Example of secured loan is housing loan, also known as mortgage or home loan. Housing loan is the process of getting a loan from a bank by pledging the property as collateral to the bank. The title deed of the property will be safe held by the bank. Upon fully paid on the home loan, the title deed will then be return to the owner. The different types of housing loan packages are fixed and floating rate housing loan, Sibor or Sor pegged housing loan, cash rebate housing loan, interest offset housing loan, interest only housing loan, equity loan and refinancing housing loan.

Loans In Singapore

Unsecured loans in Singapore are loans that customers do not need to pledge any asset to the bank. Usually the loan approve amount depends on the income and age of the customer. As there is no asset pledge to the bank, usually the loan available is much lesser than secured loan.

Example of unsecured loans:

Personal Loan is a loan that establish between banks (or financial institution) and borrower for personal use. Personal loan is categories as unsecure loan as the borrower do not need to pledge any assets to the banks as collateral.

The amount of loan available for the borrower depends of the credibility, income and age of the borrower. Generally, the maximum loan available is up to 4 times the borrower monthly income; the maximum personal loan tenure available is capped at 5 years; the maximum personal loan available is capped at $100,000; the maximum age for applicant is 60 years old.

In Singapore, personal loan is very common as many borrowers use this as a leveraging instrument.  As low as a monthly installment of $200, a borrower can loan up to $10,000 cash. However, many borrowers are not aware of the personal loan interest calculation.

Personal Loan Singapore

Personal loan interest calculation:

Mr Tan monthly income is $2500 and took a $10,000 personal loan from Bank A at an interest of 4%. He chooses repayment tenure of 5 years.

Yearly Interest = 4%
5 Years Interest = 4% x 5 years = 20%

Total interest paid to Bank A for 5 years = Total personal loan approved x total interest of loan tenure = $10,000 x 20% = $2000

Total Personal loan = $10,000
Total Interest Paid = $2000
Total Tenure = 5 years = 60 months

Monthly Installment = (Total personal loan approved + Total interest paid) / Total tenure = ($10,000 + $2000) / 60 = $200

Some banks/ financial institutions have additional charges on their personal loan. Additional charges such as

• Admin fee – the fee for the bank to process and approved borrower’s personal loan
• Insurance fee – this charges is to pay bank for insurance coverage of your loan amount should it got mishandled (eg, funds was transfer to wrong account)

For more examples, you can click on Personal Loan Interest Calculation

Balance Transfer – Loan approved base on unutilized credit limit in their credit card. Usually banks allow 80% of the credit limit to be taken as a loan of balance transfer.

Bridging Loan – An interim loan that is useful for cash flow purposes for customers who are selling and buying property at the same time and have problem with their down payment.

Business Loan – When starting business, we often heard advise on cash is king and cash flow is the blood of the business. It will be good to understand more about business loan.

Car Loan – A loan used for the purpose of buying motor vehicle.

Credit Card Loan – A very popular loan that allow credit card holder to pay their huge purchase or high monthly bills charged to the credit card by installments.

Personal Credit – Commonly known as overdraft account where bank approved a standby credit for usage. The payment back to the account can be anytime and not necessary to be paid every month.

Renovation Loan – A loan structure for the renovation of the property. Usually for banks to approved renovation loan, the contractor must be within the bank panel. Renovation loan cannot include the furniture cost in the property.

Study Loan – Study loan is known as education loan where students can take a loan to finance their education. Study loan does not required students to pay immediately. Their installment starts after they graduate.