Singapore Loans and Legal Tips to Avoid Penalties in Singapore

Singapore Loans and Legal Tips to Avoid Penalties in Singapore

At some point in time, every Singaporean will need money for their personal needs. Especially during this Covid-19 pandemic. Many people are having a hard time with all the business closures and unemployment.

A lot of people need some quick cash just to stay afloat. Whatever the reason it may be, loans are a great way to fund your needs. Loans can also build the credit score that you can use for crucial loans like house, car, and education loans in the future.

If you’re planning to get a loan soon, did you know that there are different kinds of loans and charges? Here’s everything you need to know about loans, fees, charges, how to avoid the costs and save money.

Kinds of Loans


Secured loans are the kind of loans that require collateral. An asset that the lender, like licensed money lenders tampines can take if the borrower can’t pay their loan. Collateral can be a car, a house, or something valuable.

Car loans and mortgages are also considered secured loans. The purchased car or house will be used as collateral.

If you haven’t built your credit rating or have a low credit score, a secured loan is an excellent way to borrow money. But it is also riskier since you could lose your valuable asset if you default on the loan.


These types of loans do not require any collateral. Lenders will look at your credit score and determine your creditworthiness. There are other factors to consider, like monthly income, savings, and other loans to qualify.

Lenders can charge a higher interest rate since they take more risk than a secured loan. But this is a great low-risk, fast loan to get if you need some quick cash.

Types of Loans Available in Singapore


Payday loans are short-term, high-interest loans that you can get if you need some quick cash. These are unsecured loans that are very easy to get. Lenders usually don’t check your credit score. They will only ask for your paycheck as proof that you can pay.

You can get payday loans even if you have a low credit rating, but it comes at an extremely high-interest rate. These can quickly get out of hand if you miss payments and accumulate vast amounts of debt because of the high-interest rates.

Personal Loans

Personal loans are unsecured loans that you can use on anything you need. Personal loans can be either term or revolving loans.

A personal term loan is a lump sum of money that must be repaid in a fixed period. There is usually a fixed monthly installment plan to help repay the loan.

Personal revolving loans are like credit cards. You have a line of credit that you can use anytime. You can use this loan repeatedly once you pay your credit debt.

Business Loans

Business loans in Singapore can be either secured or unsecured. This loan is offered to start-ups and companies for their business needs.

A business loan can be used to:

  • Purchase supplies
  • Inventory purchases
  • Equipment and machinery purchases
  • Payment for rent
  • Advertising
  • Expansion

Several loan categories fall under a Business loan.

Standard” Business Loan

The standard business loan that Singapore-registered companies can get. This is an unsecured loan that can be repaid in 5 years. Almost all banks in Singapore offer this kind of loan.

Temporary Bridging Loan

Due to the CoVid-19 pandemic, Temporary Bridging Loans are available to Singapore registered companies at least 30% owned by locals. The government backs this loan to help a business stay afloat amidst the global pandemic and lockdowns. The loan is capped at 5% and can be repaid in up to 5 years.

SME Working Capital Loan

This is another government-assisted loan for businesses with an employment size of less than 200. Singapore registered SMEs can get $1 million, payable in up to 5 years, as long as they have at least 30%, Singaporean owners.

First Business Loan

This loan can also be called a “Startup Business Loan.” It helps startup business owners explicitly with their cash flow and capital shortage. It is easier to get a first business loan than a standard business loan.

Foreigner Loans

If you’re a foreigner living in Singapore that needs extra money, a foreigner loan is the best way to get it. This loan is available for all foreigners working or studying in Singapore, as long as they pass the requirements.

Interested borrowers need to submit documents as proof that they are working in Singapore. If you don’t have a credit score, a guarantor can help you get the loan.

Home Loan

Home loans or a mortgage is a secured loan used to purchase a house. The house itself is used as collateral and can be acquired by the lender if, in any case, the borrower defaults on the loan.

Car Loan

This is just like a home loan, except this loan is used for purchasing a car.


This is a special kind of loan for students. This loan allows students to borrow up to 90% of their tuition with 0% interest and payable two years after graduation.

Loan Charges that You Can Avoid and How to Avoid Them

Most of the time, loans have charges attached to them. These charges can add up and increase your total debt. Most of them can be easily prevented.

Here are some of the charges and tips on how to avoid them.

Loan Application Fee   

A loan application fee or processing fee is one of the most common fees when taking a loan. This is an upfront charge on your loan application to be processed. Usually, 1% to 10% of the total loan amount is collected as a processing fee.

Unfortunately, this fee can’t be avoided.

Amendment fee

These fees are penalties for any changes or amendments in the loan agreement. This can be anything from a misspelled name to any change to the signed loan agreement.

To avoid this, make sure you carefully read and understand all the loan agreement details. Also, make sure that there isn’t any typo error before signing an agreement.

Cancellation Fee  

Lenders can charge you a cancellation fee if you wish to cancel your signed and agreed loan agreement. Lenders can charge you 1%-1.5% for changing your mind.

Before signing a loan agreement, make sure you are 100% sure and won’t get cold feet after signing a contract.

Legal Fees

If you got an unsecured loan that doesn’t need collateral, you shouldn’t be worried about legal fees.

But if you got a secured loan, then legal fees can be imposed. These fees are charged for processing your valuable assets used as collateral. Legal fees can also be collected if there is any legal action taken by the lender against the borrower.

Late Payment Charges

These are penalties charged by lenders if borrowers fail to pay their debt on the due date. These charges are placed to encourage borrowers to pay in time. Late fees can quickly accumulate and increase the total debt. It’s best to avoid missing due dates to prevent these preventable charges.

If a borrower fails to pay on time, late payment charges can be collected as a penalty. These charges are placed to encourage borrowers to pay on time. These charges can quickly accumulate and increase your total debt amount if left unchecked.

Always pay your debts on time to avoid this preventable penalty.

Default Charges

Aside from late payment charges, failure to pay your debt multiple times could also lead to additional default charges. If you fail to pay for an extended period, your loan can be considered default, and default charges can be collected to cover the lender’s loss of profit. This will add a considerable amount to your debt and reflect negatively on your credit score.

Do not get a loan if you’re unsure you can pay. Or, if you’re having trouble paying, it’s better to talk to the lender like Yishun money lender or debt collector for possible solutions or a repayment plan rather than avoiding paying them at all.

Early Repayment Fee

Some loans and lenders have an Early Repayment Fee(ERF) in place. This is to cover any profit loss from your loan interest if ever you wish to pay your loans earlier.

To avoid this, check if your loan has an early repayment provision. If it has, considers following your loan agreement rather than paying the ERF that could be very costly.


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