Types of Loans

Most people go through financial hardships, but it is in these difficult times when loans can be a useful tool. You’ll need to explore your options carefully before entering into a financial contract with a lending company. Acquiring financial help may be a blessing, but it can also be a bane if you don’t educate, prepare, and protect yourself.

Loan Types

Personal Loan

When you badly need cash but can’t ask friends or family for help, you can apply for a personal loan from a licensed moneylender in Singapore. A personal loan can be beneficial because you can use the money at your discretion. The interest rates of a personal loan are also usually lower compared to banks or credit cards.

Why Get a Personal Loan

You can use a personal loan for any major expenses, such as a home renovation or household repairs, your child's school fees, or emergency expenses like a family member's hospitalisation. Some people also use personal loans to consolidate their debts or pay off their credit card bills if the interest rates are lower than the banks.

However, a personal loan might not be the best idea if you're planning to use the money to fund a wedding, a dream vacation, or a big purchase. If this is the case, it's better to start a savings plan so you can avoid borrowing money and putting yourself in deeper debt.

In Singapore, you can enter into two types of personal loan.

  • An unsecured personal loan requires no collateral and the system can be quite dynamic because you can set the amount to borrow, from $500 to $100,000, and for how long you intend to pay this back.
  • A secured personal loan will help if you're planning to borrow more than $100,000 from the moneylender. You may be asked to put up collateral and comply with the terms as set by the company.

Personal Loan: Requirements and Eligibility

Your salary or income will determine the interest rates, which is usually set at a fixed rate. Banks and moneylenders will look at your credit rating, employment status, and income bracket before approving your Singapore personal loan.

But licensed moneylenders may be more lenient with their qualifications and eligibility, so it's easier to secure a personal loan from these companies. You'll also likely get a faster loan approval if you get a secure personal loan since you are offering collateral.

Personal Loans: What to Remember

When you take out a personal loan, you'll be in debt until you've paid off the balance. You also can't make additional loans from the licensed moneylender until you reduce your balance to zero. So, you need to carefully look at the repayment options of a personal loan, as well as your capabilities to pay before you sign any agreement.

A personal loan can be a big help if you're using it the right way and not living beyond your means. Exercise responsibility and borrow only when you need the personal loan and when you have the means to pay on schedule.

Payday Loan

A payday loan is also called a short-term loan. This financial assistance allows you to secure cash faster when you don't have enough funds because you have yet to receive your next pay. In other words, a payday loan can sustain your cash flow in between pay checks.

Why Get a Payday Loan

You might need a payday loan to cover an unexpected or emergency expense. Do you have to pay for something in full but your savings cannot cover the amount? Then taking out a payday loan might be a wise decision. If you don't have access to a credit card or a personal loan, a payday loan might also be sufficient.

Most people choose payday loans because its loan approval is faster compared to other types of loans. In most cases, you can get the money within 24 hours by applying either online or at the lending company’s office. Licensed Singapore moneylenders also have minimal requirements for approving payday loans. This financial scheme is short, convenient, and fast.

Payday Loan: Requirements and Eligibility

In Singapore, you need to be employed, between the age of 21 to 64, and a citizen or a Singapore permanent resident (PR) to be able to secure a payday loan. If you're not a citizen or a holder of a PR, you must provide proof of your work permit in the country.

Payday Loan: What to Remember

It's tempting to secure a payday loan given the nature of its process, but this type of loan has higher interest rates and shorter lending terms. If you fail to make payments, the late fees or finance charges can quickly balloon.

Consider taking out a payday loan from a licensed moneylender with terms you can work with. There are many lending companies in Singapore, but some offer terms that are less burdensome than others.

Foreigner Loan

Foreigners working in Singapore can secure a type of personal loan when they're strapped for cash. Since foreigners will have a harder time getting a loan from a bank, they can turn to licensed moneylenders for financial assistance and apply for a foreigner loan.

Why Get a Foreigner Loan

It's not always easy for foreigners living in Singapore to obtain extra cash for unforeseen expenses since they don't have family nearby. They will likely also be shy about borrowing money from their friends who are locals.

But even foreigners face common problems that the locals face, such as paying rent, complying with a security deposit, doing house repairs, or covering medical or emergency bills. Thus, a Singapore foreigner loan can be useful in these situations. In some cases, foreigners may even use this loan to pay for a PR application or to get their relocation to Singapore rolling. Some expats also apply for this loan to send money for emergencies back home.

Foreigner Loan: Requirements and Eligibility

A non-local or non-citizen above 21 years old without a Permanent Resident status may secure a foreigner loan from licensed moneylenders in Singapore. These institutions will no longer have to review the foreigner's credit history, but you may be required to submit copies of any of the following documents:

  • bank statements
  • passport
  • work permit
  • letter of employment from the Singaporean company
  • proof of income
  • payslip
  • utility bills, reflecting your current address
  • tenancy agreement

Foreigner loans usually take a day to process if approved and if the documents are in order. The loan may either be unsecured (without collateral) or secured (with collateral), depending on what you've arranged with the lender.

