Key Takeaways
- There are two types of lenders offering personal loans in Singapore: banks regulated by MAS and licensed moneylenders regulated by MinLaw. Each uses a different rate structure
- Banks advertise a flat rate p.a., but the Effective Interest Rate (EIR) is what you actually pay, and it is always higher than the flat rate
- A flat rate of 4% p.a. is roughly equivalent to 7.5% to 8% EIR p.a. Understanding this gap is the single most important thing before you compare any loan
- Licensed moneylenders in Singapore are capped at 4% per month on the outstanding balance. This is set by MinLaw and no licensed lender can charge more
- Licensed moneylenders use the reducing balance method. Interest is charged on what you still owe, not on the original loan amount
- The true cost of a loan is not the interest rate alone. Admin fees, late fees, and loan tenure all affect your total repayment
- You can compare current loan rates from banks and licensed lenders side by side at Lendify’s Compare Loans page
You searched for personal loan interest rates in Singapore and got back a wall of numbers that do not mean the same thing. One lender says 3% p.a. Another says 4% per month. A third shows an EIR of 7.8%. None of them are lying. But none of them are telling the full story either.
This guide cuts through that. It explains what each rate type actually means, shows you the real cost in dollars, and tells you exactly what to compare before you commit to any loan.
Two Types of Lenders. Two Different Rate Structures.
Personal loans in Singapore come from two regulated sources. They work differently, and their rates are quoted differently.
Banks and finance companies, regulated by the Monetary Authority of Singapore (MAS), quote interest in annual terms, typically as a flat rate per annum, alongside a legally required EIR disclosure.
Licensed moneylenders, regulated by the Ministry of Law (MinLaw), quote interest on a monthly basis. The statutory cap is 4% per month on the outstanding balance. Every licensed moneylender in Singapore is bound by this cap regardless of your income, credit grade, or loan amount.
Neither type is inherently better for every borrower. Which one is right for you depends on your income, your CBS credit grade, how quickly you need funds, and how much you need to borrow. For a full comparison of both lender types, read How to Get a Personal Loan in Singapore: Banks vs Licensed Moneylenders.
The Most Important Thing: Flat Rate vs EIR
Before you compare any interest rate in Singapore, you need to understand one thing. The advertised rate and the rate you actually pay are not the same number.
What Is a Flat Rate?
A flat rate calculates interest on your original loan amount for the entire loan period, regardless of how much you have already repaid.
Here is what that means in practice. If you borrow $10,000 at 4% p.a. flat for 3 years, the lender charges 4% on $10,000 every year, even in year 3, when you may have repaid $8,000 of the principal already.
Total interest on a $10,000 loan at 4% p.a. flat over 3 years: $10,000 x 4% x 3 = $1,200 Monthly payment: ($10,000 + $1,200) / 36 = $311.11 per month
Simple to calculate. Easy to advertise. But not the true cost of borrowing.
What Is EIR?
The Effective Interest Rate (EIR) reflects the actual cost of the loan, accounting for the fact that your outstanding balance decreases as you repay. It is calculated on your remaining principal each month, not on the original loan amount.
MAS requires all banks and financial institutions in Singapore to disclose the EIR alongside the advertised flat rate. This is a legal requirement. You will see both numbers on any loan offer from a bank.
Using the same $10,000 loan at 4% p.a. flat over 3 years: the EIR works out to approximately 7.7% p.a.
That is nearly double the advertised rate.
The Flat Rate to EIR Conversion Table
| Advertised Flat Rate (p.a.) | Approximate EIR (p.a.) | Based on 3-year tenure |
|---|---|---|
| 3% p.a. | ~5.8% p.a. | Indicative only |
| 4% p.a. | ~7.7% p.a. | Indicative only |
| 5% p.a. | ~9.7% p.a. | Indicative only |
| 6% p.a. | ~11.7% p.a. | Indicative only |
| 8% p.a. | ~15.6% p.a. | Indicative only |
EIR varies slightly depending on loan tenure. These figures are indicative based on a 3-year repayment period. Always refer to the EIR disclosed in your actual loan offer.
The rule to remember: whenever you see a flat rate, the real cost is approximately 1.8 to 2 times higher. Always compare loans using EIR, not the flat rate.
Bank Personal Loan Interest Rates in Singapore
Banks in Singapore advertise personal loan flat rates that generally range from around 3% to 8% p.a., which translates to EIRs of approximately 6% to 16% p.a. depending on tenure, loan amount, and your credit profile.
The actual rate you receive depends on several factors:
Your CBS credit grade. Banks use Credit Bureau Singapore (CBS) to assess your repayment history. Borrowers with a grade of AA or BB typically receive rates at or near the advertised floor. Borrowers with lower grades may receive higher rates or be declined. To understand how your credit grade is assessed, read How to Improve Your Credit Score in Singapore: CBS and MLCB Guide (2026).
Your annual income. Most banks require a minimum annual income of $20,000 to $30,000 for personal loan applications. Higher-income borrowers typically qualify for larger loan amounts and lower rates.
