How to get lowest interest personal loan in Singapore: Bank or Licensed Money Lender?

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Applying for lowest interest rates personal loan in Singapore

Do you find yourself in need of urgent fast cash to pay off an unforeseen medical bill? Perhaps your laptop suddenly stopped working and you need to get it replaced, but your next paycheck is still a few weeks away.

Sometimes when the going gets tough, most people would consider getting personal loans from either banks or licensed money lenders. But which is better? What do you need to consider when applying for a loan?

Cost of borrowing is of course one main thing that comes to mind, and it’s often affected by the interest rates charged – be it banks or licensed money lenders, the lower the interest rate a loan has, the less you’ll have to repay.

So where and how can you get the lowest interest personal loan in Singapore? Read on to find out.

What do personal loan interest rates mean?

Interest rates

Interest rate is a percentage levied on the lender’s principal amount that a borrower must pay on top of the loan principal. It is usually the first rate you see as it is more prominently advertised. For example, Citibank Quick Cash loan offers an attractive interest rate of 3.45% per annum. However, this excludes details like processing and administrative fees.

Effective interest rates

An effective interest rate indicates the actual interest that you must pay. It is usually higher than the advertised rates as it includes processing and administrative fees.

Why is this important? Some banks may offer 0% interest for personal loans, but it unfortunately doesn’t mean that your loan is interest-free. These loans typically come with high processing fees and other charges.

Equated monthly installments, flat interest rates vs reducing interest rates

Equated Monthly Installments
Banks Licensed Money lenders
Flat Interest Rate Reducing Interest Rate

Equated Monthly Installments (EMI) refers to the fixed amount you as a borrower pay the lender on a specific date every month. This includes both the principal amount and interest rates till the loan is fully paid during the loan tenure.

Banks typically offer a flat interest rate where the interest is added into the principal loan amount and divided by the loan duration in months. For example, John borrows $300,000 at an interest rate of 3.5% for 10 years. His EMI would be: [300,000 + (300,000 x 10 x 0.035)] / (10×12) = $3,375 per month.

However, licensed money lenders offer reducing interest rates. For example, if John borrowed $8,000 and has repaid $1,000 of the principal loan amount (not including interest), interest for his next payment will be calculated based on the remaining $7,000.

Banks or licensed moneylenders? Comparing lowest interest rates for personal loans in Singapore

Interest Rates
Banks Licensed moneylenders
3.5-11% per annum 1-4% per month (up to 48% per annum)

In Singapore, licensed money lenders can charge up to 4% interest per month. GoldStar credit offers attractive interest rates from 2.27% per month.

Banks typically offer lower interest rates but larger borrowing sums. You also get to enjoy longer repayment periods of up to 5 years with banks, compared to up to 12 months with licensed money lenders.

However, as the borrowing sum is higher and repayment periods are longer with banks, they have stricter loan criteria and longer approval processes, to ensure that if they approve a loan application, the borrower will likely be able to repay the amount in full.

Hence, the majority of borrowers looking for a quick and urgent fix usually seek out licensed money lenders to apply for small loans such as personal or payday loans (despite the higher interest) – as they have less stringent loan application criteria and loans can be approved quite quickly.

Why take up personal loans from licensed money lenders?

Although borrowing from money lenders comes with a few disadvantages, those usually negatively affect people who face problems managing their finances, for example, late fees (up to $60 a month) and late interests (up to 4% a month for each month of late repayment) imposed if the borrower can’t make their repayments on time.

Hence, before you commit to any loan, it is crucial that you do your research and lay out your monthly budget to see if you can afford the monthly payments.

However, there are many advantages to taking up personal loans from licensed money lenders, which are the main reasons why many people still turn to them. Should you meet all the requirements, your loans will be processed and approved within the day. It’s also very easy to apply – simply fill up their application form on the money lender’s website in a few minutes!

Licensed money lenders also don’t require a high minimum income (as long as you meet the basic income requirements) and a good credit score to approve your loan, as long as you can prove that you can pay off your loans in a timely manner. They also offer flexible and affordable monthly repayment to suit your needs.

How can you apply for lowest interest personal loan in Singapore through licensed money lenders?

When you’re researching for the best money lenders with lowest interest rates, you need to consider:

  • Eligibility criteria (borrower needs to be at least 18 years old and meet the income requirements)
  • Interest rates
  • Documents needed
  • Your borrowing history with other lenders

To get your loan processed and approved instantly, you’ll need to submit the following documents:

Singaporeans and PR Foreigners
Identification Documents – IC – Work pass (S-Pass, E-Pass, work permit of any proofs of employment)

– Passport

Other Documents – CPF statements and Notice of Assessment – Proof of address (Tenancy agreement, previous month’s handphone bills, etc)
Payslips from the last three months

When you apply for a loan, money lenders will also submit your information to the Moneylender’s Credit Bureau (MLCB) to check if you have existing loans with other money lenders, the total amount borrowed, repayment records and your borrowing limit if applicable.

So, if you’ve taken prior loans from other money lenders, ensure that you’ve made your repayments on time and avoid late repayments as much as possible. This will prove to money lenders that you are a low-risk borrower and they may even offer you the lowest interest rates personal loan in Singapore .

Remember – only borrow what you need. The more money you borrow, the more you must repay. Make on timely repayments, keep a clean record and you might be able to enjoy lower interest fees!

If you’re looking for lowest interest personal loans in Singapore, our interest rates start at 2.27%. Apply now in 3 simple steps!


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We charge competitive interest rates and fees, which is why so many of our customers keep returning to us.

As a Goldstar customer, you get to enjoy:
Loan interest rates of 1-4% a month*
A maximum of 5-10% in processing fees*