Interest rates of loans in SG

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Loan SG 2022: What are the rates lenders are charging now?

Everyone faces some degree of financial uncertainty in their lives, some more often than others. The most common solution for most of us is to obtain a loan in Singapore. This can be in the form of a casual arrangement with a friend or relative, or a formal loan from a bank or licensed moneylender.

Formal loans come with specific criteria for repayment, including the additional cost of interest rates above the loan principal. These interest rates are not static and depend on several criteria.

The first of these is the prevailing economic environment; rates are lower during recession and higher during economic booms. The second includes unique and unpredictable factors. For example, events like the Covid pandemic can cause widespread instability that can lead to lower rates.

There are several personal criteria as well. An applicant’s financial standing, level of debt, employment status, and recent financial history all affect the interest rates on a loan.

Before applying for a loan, you should also consider whether a loan from a bank or licensed money lender is the better option for you. If you are facing financial problems, it can help you ride through the rough period.

Why is it important to compare loan SG interest rates?

The short answer to that question is – so you don’t throw away your hard-earned money.

Understand that rates vary by type of lender, the type of loan (personal, business, consolidation, etc.), loan term (minimum repayment period), and other factors. Savvy borrowers also keep track of cyclic trends in interest rates, which can be used to predict when the figure will rise or fall.

Remember, a seemingly miniscule difference of just 0.1% can snowball into a significant amount over the course of the loan.

Rates charged by licensed moneylenders for loans SG

The typical interest rate charged by licensed moneylenders varies between 1% and 4% per month. This upper limit of 4% is a figure set by the Ministry of Law.

However, a licensed money lender is allowed to charge an additional late interest rate of 4% per month on overdue payments. They may also impose a late repayment penalty fee, capped at $60 per month. A 10% processing fee may also be imposed when you take up the loan.

These are some factors that may affect interest rates offered to borrowers:

● Credit score – based on the current and recent financial history of the applicant

● Income – a higher income generally indicates a lower-risk applicant

● Credit utilisation with other lenders – every person is given a debt limit and the closer to that limit they get, the higher the risk

How are money lenders’ interest rates calculated?

Private money lenders do not use a flat rate method to calculate interest. Instead, they apply the reducing balance method. While the calculations mat be simpler with a flat rate, the reducing balance method saves you money.

Let us consider an example where a borrower takes a $3,000 loan to be repaid in 3 months.

With 1% p.a. flat interest rate calculation

● Month 1 – Outstanding amount: $3,000; Interest: $2.50; Instalment paid: $1,002.50

● Month 2 – Outstanding amount: $2,000; Interest: $2.50; Instalment paid: $1,002.50

● Month 3 – Outstanding amount: $1,000; Interest: $2.50; Instalment paid: $1,002.50

The minimum total amount paid over the course of 3 months is $3,007.50.

With reducing balance calculation

● Month 1 – Outstanding amount: $2000.83; Interest: $2.50; Instalment paid: $1,001.67

● Month 2 – Outstanding amount: $1,000.83; Interest: $1.67; Instalment paid: $1,001.67

● Month 3 – Outstanding amount: $1,001.66; Interest: $0.83; Instalment paid: $1,001.66

The minimum total amount paid over the course of 3 months is $3,005.

So, the borrower would have paid 50% more interest using the flat rate method.

What are the interest rates charged by banks?

Bank loan interest rates generally range from 3.5% to 11% per annum on paper. After including fixed charges, processing fees and other miscellaneous expenses, this figure may rise to between 6.5% and 20% p.a.

As with loans from licensed lenders, you should consider the fine print and not just the advertised rates. The most important piece of information you need is the effective interest rate (EIR).

Effective interest rate (EIR)

EIR gives you a more accurate impression of the cost of your loan than just the advertised rate. It factors in mandatory costs such as processing and administrative fees.

Let us again consider an example where a borrower takes a $3,000 loan to be repaid in 3 months. The interest rate is 10% but there is a bank processing fee of 1%.

