This article was first published on The New Savvy
When borrowing money, it is important to look for the appropriate type of loan based on the goods and services that you are planning to buy. Here are the different types of loans in Singapore that you can consider.
Personal Loans in Singapore
A personal loan is a type of unsecured loan that you can use for practically anything. There are two types of personal loans that you can get. The first is a term loan, which comes with a fixed period of time and fixed monthly installment payments. With a term loan, you must repay the money you owe by the end of the loan period.
The second is a revolving loan or a personal line of credit, which gives you a credit limit that you can use anytime, and a minimum monthly payment of 2.5% or SGD 50.00, whichever is higher. With a revolving loan, you can repeatedly use your credit once you repay the amount that you owe. Here is a side-by-side comparison of the two.
The amount that you can borrow may range from two to six times your monthly income to SG$200,000.. If you are a Singaporean, then you must have an annual income of at least SG$20,000 to qualify for a personal loan. If you are a foreigner, then your annual income must be at least SG$40,000..
Home Loans in Singapore
For many Singaporeans, a home may represent the most expensive acquisition of a lifetime. A home loan or a mortgage allows you to borrow money in order to pay for the residence that you desire. Properties that are eligible for home loans include HDB flats, private properties that are already completely constructed, and private properties that are still under construction. The repayment plan for a home loan depends on the loan principal, loan tenor and interest rate.
Before taking up a home loan, determine how much you can afford on the house, how much you need to borrow, and how much you are eligible to borrow. If you are qualified for a large amount of loan principal, check first if you have the capacity to pay for it before taking it.
Renovation Loans in Singapore
Renovation or Reno loans are used to remodel or repair your property. In general, the loan amount ranges from SG$10, 000 to SG$30, 000. The loan tenure can range from one to five years. Different banks and lenders offer different interest rates. The interest can range from 3 percent to 6 percent per annum. There are also some banks that offer other services such as free insurance protection, and other related loans such as furnishing loans.
Car Loans in Singapore
A car or auto loan can be used to purchase either a brand new vehicle or a pre-owned vehicle. The maximum loan amount for vehicles worth less than SG$20,000, is 60 percent of the purchase price. The maximum amount for vehicles over SG$20,000 is 50 percent only. The tenor for this type of loan is also capped at five years.
Education Loans in Singapore
An education loan can be used by students to pay for tuition fees, books and even living expenses. Compared to other types of debts such as personal loans, this kind of loan has more flexible repayment methods and lower interest rates. While you are still studying, you have the option to make monthly installments on both the principal loan and the interest, make installments only on the interest, or not to start your payment until after you have graduated.
More detailed information on the different types of loans available in Singapore can be found at MoneySense. Before you take any type of loan, be sure to look for the best interest rates and repayment methods.
This article was first published by The New Savvy. The New Savvy is a financial platform that aims to empower women through meaningful content that are relevant and practical. The New Savvy provides resources to demystify finance and spur financial consciousness. We want to make money interesting to women and transform women’s relationship with money.