoneySmart to receive up to $1,120 cash or an Apple iPad Pro 11-inch M2 Chip Wi-Fi, 128GB (worth S$1,260.25), plus up to $3,100 cashback from Standard Chartered.
5. Citibank Quick Cash (New Customers)
Citibank Quick Cash is exclusively available to customers who are new to Citibank loans. If you already have a Citibank loan, you’ll be offered a higher interest rate. With the Citi Mobile App, you can easily apply for Quick Cash, key in the amount you need, and receive the funds instantly.
Citibank offers Quick Cash to Singapore Citizens, PRs (salaried or self-employed) with a minimum annual income of $30,000, and foreigners with an annual income of at least $42,000. The eligible age range is 21 to 65 years.
With Citibank Quick Cash personal loan, you can choose a tenure of 12, 24, 36, 48, or 60 months, all with zero processing fees. The interest rate starts from 3.56% for a 1-year tenure and 3.45% for a 3-year tenure. The EIR remains at 6.5% for all tenures.
Do note that these rates are only for new Citi Credit Card or Citibank Ready Credit account holders. Existing customers have their own rates and can apply for a personal loan via the Citi Mobile App without providing additional documents.
For a visual representation of Citibank’s interest rates, refer to the image below:
Source: Citibank
Remember, the rates mentioned here are based on examples, and actual rates may differ.
6. DBS/POSB Personal Loan
DBS’s personal loan is available exclusively to existing DBS customers. If you already have DBS Cashline or a DBS credit card or credit your salary into a DBS or POSB deposit account, you can immediately receive the cash.
The loan is open to Singaporeans, PRs, and foreigners with DBS Cashline or credit card accounts, aged 21 to 75 with a minimum annual income of $20,000. This makes DBS personal loans accessible to a wider range of individuals, including slightly older groups and lower-income earners compared to other banks.
Similar to Standard Chartered CashOne, you don’t need to earn a regular salary to be eligible for this loan. Self-employed individuals and commission earners can also apply.
DBS’s personal loan offers interest rates as low as 3.88%, with a processing fee of 1%. This brings the lowest possible EIR to 7.9%. Loan tenures of 6 months to 5 years are available. However, the actual interest rate will vary based on what DBS approves for your loan, with the maximum possible EIR being 20.01%.
7. HSBC Personal Loan
HSBC’s personal loan is open to Singaporeans and PRs aged 21 to 65, with an annual income of $30,000 and above for salaried workers, and $40,000 for self-employed or commission-based workers. Foreigners must earn at least $40,000 per year and hold an employment pass with at least 6 months’ validity.
The standout feature of HSBC’s personal loan is its long tenure of up to 7 years, the longest currently available in Singapore. So, if you need to borrow a large sum and require lower monthly repayments, HSBC’s personal loan is worth considering.
On the downside, HSBC’s interest rates aren’t the lowest. Advertised rates start from 4% p.a., with the EIR ranging from 7.5% p.a. to 15% p.a. However, keep in mind that actual rates may vary from person to person. HSBC’s personal loan also comes with an annual fee of $60, with only the first year’s fee waived.
8. Which Personal Loan Should You Choose?
If you’re looking for the cheapest personal loan, UOB Personal Loan and Standard Chartered CashOne are the top contenders. Additionally, Citibank Quick Cash is a good option for new Citi customers. However, keep in mind that the actual interest rate offered by a bank depends on factors such as your credit history, loan amount, and loan tenure. If one bank doesn’t offer you the lowest advertised interest rate, it’s worth comparing other banks to see what they can provide.
Certain groups of individuals may find it more challenging to secure a personal loan:
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Older individuals: If you’re above 65 years old, DBS allows you to apply for a personal loan up to the age of 75 years.
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Those earning an annual income below $30,000: DBS Personal Loan and Standard Chartered CashOne have a lower minimum annual income requirement of $20,000.
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Commission-based workers or self-employed individuals: Citibank Quick Cash, HSBC Personal Loan, DBS Personal Loan, and Standard Chartered CashOne are all suitable options. Some other banks may only accept salaried workers.
If you need cash quickly, the fastest options are DBS Personal Loan (for existing DBS customers), UOB Personal Loan (for existing UOB customers), and Standard Chartered CashOne.
On the other hand, if you don’t need the cash immediately but require a longer tenure to repay a large loan amount, HSBC’s personal loan offers the longest tenure in Singapore, up to 7 years.
Regardless of the personal loan package you choose, opt for the smallest loan amount and shortest term that you can manage comfortably. This will help minimize your interest payments.
9. Term Loan vs. Credit Line – Which Should You Choose?
While researching personal loans, you might come across various loan types that don’t seem to fit the criteria we’ve discussed so far. At MoneySmart, we focus on term personal loans, where you borrow a fixed sum with a predetermined repayment plan.
We recommend term loans because they typically have lower interest rates, allowing you to repay the loan gradually and at a pace that suits your financial situation.
Many banks also offer a personal line of credit, which is a pre-approved amount of money you can cash out in part or whole. However, it would be best if you repaid this amount immediately to avoid steep interest rates. It’s crucial to be confident in your ability to repay before considering this option.
These days, most banks base their personal loans on your credit cards or credit line limits. Therefore, you’ll need either a credit card or credit line to apply for the loan. However, if the loan comes with a structured repayment plan, it is still considered a term loan.
Keep in mind that using your credit cards or credit line for a personal loan will render them unusable since you’ve effectively “spent” your credit on a cash loan.
10. Being in Debt is No Fun…
But it can be prevented. If you must take out a loan, make paying it off on time your top priority to avoid late charges. In the meantime, re-examine your income and budget, noting every expense, to avoid resorting to loans in the future.
Ideally, create a budget that allows you to set aside some cash for the future without sacrificing your necessities.
It’s also essential to build up an emergency fund worth a few months’ expenses. This fund will come in handy in case of unforeseen circumstances, so you won’t have to rely on loans.
Lastly, consider the types of insurance you need, starting with hospitalization insurance as a minimum. If you have dependents, life insurance is also crucial. Adequate insurance coverage ensures you won’t face substantial bills if the unexpected occurs.
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