Interest and Tenures: A Guide To Taking Up Personal Loans

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Personal loans are one of the more basic loans provided by moneylenders. Even though many people turn to personal loans when they are short on funds, not everyone knows the exact mechanics that go behind taking up a personal loan.

When used correctly, personal loans can effectively help individuals through their financial difficulties. Personal loan moneylenders require borrowers to fulfil eligibility requirements whenever they take up the loan to make sure they can afford the repayments.

As a borrower, it is important to note these requirements and understand the details about any personal loan plan so you can have peace of mind that you can afford to pay back these loans on time.

Interest rates

There are two primary interest rate terms commonly used for personal loans: Applied Interest Rate (AIR) and Effective Interest Rate (EIR).

AIR refers to the rate that the bank or the lender charges you on your loan principal. The AIR may differ for everyone depending on the lender’s assessment of your credit score and loan application. The AIR is different from the EIR as the rate given by the AIR excludes other fees and considerations.

The EIR should be the one that borrowers pay attention to. The EIR refers to the overall interest rate that you would be paying based on your actual loan term, the frequency of instalments and other chargeable fees like admin or processing fees.

Tenure for personal loans

The loan tenure generally refers to the number of years you have to pay off the loan. Different money lenders in Singapore may offer plans that allow you to pay off the loan over monthly instalments.

When determining which loan tenure is suitable for you, you need to decide if each month’s amount is attainable according to your monthly income and expenses. Even though it is easier to pay off a loan over a longer tenure and a lower sum payment each month, a longer loan term would usually mean higher interest payable for the entire loan.

The ideal would always be to find a plan that allows you to balance between paying off your loan as quickly as possible and your ability to meet the payment each month.

Understanding your loan repayment schedule

When taking out a loan, it is essential to consider the interest you would be liable for eventually. If you cannot pay off the total sum, including the interest payments, you might be liable to late payment or incomplete payment fees.

Fees may not just apply to late payments but early payments as well. Hence, before taking up the loan, it is crucial to check with your lender if you will be liable to such fees before planning a loan repayment schedule that you are comfortable with. It is also vital to ensure that you take up the loan from a licenced moneylender in Singapore as they are less likely to offer loans with hidden fees.


Personal loans are handy when you encounter a situation that calls for a large volume of cash at short notice. Knowing the elements involved before taking up a personal loan can help you plan an effective loan repayment schedule to assist you in your road to paying off your debts.

If you are looking to take up a personal loan to help you overcome your short term cash flow issues, we are here to help. Our effective loan application approval allows you to get approved in less than 10 minutes and you could even receive the money you need on that same day! If you are looking for a licensed money lender in Toa Payoh or Hougang, head down to Goldstar Credit or give us a call at +65 6384 0088 to talk with our loan officers to help you find your best options.


While we try to provide the most accurate information on this website, it may not reflect the most current developments. The information on this website may be changed without notice and is not guaranteed to be complete, correct, or up-to-date. All information provided is for informational purposes only and shall not be relied upon as professional advice. We shall not be liable for any loss or damage resulting from the use of this website

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