Guidelines to follow when taking a personal loan  

Should you take a personal loan? 

If you are weighing your options of applying for a personal loan from a bank or a private licensed moneylender, this article will guide you in the best way.

personal loan man with calculator

Before you choose a private company to lend a personal loan, it is vital to understand how the loan application process works.

A private money lender offers loan amounts faster, with flexible repayment options.

What is a personal loan?

If you find yourself in any unforeseen financial crisis like a medical emergency, the best way to get instant cash is to apply for a personal loan. A licensed moneylender can approve a loan to ease your burden when walking on a tightrope.

A personal loan is an unsecured amount. A legal money lender will offer this loan without property or collateral as a guarantee. Hence, they are at a higher risk in such cases.

A personal instalment loan is a long-term loan that is paid in easy instalments. You can apply for it to handle a sudden expense that needs a lump sum of money. Moneylenders can charge a processing fee of up to ten per cent for approving a personal instalment loan.

You can apply for a personal loan due to various reasons.

  • Hosting a wedding or an engagement ceremony
  • Home renovation processes
  • Educational loans
  • Starting a new venture
  • House relocation
  • Rental down payment
  • Funeral
  • Accidents or medical situation
  • Planning a vacation

Tips to select the best private money lender for a personal loan

Selecting a licensed private financier is the first step to avoid discrepancies while applying for a loan.

Here are a few tips for selecting a reputed money lender in Singapore.

Check for hidden charges

A reputed private creditor will explain all the terms and conditions of the loan contract in detail. They will follow a transparent business process and will not have hidden charges.

According to the Moneylenders Act, the private money lender should provide a valid loan information report to the borrower upon request.

Check for data security

Choosing an expert lender will ensure the safety of your personal information and documents with the organization.

Easy application and approval process

Legal lending firms follow a safe, easy application system. They also have a 24-hour service to approve loans faster.

Flexible interest rates and repayment options

Compare and choose the most suitable loan provider offering customizable loans with low-interest rates and flexible instalment options.

A private finance company may also have its mobile application designed for the benefit of the customers. It is an added advantage of an experienced and a licensed moneylender.

A borrower can easily log in and check their loan status, outstanding instalments and get instant reports on the go.

Eligibility to apply for a personal loan from a money lender

Once you have chosen a licensed moneylender, the next step is to check the eligibility criteria to apply for a personal loan. You should have completed 18 years to apply for a personal loan.

  • A Singaporean citizen whose annual income is less than S$10,000 can avail of a maximum loan of S$3,000. A foreigner with the same salary can avail a loan of up to S$500.
  • For a permanent citizen or a foreigner with an annual salary between S$10,000 and S$20,000, the maximum loan can be S$3,000.
  • For Singaporeans and foreigners whose annual income is more than S$20,000, a loan amount six times their monthly income can be disbursed.

Prepare and submit the necessary documents

A permanent resident of Singapore has to submit:

  • Proof of residence
  • A copy of the National Registration Identity Card (NRIC)
  • Proof of annual income

A foreigner working in Singapore must submit:

  • Work permit details
  • Passport and Visa
  • Rental agreement as proof of residence
  • Employment letter and payslip

Check loan details

The next step in applying for a personal loan is checking for interest rates and repayment options. You can choose to pay back your loan monthly, quarterly, half-yearly, or as a lump sum annual amount.

All licensed money lenders in Singapore have to abide by the rules of the Ministry of Law (MinLaw). The basic rules are:

  • A private legal financier cannot charge more than ten per cent of the principal loan amount as a processing fee.
  • The interest rate cannot be more than four per cent per month.
  • They cannot charge a late fee of more than S$60 per month for delayed instalments.


It is essential to verify the reputation and credibility of the financial institution to avoid loan sharks and scammers. You should choose a licensed moneylender listed in MinLaw for applying for a personal loan in Singapore.