How Much Personal Loan Can You Borrow in Singapore?

Knowing how much you can borrow is one of the first thoughts you have when you are thinking of getting a personal loan in Singapore. Many lenders will promise very large amounts in their advertising, but the truth is that many elements determine the amount of money you can actually borrow. In this article, we’ll look at these factors, how to ensure that you will get the amount you need, and how comparing the personal loans available can get you the best option possible.

Borrowing Caps and Regulations

The whole lending environment is regulated to encourage responsible borrowing. The Monetary Authority of Singapore (MAS) has set some clear guidelines to ensure that consumers are not taking on excessive debt. If we are talking about unsecured loans from banks and you are earning at least $20,000 annually, you can borrow up to 12 times your monthly salary. But the amount will still depend on creditworthiness and the polices of the bank. You will face further restrictions if you already have outstanding unsecured debt.

In a scenario in which you are earning less than $20,000 annually, your access to unsecured loans from banks will be restricted. But, in these situations, licensed moneylenders can be a very good and safe option. Licensed moneylenders are lenders that are also regulated by the government, so you will not be getting into any trouble. They follow strict caps regulated under the Ministry of Law.

• If you earn below $20,000 per year, you can borrow up to $3,000
• If you earn more than $20,000 per year, you can borrow up to 6 times your monthly income

Understand the Total Debt Servicing Ratio

When you want to get a personal loan, it’s essential to understand the total debt servicing ratio. Also known as TDSR, it is an affordability measure tool that ensures that borrowers can manage their debt responsibility. TDSR limits your monthly debt obligations to a maximum of 55% of your gross income. To make this even clearer, this includes everything from credit cards to car loans, mortgage payments, and any other kind of loan. So, if your gross monthly salary is $5,000, your debt cannot exceed $2,750. As already mentioned, this is to ensure that borrowers don’t end up not being able to pay their debt.

By using data from the Credit Bureau in Singapore, banks will evaluate your debt obligation to ensure compliance. If you are thinking of applying even if you know you are not eligible, you are wasting your time, because the lenders will check. If a large part of your income is already going towards paying back debt, your personal loan in Singapore might be refused, or you might be offered a very low amount. TDSR is a system that protects both the borrower and the lender, which is why it’s actually respected.

What Influences Your Loan Eligibility?

Before jumping into comparing the personal loans available in Singapore, you want to know if it’s worth applying. The eligibility requirements are going to slightly differ from one lender to another and from one bank to another; but there are a few factors that will also matter. The first one is your income stability, because you need to prove that you can pay back the loan. Self-employed people can apply, but they need to provide more documentation than people with a full-time job, and the amount will probably be a little less.

The second element that is important when you are applying for a personal loan in Singapore is your creditworthiness. Your credit score and history will influence the lender’s decision and the amount you can receive. The higher your score and the better your history looks, the higher the chances of being approved for the amount you want. Your residency status will also have a say in this, because a resident is more likely to be accepted for a larger amount. A foreigner can also receive approval, but the criteria are typically stricter. And as a bonus fact, the closer you are to the retirement age, the lower your loan amount will be compared to that of young professionals.

Learn to Estimate Your Borrowing Capacity

After you finish comparing the personal loans available in Singapore, you can use a simple approach to get an estimate of how much you will likely be lent. Start by writing down your monthly gross salary, because that’s what we are working with. Now add up all of the debt that you are already paying, and ensure that it’s not above 55%. Do not forget to add everything that can be considered debt, even credit cards. You should not pass the affordability threshold even after you add the new loan that you want to apply for. It might sound silly to some, but remember all of your other expenses, like rent, groceries and so on.

Now we are back to finish comparing the personal loans available, because, as we mentioned in the beginning, the amount you can borrow will depend on one lender to another. Check their website, contact them, or simply visit their office and ask for more details on their offers. Many banks have calculators on their websites that can allow you to get an estimate of the amount you can borrow from them. In this whole borrowing process, responsibility is the most important element. You don’t want to be borrowing more than you can actually afford. 

Conclusion

If you are thinking of applying for a personal loan, you probably want to know what the amount you can borrow is. The lending environment is regulated to ensure that you will not be borrowing too much, which is a strategy that is beneficial for both the lender and the borrower. You will get the highest amount if you are borrowing from a licensed lender, if you have a stable income and if you have a good credit score and history. But you should not be aiming for the maximum amount, but for the one that you can safely afford.