You might be wondering; how much you can take as a personal loan.
People looking for the best personal loans in Singapore are often confused on how much they can borrow. With so many lenders and loan products to choose from, it’s not surprising that consumers can feel overwhelmed by the process of getting a personal loan in Singapore.
The answer depends on many factors, including the credit score of a borrower, their income, and other debts they have.
We are going to discuss how much personal loan one can take in Singapore. In addition, we explore what you need to qualify for the loan.
How Much Personal Loan Can I Take?
To know how much personal loan, you can take first, you have to qualify to get the loan.
All Singaporeans, foreigners, and permanent residents can apply for the loan though there are different requirements for each category. But in general, anyone with an annual income of less than $20,000 isn’t eligible for a personal loan.
To access a loan as a Singaporean or PR, one must be earning at least $20,000 each year. Though, with a yearly income between $20,000 and $30,000, if you apply for any loan, it will attract a higher interest rate than other Singaporeans and PRs earning $30,000 and above.
For foreigners, they must earn at least $40,000 and $60,000 each year to qualify for a personal loan in Singapore.
What Can A Personal Be Used For?
Taking the best personal loan is a good idea when you need some urgent cash or want fast cash loan for emergencies in Singapore. Though it takes time to pay it over time, it’s a viable means to meet short-term needs.
But, ensure you are in a position to repay back the best personal loan in Singapore before committing to apply for it.
Here are what you can use your personal loan for:
Medical And Other Family Emergencies
Accidents and emergencies are unpredictable in life. They hit at the worst time and you may be forced to exhaust your savings and seek a personal loan to get some relief.
It’s not that savings don’t come in handy, but emergencies may force you to take up a loan to sort out the difference after exhausting the savings.
So, in such a case, personal loans can help you cushion the emergencies and present a better time frame to restructure your plans financially.
Weddings And Vacations
Couples do plan for their big day often. But in some scenarios, some miscellaneous budgets may crop up.
Even if it’s not an emergency, a personal loan comes in handy to buy a banquet for your wedding.
Consider having a loan for your biggest event in the following ways: make your day special by going for a holiday, hiring personnel to help in the wedding, and many others.
All these are understandable because weddings in Singapore can be damn expensive.
Credit Cards Debt Payments
You can also use a personal loan to pay off an outstanding credit card debt.
Though it’s not advisable to be doing this for long, you can equally use this a s a measure to keep you off the hook while realigning your finances.
Education Expenses: School Textbooks And College Tuition
As a student, you can also take a personal tailored to your needs to help with your education expenses.
It can be for tuition fees or take the loan to purchase extra school textbooks. Alternatively, the loan can help you pay for other educational needs until you finish your studies.
Consolidate Debts
A personal loan is also instrumental in consolidating debts. Debt consolidation plan and balance transfer are examples best personal loans you can use to consolidate your loan into one manageable account.
Through this personal loan comparison in Singapore, one can pay a fixed monthly amount with fair or lowest-interest personal loan rates.
Remember, when consolidating your debts, the personal loan interest and terms are subject to your income annually and all supporting factors. Consider the lowest interest rate for a personal loan in Singapore.
But, ensure you compare the criteria and interest of a personal loan before applying with financial institutions and various banks in Singapore.
Do You Qualify For A Personal Loan?
To qualify for a personal loan as a first-timer, there are requirements. Here are the least documents you need to get a loan:
- If you’re a Singaporean or PR, You’ll need a photocopy of NRIC. Foreigners need an employment pass with at least 6 months’ validity and a valid passport.
- Income proof
- When earning a salary, your latest e-statement, or latest Income Tax Notice of Assessment, or your CPF contribution history statement for the last 12 months
- If you are self-employed, you’ll require the latest 2 years of Income Tax Notice of Assessment
With these documents, banks will still need some time to do the required checks in order to process the loan. Even with instant approval advertisements from banks, the institutions still need time to validate and authenticate the information given.
