Did you know that you can use personal loans for more than just your home and car repairs, hospital bills, and other financial emergencies?

You can use your personal loan for other reasons, such as funding education, home renovation, wedding expenses, and debt consolidation.

A personal loan is an unsecured loan that you can use without using any of your assets as security. This means that a lender won’t take your assets if you default, but it’ll damage your credit score.

This guide will look at everything you need to know about personal loans and answer the important question, “how much personal loan can I take in Singapore?” Let’s dive in!

How Much Personal Loan Can I Take?

As long as you meet the age and income requirements for a personal loan, you can qualify for a personal loan in Singapore.

For instance, Singaporean and permanent residents earning an annual income below $10,000 can get a maximum personal loan of $3,000. This is the same for those earning $10,000 to less than $20,000.

If you earn $20,000 and above per year, you can qualify for a personal loan six times your monthly income. Foreigners in Singapore can qualify for a maximum loan amount of $500 if earning below $10,000.

Generally, you can borrow between two to six times your monthly income, up to a maximum of $200,000. However, the maximum amount depends on your credit rating and other existing credit facilities.

What Can A Personal Loan Be Used For?

As mentioned earlier, you can use it for various reasons, as there’s no collateral required. Below are some of the ways you can use your loan for:

Medical And Family Emergencies

While it’s always important to have an emergency kit for rainy days, emergencies and other accidents can happen anytime. Medical and family emergencies come without warning, and you may need extra financial support to solve the situation. You can take a personal loan to cushion these emergencies in such a situation.

Home Renovation Or Improvement

Home improvements require a large sum of money, and it’s important to go for personal loans with a longer term. You can take a personal loan to upgrade your home or complete repairs such as redoing the electrical wiring, fixing the plumbing, and completing the necessary repairs.

It’s an ideal option for borrowers who don’t have home equity or don’t want to get a home equity loan or a home equity line of credit. Unlike these loans, you don’t have to use your home as collateral.

Wedding Expenses

Wedding ceremonies can be expensive affairs with a budget of over $40,000. If you are planning for such a dream wedding and you don’t have the funds, you can use a personal loan to cover these costs and repay them later.

You can use it for big-ticket items such as the bridal dress and venue reservation, as well as smaller expenses like the cake, wedding planner, or photography and videography. Moreover, if you’re not looking to deplete your savings, you can take a personal loan to turn your dream wedding into reality.

Vacation Expenses

If you want to treat yourself and your loved ones to an unforgettable vacation, you can take a personal loan in Singapore. You might need a luxury cruise, or you’re thinking about a honeymoon.

Whether celebrating an anniversary or just graduating, you can find the best personal loans in Singapore to fund your dream vacation. However, remember that you’ll pay the interest on the loan later after your vacation is over.

Debt Consolidation

Debt consolidation is one of the most common reasons most Singaporeans take out a personal loan. You can apply for a loan to pay off several other loans or credit cards; you’ll combine all the outstanding balances into a single monthly payment.

Debt consolidation makes it easier to set favourable terms, such as tenure, to pay off your balances without getting overwhelmed by the higher interest rates.

One of the best benefits of using a personal loan for debt consolidation is the reduced interest rates. With the reduced rates, you can lower the interest amount you’ll pay and the time it takes to pay off your debt.

You can also use a personal loan for the following reasons:

• Moving costs
• Making large purchases
• Vehicle financing
• Alternative to payday loan
• Funeral expenses
• Helping loved ones with financial needs
• Paying for legal fees
• College tuition
• Business expenses

Do You Qualify For A Personal Loan?

Banks usually have age and income requirements. You must be at least 21 years and no older than 65 to qualify for a personal loan in Singapore.

Most banks will require you to have a minimum income of $30,000 annually, while those who make less than this are subjected to a higher interest rate.

On the other hand, if you’re a foreigner, you must have an annual income of at least $40,000 to $60,000 to get a personal loan from Singaporean banks. You can opt for a licensed moneylender if you don’t meet this criterion. Be sure to compare the best personal loan providers in Singapore, as some have lenient requirements, even for unemployed citizens and foreigners.

Can You Take Multiple Personal Loans?

