Is there a difference between a term personal and a revolving personal loan?

Yes. A term personal loan usually involves a fixed period of time (longer loan tenure) and the interest rate is lower, while a revolving personal loan is more suited for those who are able to repay their personal loans as soon as possible, with much higher interest rates than a term personal loan. There usually isn’t any penalty for an early full repayment when it comes to a revolving personal loan, unlike a term personal loan.

How do I get the best personal loans by banks in Singapore?

There is really no “best personal loan” as it depends on what suits your needs the most. Currently, Standard Chartered, UOB, HSBC, and DBS are offering the best interest rates and personal loan promotion in Singapore. To make a better decision, you can compare them based on loan repayment tenures, effective interest rates (EIR) and minimum annual income requirement with MoneySmart's comparison tool.

Does my credit score affect my personal loan application?

Yes. By building a good credit score and maintaining it, your likelihood of having a home renovation loan application approved will probably be much faster.

What are other alternatives to a personal loan?

There are other types of loans with varying interest rates, loan tenures and loan terms such as renovation loans, SME business loans, education/study loans, debt consolidation plans and many more.

10 Things To Consider When Getting A Personal Loan

There are plenty of reasons for taking up a personal loan. It could be for home renovations, wedding events, emergency medical expenses, greater cash liquidity for a business or other reasons. Whichever the reason is, getting a personal loan is one of the fastest ways to cope with financial situations that require more money in a relatively short time.

However, taking on a personal loan requires certain commitments and consideration of several factors as you’re tied down to monthly repayments. Let’s take a look at some of the key aspects to bear in mind or act on before getting a personal loan, and during and after as well.

10 Questions To Ask Yourself Before Applying For Personal Loans

1. Do you have a good credit score?

If you maintain a good credit score, it will definitely help you get a personal loan much faster with shorter approval time of your loans. Usually determined by certain factors, your credit score can be affected by how timely you pay your bills, any late payments you have had, the amount of credit you use, how established your credit history is, your recent credit, and the number of accounts you hold.

2. Look at renovation loans instead (if applicable)

When you’re trying to get funds for your home improvements or renovations, you may be in a dilemma on which type of loan to pick. Although personal loans and renovation loans may be quite similar as they both offer loan tenures that range from 12 to 60 months, with maximum loan amounts of up to 6X your monthly income, personal loans may tend to have higher processing fees and higher interest rates (subject to fluctuations depending on economic conditions).

In certain economic conditions, it’ll be the reverse, with personal loans being a more affordable option. So, you’ll have to do your homework and research and compare the rates.

3. Have you tried SME business loans?

There are actually many SME business loans available in Singapore, which can be really beneficial (with more attractives interest rates and repayment terms than personal loans) for you if you’re thinking of improving the cash flow for your business.

In the event that you fail to qualify for any of the SME business loans by all the banks in Singapore due to certain reasons such as lack of a solid business plan or having insufficient track record (new businesses may not have enough time to build a good credit history), personal loans may be a good alternative.

4. Other study loans could be better (if it’s for education)

Education loans may be a better way to fund your local or overseas education compared to personal loans, as some like the DBS Study Loan offer an interest-free benefit during your period of study. Moreover, you’ll earn more savings than a personal loan over time and enjoy flexible repayment options available for specific education loan packages. To find out more, you may visit our platform to find the best education loan.

5. Perhaps a suitable DCP may help

If you’re planning to take up a loan only for unsecured loans like credit card bills and other types of personal line of credit, a “DCP loan”, also known as a debt consolidation plan could be an ideal repayment scheme.

It’ll help you combine all the outstanding unsecured debt (including those from different banks) into one single loan with one bank. The calculation of your DCP loan will be done by the DCP issuing bank and it is typically a sum of the total outstanding debts, plus outstanding interest, plus 5% on top of the total. Just one important requirement you’ll need to note: you’ll have to be a Singapore citizen or PR to qualify for this type of loan.

6. Will term or revolving loan work for you?

There are two categories of personal loans, namely the term personal loan, and the revolving personal loan. A term personal loan has a fixed period of time that usually caters to long-term needs. If you’re among those who need a year or more to completely repay your loan, this loan type is for you as the interest rate is lower.

