How Long Does It Take To Get A Personal Loan?

When used responsibly, a personal loan is an affordable and convenient way to obtain extra funds during an emergency, or to fund the cost of a large purchase. Once your loan is approved, the amount you requested will be transferred to you, to be used at your own discretion. You can then pay back your loan via fixed monthly instalments. 

If you’ve not applied for a personal loan before, you may be wondering what the process is like, how long it takes, and what happens if your application is denied. Here’s everything you need to know about applying for a personal loan in Singapore.

The two main sources of personal loans in Singapore are banks and financial institutions, as well as licensed moneylenders. We’ll take a look at each in turn.

Banks are the most popular source of personal loans in Singapore. The benefits of taking a bank personal loan are that they are well-regulated, have competitive interest rates, are convenient, and can be easily managed via mobile banking apps. 

You can easily search and compare bank personal loan offers online, and quickly get a sense of the average interest rates being offered. As personal loans are highly popular in Singapore, banks are always competing with each other, which helps to keep interest rates low – a boon for borrowers. 

Bank personal loans are also highly convenient. You can often apply for a personal loan from your bank using your existing internet banking credentials, get your application approved very quickly, and have the funds disbursed directly into your account. Your personal loan will be included in your monthly bank statements, so you can easily keep track of important details such as your next payment date, remaining loan instalments, etc. 

Besides banks, there are also some financial institutions in Singapore that offer personal loans. They largely work in the same way, being monthly instalment loans that you pay off over a stipulated period of time. 

Though uncommon, some financial institutions may be able to offer loans with similar interest rates to banks. If you manage to find one, there’s no harm in choosing to go with the cheaper loan, as financial institutions are just as well-regulated as banks.

Another source of personal loans in Singapore is licensed moneylenders. These are independent organisations that are licensed under the Moneylenders Act by the Registry of Moneylenders, which is a distinct piece of legislation from the Banking Act. 

Nonetheless, licensed moneylenders are highly regulated by the Registry of Moneylenders and licensees are held to high standards of professionalism when conducting money-lending activities. 

However, in comparison to personal loans, moneylender loads charge far higher interest rates – under the law, they are allowed to charge as much as 4% per month. Also, licensed moneylenders are unlikely to grant loan tenures longer than 12 months, this is practised as a means to control the risk of lenders defaulting.

On the other hand, licensed moneylender loans may be easier to obtain for those with poor credit scores. This is because licensed moneylenders do not take credit scores into account, but they are legally obligated to maintain shared records of an individual’s total loans from licensed moneylenders, so as to prevent overborrowing.

In general, the process of applying for a bank personal loan in Singapore involves the following steps. Do note that your individual experience may vary. 

1. Look up the personal loan you want online. 
2. Using the information provided on the lender’s page, check your interest rate and repayment amount; this will vary based on the amount you want to borrow, and the duration over which you will repay your loan. You should also check the eligibility requirements of the loan, as well as any fees and charges involved. 
3. Assuming the loan terms and eligibility requirements are suitable, you can go ahead and apply for the loan. You can do this by filling in an online form. 
4. You will be asked to enter your personal details. You do so manually, but for convenience, it is recommended to use SingPass to submit your details. 
5. Once you have submitted your personal loan application, you may be given an “instant approval”. This is simply approval-in-principle based on the fact that you fulfil the eligibility requirements. However, it does not mean your personal loan is approved. 
6. Wait for the bank to confirm your loan approval. You may also be contacted with further instructions, such as to submit other documents. 
7. Once approved, your requested loan amount will be deposited into your bank account.

The duration between submitting your loan application and receiving your funds can vary greatly. You may be able to get your loan in as little as 15 minutes, or may have to wait a few business days. 

How quickly you can get your personal loan depends on a few factors.

If you have an existing credit card or credit line account, your bank has already pre-approved you for a certain amount of credit. You access that pre-approved credit as a personal loan. 

Often, this will be the fastest way to get a personal loan, as the credit has already been granted to you, and there is no need for further approval from the bank. 