The total amount to be repaid = Principal + Interest + Processing fee = $3,000 + $300 + $30 = $3,330

The EIR here is 11% despite the official interest rate of 10%.

Remember that the repayment frequency and number of instalments also affect the total amount to be repaid. This is because interest is calculated with every instalment – you pay more in interest every time.

Things to consider before taking a loan SG from banks or money lenders

Loans can be a wonderful tool for financial independence if you make good use of them. Otherwise, they can become a source of additional financial stress instead.

Always be aware of the additional costs of a loan. This may include:

● Late payment interest rates and penalties

● Administrative fees and processing fees

There are also other factors to consider:

● Credit history – Banks will immediately refuse a loan to anyone with a poor credit rating. Money lenders do not usually consider your rating before extending a loan. However, they are generally more expensive so always try to get a bank loan first.

● Credibility of lender – Not all money lenders are the same. Some offer greater flexibility and terms than others. It’s important to choose the right lender. Check out more tips about obtaining the right loan here.

We understand that choosing the right loan and comparing rates can be time-consuming and confusing. This is why we are here to help.

Get an instant loan with reasonable interest rates with us – reach out to us today.

Disclaimer

While all reasonable efforts are made to include accurate and up-to-date information on this website, errors or omissions may still occur. We are not liable for any loss or damage caused by the use of this website. The information on this website is for general information only and should not be taken as professional advice.

Related Posts

In times of financial need, we may turn to taking loans to help us overcome various cash flow needs. A popular type of loan is unsecured loans. This includes personal loans, business loans and more.

Here, we will share with you everything you need to know about unsecured loans – read on to find out!

What is an unsecured loan and how do unsecured loans work?

An unsecured loan is a loan that does not require collateral. If we compare unsecured loans with secured ones, the biggest difference between a secured loan and unsecured loan is the penalty when you default on your loan.

Secured loans require you to use a high-value asset (such as property, vehicles, etc) as collateral, if you default on your loan, the lender can seize your asset and sell it to cover their losses.

On the other hand, unsecured loans don’t require collateral, and if you default on your loan, your credit score will be adversely impacted. This would likely lower your chances of getting future loans approved.

Unsecured loans in Singapore also tend to have higher interest rates, lower loan amount and a shorter loan tenure as compared to secured loans.

Unsecured loans’ interest rates – flat or reducing

Unsecured loans’ interest rates are either flat or reducing (monthly rest).

For flat rates, interest payments are based on the original loan principal. This means that you pay the same monthly interest throughout the tenure, even as your outstanding loan gets lesser.

For monthly rest, the monthly interest is calculated based on your loan’s outstanding balance. This means that your interest reduces every time you make a payment.

What are the types of unsecured loans?

Here are four types of unsecured loans offered by banks and licensed money lenders:

1. Personal loans

Personal loans are versatile – they do not come with restrictions on what you can use it for. You can use it for various small and large expenses like paying off urgent expenses, weddings, surgeries, vacations, etc.

2. Study loans

Study loans grant you extra financing for your tertiary education. They are typically interest-free while you are studying and you can repay it after you have graduated.

3. Renovation loans

If you’re looking to renovate your house, renovation loans would be able to help you ease your cash flow, so you don’t need to fork out a lump sum in one go. You will need to prove that you are the owner of the house or a family member of the owner. This loan can only be used for renovations.

4. Business loans

It is common for SME owners to look for business financing. Business loans can help you finance that extra inventory or expand your business. To be eligible for an unsecured business term loan, your company must be incorporated in Singapore and generally has to be operating for at least two years.

What are the advantages and disadvantages of unsecured loans?

Advantages:

1. Legal

It is perfectly legal in Singapore to obtain an unsecured loan.

2. No Collateral Required

You don’t have to worry about losing your assets that are backed as collateral should you be unable to repay the loan. The lender will instead consider your credit history and salary to ensure that you are capable of repaying.

3. Fast and easy application process

Licensed money lenders provide a fast and easy application process for small unsecured loans and bigger ones. This means it is ideal for those looking for urgent cash loans.