Foreigner Loan: What to Remember

Always look for a Singapore licensed moneylender with an excellent reputation to loan money from. This way, you'll be assured of genuine financial advice from a capable lender. You are assured that the lending company will be compliant of the regulations as stipulated by the Ministry of Law.

Bridging Loan

Banks and moneylenders extend a bridging loan to borrowers intending to put a down payment on a new home while still waiting to sell their current property. A Singapore bridging loan is for short-term only, and it's specifically designed to help the homeowners (borrowers) secure a new house until they receive the proceeds made from the sale of their old house.

Why Get a Bridging Loan

You can take advantage of a bridging loan if you want to buy a new property before someone else. If this property is a priority, then you can use this money to:

  • make a deposit as soon as possible
  • secure enough cash for a down payment
  • sell off your current property within six months and avoid paying the Additional Buyer’s Stamp Duty (ABSD)
  • buy a house from an auction
  • buy a property that's not mortgageable but you want to fix it and flip it

Bridging loans are easier and faster to obtain than a personal loan. Aside from using the money to purchase a new property, however, a bridging loan may also be used for home renovations while you're still waiting for the financial company to approve your mortgage application.

In Singapore, you can apply for two types of bridging loans.

  • A capitalised interest bridging loan enables you to secure financing for the whole amount of the new property, and you may start repayments after you sell your current house. However, there will be considerable interest accrual on the principal amount of your loan if you choose this scheme.
  • A simultaneous repayment bridging loan enables you to make repayments if you have both a bridging loan and a home loan. You're accorded 12 months as leeway for selling your old property, but you will be asked to provide additional documents to ensure your ability to pay off your debts.

Bridging Loan: Requirements and Eligibility

Generally, bridging loans is available to any individual or business entity requiring immediate funds to secure a new property. Documentation requirements are pretty straight-forward, so the processing of the loan takes less time and hassle.

The terms of a bridging loan are also more flexible than other types of loans. Some licensed moneylenders may even allow you to repay the interest first until you sell your old house. You may also be able to pay off the loan once it matures without getting penalised.

Bridging Loan: What to Remember

A bridging loan's interest rates and fees are higher than the standard home equity loan because of its short tenure (within six to 12 months). Weigh your options carefully before entering into this agreement as the loan may drill a hole in your bank account if you cannot pay off on schedule. Worse, you can lose the property if you don't have a clear plan in making the repayments.

Essentially, you'll be taking two mortgages under this loan so be sure that you can maintain and sustain these.

Business Loan

Opening or expanding a new business requires funding, and if you can't get enough capitalists and investors on board your venture, you can turn to banks for a loan. However, proving your credit rating and financial capacity to banks can take months before your loan is approved. If you want to start building or expanding your business as soon as possible, then you can secure faster funding from a licensed moneylender.

Why Get a Business Loan

There are many viable reasons to obtain a Singapore business loan from a moneylender. Apart from raising capital to open and start a new business, you may also take advantage of the opportunity to grow your venture using the money you get from the loan.

As any business person should know, you need to shell out money to grow your business because you'll have to spend for the following:

  • advertising and marketing
  • addition of staff or workers
  • physical improvements of the business site
  • increase in stocks and inventory
  • equipment upgrade

You can also use a business loan to support your cash flow if you have customers or clients with special payment arrangements or if there are inventories yet to be sold.

There's a wide variety of business loans available in Singapore.

  • A secured business loan requires collateral like financial assets, bonds, and other properties from the borrower.
  • An unsecured business loan requires no collateral, but the borrower has to show proof of solid credit history or creditworthiness.
  • A guarantor-based business loan involves a third party that will also bear the responsibility of the repayments, should the borrower be unable to pay.

Business Loan: Requirements and Eligibility

The requirements and terms of a Singapore business loan may vary from lender to lender. Thus, it's important to carefully look into the agency you're approaching to ask for a loan. The business, however, must be duly licensed and registered in Singapore for at least two years. The borrower must also be a citizen or a Permanent Resident of the country and holds at least 30 percent of the company's ownership.


Most licensed and legal moneylenders might ask for the following documents to process your application:

  • Identification of the business owners and directors
  • Income tax returns
  • Bank account statements
  • Accounting books or balance sheets

Business Loan: What to Remember

It goes without saying that you must not put your business in a situation where you incur unnecessary debt. However, there will be instances where taking a loan can be the best decision you make to ensure that your business survives and stays afloat for a long time. As with anything, consider the pros and cons of the loan first before signing the dotted line. If it's going to increase your revenues, then a business loan can be a great opportunity.


Need more information about the right Singapore loan to apply for? Keep browsing our site for information-rich articles before you make that big decision. Check out this link for list of licensed money lenders.

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