Sometimes, it does not matter how financially sound you are. You could still be faced with a need for urgent cash to cover unexpected expenses.
In such unpredictable situations, taking a personal loan from a private money lender in Singapore in an expensive city like Singapore can be an ideal choice.
However, you might be confused about the process of getting one. Where to begin? Is there a licensed money lender near me I can approach? How to know about the best rates in the market?
These are all questions you might need answers to. But before we understand any of that, let’s first figure out what a personal loan is.
What is a personal loan?
A personal loan is an unsecured loan that permits the borrower to get the loan amount without requiring any collateral, like jewellery or a house. In exchange for this benefit, personal loans typically come at higher interest rates, because if you end up defaulting on payments, the lender will be unable to recover the amount by confiscating your property or other assets.
Types of loans to consider from a licensed money lender
Licensed moneylenders offer different types of loans for varying needs that you may have. Some of the kinds of loans that you can explore depending on your requirement are medical loans, payday loans, wedding loans, Grab/ Gojek loans, study loans, or debt consolidation loans.
Payday loans are instant loans but need to be paid on your next payday. Grab/ Gojek loans and study loans are for those who are exploring financial assistance to purchase a vehicle to be a Grab/ Gojek driver or to take on further studies.
Wedding loans have been specifically curated to help young couples cope with the high cost of arranging a wedding. A debt consolidation loan helps a borrower with bringing all their loans into a single loan for ease of managing payments.
Eligibility for a personal loan from a licensed money lender
You also have to know whether you are eligible for a loan or not. Here are the criteria:
- To get a personal loan in Singapore, the borrower has to be above 18 years of age.
- The borrower must be employed (full-time, part-time, freelance, or self-employed) or have some other income source.
How does a personal loan work with a moneylender?
Most personal loans have fixed repayment periods and fixed interest rates. Many personal loans are amortized, which means that the monthly instalments comprise the principal repayment and the interest charged. Interest is charged using the reducing balance method.
Such loans are easy on the pocket as they do not demand any sort of balloon payment towards the completion of the loan term. To make it easy for you, here’s a table that shows how a personal loan of S$10,000 meant to be paid back in twelve months, pans out.
| Loan amount | $10,000 |
| Loan term | 1 year |
| Reducing interest rate | 2% per month |
| Monthly repayment | $945.60 |
| # | Payment | Interest | Principal | Balance |
| 1 | 945.6 | 200 | 745.6 | 9,254.40 |
| 2 | 945.6 | 185.09 | 760.51 | 8,493.89 |
| 3 | 945.6 | 169.88 | 775.72 | 7,718.17 |
| 4 | 945.6 | 154.36 | 791.24 | 6,926.93 |
| 5 | 945.6 | 138.54 | 807.06 | 6,119.87 |
| 6 | 945.6 | 122.4 | 823.2 | 5,296.67 |
| 7 | 945.6 | 105.93 | 839.67 | 4,457.00 |
| 8 | 945.6 | 89.14 | 856.46 | 3,600.54 |
| 9 | 945.6 | 72.01 | 873.59 | 2,726.95 |
| 10 | 945.6 | 54.54 | 891.06 | 1,835.89 |
| 11 | 945.6 | 36.72 | 908.88 | 927.01 |
Other factors to consider while applying for a personal loan in Singapore
Monthly income
The amount you can get as a loan depends on your monthly income, so it is advisable to keep this in mind.
Here’s how your earnings determine the amount you can get from licensed moneylenders in Singapore.
| Annual Income | The amount you can borrow from a licensed moneylender |
| Less than $10,000 | Up to $3,000 if you’re Singaporean/PR Up to $500 if you’re a foreigner residing in Singapore |
| $10,000 or more and less than $20,000 annually | Up to $3,000 whether you’re Singaporean, PR, or a foreigner residing in Singapore |
| At least $20,000 annually | Up to 6 months of your monthly income whether you’re Singaporean, PR, or a foreigner residing in Singapore |
Interest rates
A licensed moneylender can charge up to 4% interest per month. In the event of late payment, a late interest of 4% can be charged for every month that the repayment has been delayed. Also, the late interest can be calculated only on the principal amount that is remaining to be paid.
Term flexibility
If you need a loan in the first place, chances are you do not have easy access to cash. This means that if any unforeseen circumstances arise in the future, like losing your job, you may not be able to make your repayments on time.
With help from flexible and reliable moneylenders in Singapore, you can renegotiate the loan terms and conditions. This could mean a reduction in the rate of interest, a longer repayment period, and even a higher loan amount.
Fees and charges
When applying for a personal loan from a moneylender, you must also be aware of the additional fees they charge. These can include:
- a fee not exceeding $60 for each month of late repayment;
- a fee not exceeding 10% of the principal of the loan when a loan is granted (processing fee); and
- legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.
However, it is good to note that the total amount charged as fees by legal moneylenders cannot be higher than the principal that you have borrowed.
No credit score discrimination
While banks are often strict when it comes to adhering to the credit score, licensed moneylenders are more concerned about your ability to repay the loan and may therefore approve your application even if your score is low, as long as you can show a regular source of income.
Because most licensed moneylenders forgo CBS credit checks, your application process is a lot faster too. You can typically get a fast cash loan within 30 minutes, as long as you meet their criteria and your documents are in order.
Tenure
A licensed moneylender generally will not approve loans for periods over 12 months. However, the tenure of the loan can vary according to your loan amount and repayment history.
The need for a personal loan can arise at any point of time in life. Hence, at such a time, it is important to take note of the factors mentioned in this article.
It is always best to speak with loan experts about your options before applying for a loan. By understanding your financial circumstances and how you are placed as a borrower, you will know which type of loan to go for. If you do wish to get a personal loan, do consider Cash Direct for our quick, efficient, and helpful service.
About the Author
 A legal, reputable licensed lender providing a wide range of loans for personal and business use since 2010, Cash Direct goes the extra mile to provide tip-top customer service and loan guidance.