Can You Take Multiple Personal Loans?
To answer this question, you must understand your limit. Often the answer is it depends because you can take more than one personal loan but the determinant is the Monetary Authority of Singapore (MAS) unsecured credit borrowing limit.
The limit is usually up to 12 times a person’s monthly income. In case you exceed the limit for three consecutive months, it implies you won’t access any further unsecured credit.
Most banks and financial institutions can allow you to borrow up to six times your monthly income for a personal loan. However, they will consider your aggregate outstanding debt like other personal loans, unpaid credit cards, and credit score to determine your limit of borrowing.
Here are the eligibility requirements to have multiple loans.
Besides, your credit score, there are other eligibility requirements to have multiple loans. They are annual income and residency status.
Even though banks and financial institutions can offer you up to six times your monthly income, it’s never a guarantee in most cases. You may get two or four times your income per month dependent on your financial situation.
Here are the requirements for the maximum borrowing amount:
| Borrower’s Annual Income | Singapore Citizens (SCs) And Permanent Residents (PRs) | Foreigners Residing In Singapore |
|---|
| Less than S$10,000 | $3,000 | $500 |
| At least S$10,000 but less than S$20,000 | $3,000 | $3,000 |
| At least S$20,000 | 6x monthly Income | 6x monthly Income |
How to manage multiple personal loans?
Managing more than one personal loan can be challenging. You are only better off managing multiple loans if your debt-to-asset ratio is low and monthly obligations are manageable.
In case you have a number of financial obligations each month and your debt-to-asset ratio is only 50% or more, you will need to reassess your finances to at least reduce the number.
Consider these as ways to manage your multiple personal loans better:
- Understand your financial standing by evaluating your debt-to-asset ratio
- Make a budget to maximize your financial resource efficiency
- Consolidate all your high-interest unsecured debts to manage credit card bills and other debts
- Work with a financial institution or bank to restructure your personal loan for easier repayment
Multiple loan management is a viable idea if you understand your finances, can create a budget, and stick to the agreed repayment plan. Alternatively, you can engage CreditMaster’s personal loan experts to help you solve your puzzle.
What To Consider
Besides taking into consideration the requirements of taking a personal loan, here are other considerations to take into account when applying for a personal loan in Singapore.
Plan In Advance
One sure thing to consider before applying for the best loan in Singapore is to plan ahead. This involves making sure you can pay back the loan on time.
Remember, when taking the debt, it comprises the initial sum you’ve borrowed plus the Singapore personal interest rate it will accrue and any other additional charges. And if you are able to pay the loan on time, you’ll maintain a good credit score.
A credit score often reflects your financial health and the number of risks lenders have when lending you money. As a customer, the better the credit score the more trustworthy you’re to lenders.
However, if you default on loan payments, it will negatively affect your credit score. This lowers your chances of getting loan approvals in the future.
Better Financial Management
Even if you’ve never taken a loan, the cardinal rule to finances is wise management. The best way to effect this is by budgeting and only borrowing within your means.
When applying for a loan, choose a payment schedule suiting your budget.
This way regardless of the instalment frequency, you can pay back the loan on time to avoid a negative listing on your credit score. This way, you’ll be able to repay the loan on time.
Explore Alternatives
Even though taking a personal loan is one of the best options out there, you can equally seek other alternatives like borrowing from family and friends. Engage them on your plans and goals, and give assurance about how you will be able to pay back on time.
Know How Much Loan You Qualify For
According to experts, the best way to figure out how much loan you can take in Singapore depends on your income level, existing debts, and expenses, among other factors.
Moreover, your net worth will be a major determinant of the amount of loan you can take in Singapore. In the end, the only sure way to find out how much personal loan you can take in Singapore is by speaking to one or various financial organisations.
Contact our CreditMaster experts at +65 6748 1338 today to help you know the amount and apply for a personal loan.