Unless you’re confident of repaying your personal loan as soon as possible, a short term solution like a revolving personal loan would be apt although the interest rates are much higher. The upside is that there usually isn’t any penalty for early full repayment unlike a term personal loan. You can read more about the pros and cons of these two types of personal loans in our blog article here.

7. Try researching a bit for the best

You can either go to your preferred bank directly or tap on the convenience of our personal loans comparison tools like the one by MoneySmart to get an overview of the personal loan rates by most banks in Singapore, but do keep in mind that if you go directly to banks, you may miss out any alternatives which may offer better rates and loan tenures and end up repaying more than what you should.

8. Were there multiple applications?

You would want to avoid making multiple personal loan applications as whenever you’ve multiple enquiries in your records, it will affect the approval likelihood and speed of your requested personal loans.

Banks are able to retrieve your credit report from your records whenever you make a new loan application and each enquiry will be placed on your file. For every application you make, it will be deemed as a possibility of you attempting to take on more debt and this increases the risk assessment of the maximum potential loss in the case you are unable to make your loan payments on time.

9. Enquire with an issuing bank

The chances of getting a personal loan approved is relatively higher in most situations when you apply for a personal loan from your existing credit card issuing bank, because they already have your records.

10. Would you prefer 0% interest?

Personal loans do not really offer 0% interest, so if you’re searching for something short-term with 0% interest, a balance transfer may be ideal. It’s essentially borrowing from the available credit limit of your existing credit line or credit card account, while offering flexible repayments over a short period of time.

However, there's a one-time processing fee that is payable, plus you’ll need to be capable of paying back what you owe within 3 to 18 months.

Check out other Personal Loans with Low Interest Rates & Fast Approval

Explore Personal Loan

Step 1

Visit MoneySmart’s Personal Loans page

Simply click on “Apply Now” on your preferred personal loan, or you can choose to apply via your preferred bank’s mobile app or their website with your SingPass MyInfo (if you’re a Singapore citizen or PR). If you’re using SingPass MyInfo, it will then retrieve your identity and income data from SingPass. Thereafter, the approval-in-principle page will pop up briefly after you confirm/submit your MyInfo details.

Step 2

Get the required documentation ready

There is usually some necessary documentation needed in order for the bank to approve your personal loan application. This list of documents include (but is not limited to):

NRIC or other identification details
Latest computerised payslip
Latest 12 months’ CPF Contribution
Latest Income Tax Notice of Assessment (NOA) if you wish to be considered for a higher loan amount

Step 3

Pick your monthly repayment plan

Decide on your required amount before picking the suitable plan and also pick your preferred bank account to receive your funds, or provide the details of your other bank accounts.

Step 4

Review and confirm details

Depending on which bank and type of personal loan you’ve applied for, some banks may allow you to confirm your requested funds via the bank’s mobile app after reviewing your details.

Step 5

Receive your loan disbursement

The loan disbursement will be completed upon approval of your personal loan online application. Some banks have instant disbursement while others may take about 3-5 working days.

Frequently Asked Questions

Is there a difference between a term personal and a revolving personal loan?: Yes. A term personal loan usually involves a fixed period of time (longer loan tenure) and the interest rate is lower, while a revolving personal loan is more suited for those who are able to repay their personal loans as soon as possible, with much higher interest rates than a term personal loan. There usually isn’t any penalty for an early full repayment when it comes to a revolving personal loan, unlike a term personal loan.
How do I get the best personal loans by banks in Singapore?: There is really no “best personal loan” as it depends on what suits your needs the most. Currently, Standard Chartered, UOB, HSBC, and DBS are offering the best interest rates and personal loan promotion in Singapore. To make a better decision, you can compare them based on loan repayment tenures, effective interest rates (EIR) and minimum annual income requirement with MoneySmart's comparison tool.
Does my credit score affect my personal loan application?: Yes. By building a good credit score and maintaining it, your likelihood of having a home renovation loan application approved will probably be much faster.
What are other alternatives to a personal loan?: There are other types of loans with varying interest rates, loan tenures and loan terms such as renovation loans, SME business loans, education/study loans, debt consolidation plans and many more.
Is there a loan with 0% interest?: Currently no in Singapore, but an alternative is a balance transfer which involves borrowing from the available credit limit of your existing credit line or credit card account, while offering flexible repayments over a short period of time. However, there's a one-time processing fee that is payable.