Whether you can take more than one personal loan depends on the unsecured borrowing limit.

The Monetary Authority of Singapore (MAS) implemented this limit of up to 12 times a borrower’s monthly income. The unsecured credit includes student loans, personal loans, credit cards, and any other interest-bearing unsecured debt.

When you exceed this limit for three consecutive months, you won’t be able to access more unsecured credit. Financial institutions and banks can allow you to borrow up to six times your monthly income.

Your eligibility depends on your credit score, annual income, and residency status. So, if you’re eligible, you can take multiple personal loans in Singapore.

What To Consider

When looking for the best personal loan in Singapore, there are several factors to consider apart from the best interest rates. These include:

Put Your Money To Good Use

Although you can use a personal loan for any purpose, don’t take the freedom lightly. There’s always a risk of taking additional debts, including personal loans of any type. One of the best uses of a personal loan in Singapore is paying off high-cost debt, which lowers the interest rates and increases the repayment period. It also makes sense to take a personal loan for medical, financial, and home improvement emergencies.

What Is The Interest Rate?

When applying for a personal loan, you’ll always come across the Applied Rate (AR) and Effective Interest Rate (EIR) terms. AR assumes that the loan principal stays constant throughout the loan term and doesn’t factor in the fact that every repayment leads to a reduction in the principal amount.

On the other hand, EIR reflects the actual cost of borrowing with timely repayments. It is calculated after factoring in the gradual reduction in the principal over the loan term.

Always compare the EIR based on the same tenure and amount. Always look for the lowest-interest personal loan to get the best personal loan in Singapore.

What Are The Fees And Charges?

You shouldn’t only check the lowest interest rate when taking a personal loan in Singapore. There are other charges, such as:

Annual fees: Some financial institutions and banks charge a fixed amount annually in addition to the accrued interest. For instance, a five-year loan could imply five annual fee payments.

Late payment fees: If you miss your monthly repayments or pay less than the fixed amount by the due date, there is an applicable late payment fee. Give this special attention because some lenders are quite strict with delayed payments.

Change in tenure fee: Not all banks are flexible, but you should consider it. For instance, let’s say you’ve applied for a personal loan with a repayment of two years. However, due to some instances, the monthly repayment becomes too expensive. You could benefit by extending the loan tenure for an extra fee.

How Much Personal Loan Can I Take?

Banks and financial institutions determine your borrowing limit using your relationship with the bank, your monthly income, your residency status, and your credit score.

If you earn more, you can get more at reduced interest rates. Compared with several lenders who are best for a personal loan in Singapore.

How Soon Will You Get The Funds?

When borrowing a personal loan, it means speed is paramount. You need to know how quickly your personal loan will be approved and when the funds will hit your bank.

However, the period varies from lender to lender. Therefore, it’s important that you clarify this before applying.

Get the required documents ready to speed up the application process. For most banks, such as BST Credit, the funds hit the bank of your choice within minutes of your personal loan is approved.

Can You Afford The Repayments?

Don’t be tempted to take out a quick personal loan and forget the implications your personal loan repayments can have on your monthly budget. Although most banks and financial institutions will determine your loan based on your credit score and income, that might not be the actual amount you need.

Always ask yourself how much you need and can afford to repay each month. Also, consider how you currently use your monthly income, the monthly instalment, and whether the remaining amount will be sufficient for your daily needs.

Review your spending pattern over the past few months before deciding on the personal loan amount and tenure.

Other factors to consider include the following:

• There could be an effect on your credit score
• You could impact your credit card limit
• Will the early repayment fee be reasonable?
• How dependable is your lender?
• Have you explored alternatives?

Get The Best Personal Loan For Your Needs

Personal loans are an ideal way to raise quick cash for emergencies and debt consolidation, among other uses.

Whatever the reason, ensure you thoroughly check the lender’s fine print and fully understand the repayment terms based on your loan tenure and amount.

As long as you meet the age and income requirements for a personal loan, you can qualify for a personal loan in Singapore.

At BST Credit, we pride ourselves as one of Singapore’s best personal loan lenders. By browsing our sections, you can find more information about personal loans and other loan types.