Disadvantages:

1. Smaller loan amount

As unsecured loans are not backed by collateral, lenders will tend to minimise their risk by offering a smaller loan amount as compared to secured loans.

2. Higher interest

Due to the higher risk borne by lenders, you will have to pay a higher interest rate as compared to secured loans.

Where and how you can apply for an unsecured loan

1. Applying for an unsecured loan with banks

Banks offer interest rates of 3.2% onwards for unsecured loans and would typically conduct a stringent inspection of your credit history before approval.

Before you apply, ensure that you are eligible. If you are a Singapore citizen or Permanent Resident, and have a minimum annual income of $20,000, between 21 to 65 years old, and have a good credit history, you should be able to qualify for an unsecured loan.

Set up a meeting with your bank, and remember to bring the required documents like IC, proof of income and others that your bank may require.

2. Applying for an unsecured loan with licensed money lenders

Licensed money lenders offer unsecured loans in Singapore with competitive interest rates ranging from 1-4% a month, as well as a streamlined application process.

Find out more about your eligibility, documents required as well as loan limits here.

Tips to get the best unsecured loan

Here what you can do to get the best unsecured loans:

1. Maintain a good credit score

Because of the lack of collateral, banks and licensed money lenders will carefully consider your credit history and borrowing history with other lenders to ensure you are able to repay the loan.

Maintaining a good credit score may even lower the interest rates, and increase the loan amount and loan tenure offered to you.

To get a good credit score, repay your loans consistently and on time.

2. Maintain employment

As long as you are employed with a steady source of income, even if your employment is of an informal or freelance nature, you will have a higher chance of getting an unsecured loan.

Looking for unsecured loans with low interest rates?

96BM Credit offers the best unsecured loans with competitive rates and loan terms. Apply for a loan with us now.

 

You’ve come to the right place.

96 Credit is a legal moneylender that provides convenient and seamless online loans.

Receive your loan in just a few simple and easy steps.

All you have to do is send in your application and get your loan approved in under 20 minutes.

Start your online loan process with just a click of a button.

Get Your Instant Online Loan in Singapore Sorted in 3 Easy Steps

  1. Send in an online enquiry through the web form with your requirements and loan needs
  2. Our legal moneylender officer will be in contact with you within 15 minutes to schedule a same day appointment
  3. Head down to our office and get a fast loan approval within 20 minutes.

Why Would You Need an Instant Online Loan in Singapore?

Sometimes we find ourselves in need of urgent cash due to unforeseen circumstances. Local banks may not be an option as they do not grant fast loan approvals and will usually take a few days for the loan to be disbursed. On the other hand, a legal moneylender will be able to offer same-day loan approvals for your emergency needs.

Situations that require an instant online loan in Singapore:

  • Utility Bills
  • Rent
  • Holidays
  • Emergency medical expenses
  • Home renovations
  • Wedding banquets

What Documentation Do You Need to Get Your Loan Approved?

To be eligible for an instant loan, you should have a stable monthly income statement. If you require extra assistance, our legal moneylender officers are here to aid our clients through their unique situations.

When visiting our office, do bring along your NRIC and income statement for seamless loan approval.

What Types of Loans Can Be Approved Through an Online Loan Application?

We offer online approvals for all loans and situations. All you have to do is indicate the type of loan you require on your enquiry form and our loan officers will assist you with the process.

Depending on your employment and financial status, some loans may be easier to obtain, such as a Payday Loan. For further enquiry, get in touch with one of our experienced officers.

Benefits of an Instant Online Loan in Singapore with Credit96

  • Expedited application approval
  • Caters to all credit scores
  • Quick and convenient
  • Negotiable loan terms

Frequently Asked Questions on Our Instant Online Loans

How does an instant online loan in Singapore work?

Online loans allow clients to make their first enquiry through a web form. Once their requirements and needs are accessed, a loan officer will get in touch with the client within 15 minutes to schedule an appointment in our office to receive the loan.

Am I eligible for a loan?

To be eligible for a loan, you will need to be:

  • A Singapore Citizen, Permanent Resident, or a Foreigner with a valid permit
  • At least 18 years of age
  • Employed with a monthly income

Am I still eligible for a loan with a poor credit score?