The drawback of doing this is that your existing credit limit will be reduced by the amount you borrow. If you prefer to keep your credit limit intact, or need to borrow a sum exceeding your credit limit, you may have to speak with your bank on alternatives.

Regardless, some lenders require you to apply for a credit card or credit line account in order to apply for a personal loan. You should take into consideration the additional charges associated with these credit facilities.

If this is your first time applying for a personal loan from a particular bank, you may need to wait a few days for your loan approval. This is because banks are required to check your credit score when processing your application, which can take some time if you are a new customer. 

On the other hand, if you have recently taken a personal loan from the bank, your loan application may be quicker the second time around. Your bank may decide to refer to your recent credit report (and your loan repayment habits) as the basis of your creditworthiness and fast-forward your application. 

In this case, your loan application may take just one to two business days.

You’ll notice that the bank requires a list of supporting documents to go with your application, such as the latest salary slips. This is to verify that you have the financial ability to fulfil the loan repayments. 

Most of the time, applying via SingPass allows you to skip having to send in additional documents. However, you may still be required to furnish copies of your latest salary slips if your income has recently changed. 

Note that commission-based workers and self-employed persons will be required to submit additional documents, such as the latest Notice of Assessment, and CPF contribution statements. As foreigners do not have SingPass, they, too, will need to submit their income documents. 

Thus, to ensure you get your loan as quickly as possible, pay attention to the required documents, and submit them along with your application. Otherwise, the bank will have to put your application on hold as they wait for you to send in the missing documents.

In the previous section, we’ve discussed some of the factors that could delay your personal loan approval. Hence, to make sure your personal loan process goes as quickly as possible, there are a few things to note:

• Try taking a loan against your credit card account. This will lower your credit limit, but such applications are often the quickest.
• Use your mobile banking app and SingPass when applying for a personal loan. This will streamline the information-gathering process. 
• Ensure you fit all of the eligibility requirements. Any discrepancies could cause a delay and rejection of your loan. 
• Be sure to submit any and all required supporting documents. Doing so will prevent delays.

Generally speaking, you will be able to get your personal loan approved as long as you fulfil all the requirements. This means not only the eligibility criteria such as income level and borrowing amount, but also your creditworthiness. 

By that, we mean your credit score has to be high enough for the bank to approve your loan. If you have a poor credit score due to missed payments or excessive borrowing in the past, you may not be able to get your personal loan approved. 

Also, do mind your Total Debt Servicing Ratio (TDSR). Under the Monetary Authority of Singapore (MAS)  rules, your total debt repayments cannot exceed 55% of your gross monthly income. This includes loans such as credit card balances, home mortgages and car loans. 

Hence, if the personal loan you are requesting exceeds your TDSR, your loan may be rejected.

Your bank will inform you when your personal loan is approved via the communications channel you have indicated, so be on the lookout for any messages in that vein. 

Once approved, your loan amount will also be deposited into your bank account shortly. Thus, if you see the loan account has been disbursed to your bank account, you will know that your personal loan has been approved.

If your loan application is taking more than a few business days, there may be some hiccups, such as missing information or documents. 

Alternatively, your personal loan may have been rejected, but you may have missed the notification from your bank stating so. 

In any case, get in touch with your bank to ask about the status of your loan. Check to see if there are any additional documents you need to submit, or if your loan has been rejected.

You may consider applying for multiple loans at once as a way to counteract slow approvals and enhance your chances of getting a loan. This is highly inadvisable for two reasons. 

Firstly, once a loan is disbursed to your account, there is no way you can reject it. If several loans happen to be approved at once, you will have to pay early redemption penalties to cancel the ones you do not want. 

Secondly, applying for several loans in quick succession can damage your credit score. Banks and lenders have to query your credit score when you apply for an unsecured loan facility – i.e., personal loan or credit card.

Having too many checks triggered within a short period of time is taken as a sign of financial distress, which can lower your creditworthiness. In turn, this causes your interest rate to go up or even makes it more difficult to get approved for a personal loan altogether.