Man holding a black board with the word ‘unsecured loan’, representing intention to get an unsecured loan in Singapore

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Table of Contents

Unsecured Loan Singapore: How It Works, Types & Where To Get

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

Here, we will share with you everything you need to know about unsecured loans in Singapore – 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 make a comparison of secured vs unsecured loans, the biggest difference between the two 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. 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 amounts, 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 them for. You can use them for various small and large expenses like paying off urgent expenses and bills, which includes wedding loans specially for wedding expenses, medical loans for urgent surgeries, loans for a much-needed vacation, and so on.

2. Study loans

Study loans provide you with the funds you need to further your studies. They are great for financing your tertiary education. They are typically interest-free while you are studying and you can start repaying your study loan 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 make a huge dent in your savings 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 renovation works.

4. Business loans

It is common for SME owners to look for business financing. Business loans can help you finance that extra inventory purchase 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 in operation for at least two years.

What are the advantages and disadvantages of unsecured loans?


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 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 the loan extended to you.

3. The fast and easy application process

Compared to traditional banks, licensed money lenders provide a fast and easy application process for small unsecured loans as well as bigger ones. Licensed money lenders could be a viable, legal loan option for those looking for urgent cash loans.


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 in Singapore

1. Applying for an unsecured loan with banks

Banks offer interest rates of 3% per annum 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, have a minimum annual income of $20,000, are 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 your IC, proof of income, and other documents 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 in Singapore

Here is 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 score and borrowing history with other lenders to ensure you can 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, always repay your loans consistently in full 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. Need advice? Feel free to contact us — our friendly loan officers are more than happy to help.


About the Author
Weetee Neu

Weetee Neu is a writer based in Singapore. He has written for MediaCorp, SPH magazines, Tripzilla and others.


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.

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