Depending on the loan required, we do offer loans no matter the credit score. Get in touch with us for further enquiry.

How fast can I receive my loan?

Once the client has signed their loan contract at our office, the funds will be immediately disbursed.

 

You won’t have time to look for solutions when a financial emergency hits. Keep yourself prepared for the worst by knowing your loan options beforehand. The best of those options is an urgent loan.

In this blog post, we talk about the idea behind urgent cash loans and how you can qualify, as well as their pros and cons.

What is an urgent cash loan?

An urgent cash loan is one that is approved very quickly. 96bm Credit specialises in such loans. We can approve an urgent cash loan Singapore faster than any bank. Visit us at our office and you could have the money you need in your hands within half an hour.

Are you eligible for urgent cash loans?

Urgent cash loans are very popular precisely because of the accelerated approval process. However, not everyone can qualify for one. One reason is that quick processing depends on the health of your financial record.

Applicants graded AA or BB (credit score of 1843 and above) ordinarily have never defaulted on a loan, have rarely or never made late payments, and are not involved in any legal financial proceedings. They are most likely to receive an urgent cash loan very quickly.

The other crucial factor is the right ID.

We respect our clients’ privacy and security and have very stringent measures in place to prevent identity theft and fraud. To do this, we require applicants to provide ID such as NRIC and/or passport so we can confirm their identity. This keeps both you and us safe from fraud and legal problems.

Pros of an urgent cash loan

There is always a huge demand for an urgent cash loan Singapore. Here are some of the reasons for its popularity.

A woman holding Singapore dollar notes as she obtains urgent cash loan in Singapore

Fast process

No one enjoys waiting. With our fast approval process, you can come in, get the cash you need, and then leave in less time than it takes to drink a cup of coffee.

Immediate relief

Most people who apply for an instant cash loan need the money desperately. It could be a medical emergency, a legal issue such as reclaiming an impounded vehicle, or maybe even a product that you need that is on discount for a limited time. In each of these scenarios, waiting too long can have unfortunate consequences.

No collateral

Some money lenders in Singapore who offer special loans attach tough conditions to the loan contract. At 96bm Credit, all our urgent cash loans are unsecured. So long as our loan executives approve the loan, you do not have to leave anything you own with us.

Cons of an urgent cash loan

Quick loans are very convenient when you need cash in a hurry but there can be downsides as well.

High interest

When a licensed moneylender approves an urgent cash loan Singapore, they have to dispense the funds at very short notice. The loan executives have to complete the formal process and paperwork within a very compressed timeframe.

One way that they account for this is by imposing an administrative fee. This may be a standalone cost or incorporated into the terms as part of the interest on the loan.

Unhealthy financial habits

There is no doubt that instant cash is very convenient. Unfortunately, that convenience can become addictive. Some borrowers put themselves in precarious financial circumstances, content in the knowledge that an urgent cash loan will give them temporary relief.

In the long run, though, this lax attitude leads to accumulated debt that is very difficult to pay off.

How to get a fast cash loan

So, you need cash urgently. Here are 3 ways to improve your chances of approval and also ensure a smooth application process.

Neon sign of cash loan logo with arrow sign represents the concept of getting urgent cash loan in Singapore

Employment – casual or formal

One of the best indicators of a borrower’s ability to repay a loan is their employment history. A steady income gives them the means to support their lifestyle as well as meet their financial obligations.

This is great news for someone who has always been employed. However, applicants who do not have a formal job can improve their chances of approval by consistently engaging in freelance work and earning other casual income.

Documentation

Before you apply at our office, make sure you have all the necessary documents. This includes your NRIC or FIN card and/or passport. You will also need income-related paperwork such as payslips for at least the past 3 months. Know your SingPass password as you may need to log in to show related transactions.

Credit score

Maintain a good credit score even when you do not need to apply for a loan. Some easy steps are to always pay your debts on time, manage a range of credit lines, and maintain a healthy credit utilisation level.