Personal loans can be entirely helpful if you do not have a stable monthly income flow or situation. Although the loanable amount and interest rate might vary from lender to lender, it is important to select from multiple loans suitable for your needs.
How much can I borrow with personal loans?
- You can borrow up to six times your monthly income from private lenders.
- The maximum you can borrow is 10 times the amount of your monthly salary, though this cap is often raised if you have high credit scores or are considered financially irresponsible.
- The Monetary Authority of Singapore (MAS) sets the maximum loan-to-income ratio in Singapore at 12 times your monthly income. MAS normally allows you to borrow only a certain amount of money in an effort to prevent a debt crisis, which in turn could hurt the economy.
What is an unsecured loan?
Unsecured loans are the type of loans that let you borrow money without pledging anything as collateral (something of value that you provide to the lender as security, such as a house or a car). Unsecured loans come in many different types, as outlined below.
Credit Card Loans
Credit card loan terms are typically capped at the rate your credit is actually good for. That means that when you apply for a loan, lenders can offer lower rates than they could if you were making good credit – but only if you have good credit in the first place. If you fall behind and fail to pay your bills on time or run up huge bills with your credit card debt, lenders can threaten to cut off your benefits and increase your interest rates.
A common requirement is that you must demonstrate that you have adequate monthly income to repay the loan.
A line of credit is a revolving account you can access multiple times and withdraw funds from whenever the need arises. The interest rate is variable, but you will only be charged if you spend the money. Banks will usually charge an annual fee to keep your line of credit open.
Personal Loans (whether instalment-based or variable repayment)
These are loans that are used for personal reasons to help you get out of a financial pinch, such as paying for home loans, car, tuition, child support, etc.
It is an unsecured loan (meaning there is no need for collateral as security) with relatively short repayment periods, which are often between one to five years.
The loan amount can be as much as up to four times your monthly salary. If your annual income is S$120,000 or more, you may be eligible to borrow up to 8 times your monthly income.
Education loans are a great way to finance education, particularly if you’re planning to study abroad, need to take out insurance policies that exclude pre-existing conditions, have the opportunity to build a nest egg after graduating, or if you have dependents to look after.
An education loan in Singapore carries an interest rate of 4% to 6% a year on average. The general interest rate ranges between 6% and 9% annually, making this a cheaper alternative to other loans.
Furnishing and Renovation Loans
Furnishing and renovation loans are available when you require capital to complete a renovation or remodelling project. It can be in the form of funds that can be used to pay for materials or equipment (this includes any necessary real estate acquisition costs). Depending on the lender, this may include either a bank guarantee or a risk-weighted asset.
With a diligent approach to budgeting and management, you should be able to refinance your renovation loans at lower rates than those available for other types of consumer loans.
When determining my loan amount, what factors are taken into account?
Personal financing is a convenient way to get money at your doorstep on short notice. However, its availability depends on various factors like your age, income, salary, and whether you have any existing loans with other lenders. There are many variables that can affect your maximum loanable amount such as:
The main aspect that would determine the principal you can borrow is your creditworthiness. Your credit score is a numerical measure of your financial history.
Those with good credit scores are usually approved for lower-priced financing, while those with poor credit scores often have to pay more for the same terms as those with good credit.
In general, if you have a steady, predictable income and can show lenders that you have ample funds for your needs, the lower the interest rate and the more flexibility you will have regarding repayment and loan approval.
Your employment history will include any jobs you had with creditors including current or former employers. Some lenders will even look at your wage history and even your cash advances to see if you have a reputation for poor financial management.
Monthly Income and Existing Debt
Your income and existing debts are numbers that tell lenders how risky you are as a borrower.
Your income should be sufficient to effectively service existing debts and support your monthly living expenses. Knowing this, it’s important that you understand how much debt you may be able to handle and what factors might make it dangerous for you to take on more debt.
The loanable amount varies according to which type of financing you’re applying for. This includes how much you meet the criteria for and your overall financial capacity for repayment.
By law, most personal loans cannot exceed this limit. The Monetary Authority of Singapore (MAS) sets maximum amounts that financial institutions can lend based on the local property market and other factors.
Is it possible to qualify for a larger loan?
Definitely. Consider these 7 important tips on how to portray yourself as a strong candidate for larger loan amounts:
- Lenders differentiate themselves by offering different products and services so they appeal to different types of borrowers. The best way to get approved for the best loan is by shopping for multiple lenders to filter which works best for your needs
- Opt for longer repayment terms. Note that there is a minimum loan term capped at 6 months as well.
- A cosigner is someone who agrees to pay the full balance on your loan if you go into default. Enlisting a cosigner on a traditional loan typically allows you greater flexibility in interest rates and fees that may be charged by the lender if approved for a loan.
- Many times, especially for unsecured loans, lenders will request collateral – basically anything that can be used as a counter-weight against your guarantees if you fail to make the loan. So be sure that you have something of value to vouch for your repayment capacity.
- Paying off your existing debt before applying for a new loan will prevent lenders from raising your rates or asking you for more money than you are able to repay.
- By improving your credit score and making regular payments on time, under the terms of your existing loan or credit card.
- It is possible to increase your chances of being approved for a larger loan by improving your income and savings.
1.) What is the maximum personal loan amount?
As regulated by MAS, the maximum loanable amount is capped at 12 times the borrower’s monthly income.
2.) How much can I get approved for a personal loan?
The amount you can get approved for may depend on your credit score, income information, and personal details which lenders look at when assessing your suitability for a loan.
3.) How much loan can I get on a $35,000 salary?
On the basis of MAS’ maximum loanable amount of 12 times the monthly salary, that amounts to S$420,000.
4.) How much loan can I get on a $30,000 salary?
An amount up to and not exceeding S$360,000.
The Bottom Line
Do you have difficulty weighing your options? We at Instant Loan are here to help you. We understand that securing money can be tough, which is why we make it easy.
Instant Loan is a loan comparison service that helps you get financing by giving you a list of loans and financial products from the top licensed moneylenders in Singapore, curated to address your specific need.