Your existing relationship with the bank. Existing customers with salary crediting accounts, credit cards, or pre-approved facilities often receive better rates than new applicants.
Promotions. Advertised rates are frequently promotional rates tied to specific conditions. The standard rate after the promotional period may be higher.
One important detail: when a bank loan application is made, a hard enquiry is recorded on your CBS report. Multiple applications within a short window are visible to every lender who checks your CBS and signal financial distress. Apply selectively. To understand how loan applications affect your credit score, read Does Applying for a Loan Affect Your Credit Score in Singapore?
For current bank personal loan rates side by side, visit Lendify’s Compare Loans page.
Licensed Moneylender Interest Rates in Singapore
Licensed moneylenders in Singapore operate under a completely different rate structure, regulated directly by MinLaw.
The 4% Per Month Cap
With effect from 1 October 2015, the maximum interest rate a licensed moneylender can charge is 4% per month, applied on the outstanding balance. This cap is set by MinLaw and verified on the Registry of Moneylenders FAQ. No licensed moneylender in Singapore can charge above this, regardless of your income, credit profile, or loan size.
How Reducing Balance Interest Works
Interest is calculated each month on the amount of principal you still owe. Not on the original loan. As you repay principal each month, the interest charged falls with it. This is called the reducing balance method.
Here is a full repayment schedule on a $3,000 loan at 4% per month over 6 months:
| Month | Opening Balance | Interest (4%) | Principal | Monthly Payment |
|---|---|---|---|---|
| 1 | $3,000.00 | $120.00 | $500.00 | $620.00 |
| 2 | $2,500.00 | $100.00 | $500.00 | $600.00 |
| 3 | $2,000.00 | $80.00 | $500.00 | $580.00 |
| 4 | $1,500.00 | $60.00 | $500.00 | $560.00 |
| 5 | $1,000.00 | $40.00 | $500.00 | $540.00 |
| 6 | $500.00 | $20.00 | $500.00 | $520.00 |
| Total | $420.00 | $3,000.00 | $3,420.00 |
Indicative figures based on the maximum legal rate of 4% per month and equal monthly principal repayments. Actual loan terms and repayment schedules vary by lender and agreement.
On this $3,000 loan, the total interest paid is $420. The total repayment is $3,420. Your payment starts at $620 in month 1 and falls to $520 by month 6 as the balance reduces.
For a larger loan, say $5,000 over 12 months at the same 4% rate:
| Amount | |
|---|---|
| Total interest paid | $1,300.00 |
| Total repayment | $6,300.00 |
| Month 1 payment | $616.67 |
| Month 12 payment | $433.33 |
Indicative figures. Interest is charged on the reducing balance, so your monthly payment decreases as you repay.
Additional Fees: What Else Can a Licensed Moneylender Charge?
Beyond interest, licensed moneylenders in Singapore are permitted to charge the following under MinLaw regulations:
| Fee Type | Cap |
|---|---|
| Admin fee (one-time, deducted at disbursement) | Up to 10% of principal |
| Late repayment fee | Up to $60 per month of late repayment |
| Late interest | Up to 4% per month on the overdue amount only |
| Legal costs | Only if court action is taken and ordered by court |
The total of all fees and interest you ever pay on a loan, including interest, late interest, admin fee, and late fees, cannot exceed the original principal amount you borrowed. This is a hard statutory ceiling under MinLaw.
For more on what happens if you miss a payment, read What Happens If You Miss a Moneylender Payment in Singapore?
Head-to-Head: Bank vs Licensed Moneylender Interest
| Bank Personal Loan | Licensed Moneylender | |
|---|---|---|
| Rate type | Flat rate p.a. (EIR disclosed) | Monthly rate on reducing balance |
| Typical rate range | ~3% to 8% p.a. flat (~6% to 16% EIR) | Up to 4% per month (statutory cap) |
| Regulated by | MAS | MinLaw |
| Credit check | CBS hard enquiry | MLCB check only |
| Min income (typical) | $20,000 to $30,000 p.a. | No fixed minimum, assessed per application |
| Existing relationship needed | Helps significantly | Not required |
| Same-day disbursement | Existing customers with pre-approval only | Yes, after in-person verification |
| Total fee cap | No statutory ceiling on total fees | Cannot exceed principal borrowed |
The bank route is almost always cheaper for borrowers who qualify. The licensed moneylender route is accessible to borrowers who do not qualify. This includes those with a low CBS grade, irregular income, or an urgent need that cannot wait for a bank’s approval timeline.
What the Interest Rate Does Not Tell You
The rate is one number in a total cost calculation. Three other factors change what you actually pay.
Loan tenure. A longer repayment period means more months of interest, even on a reducing balance. A $5,000 loan at 4% per month repaid over 6 months costs less in total interest than the same loan repaid over 12 months. Borrow for the shortest tenure your monthly budget can support. Read Short-Term vs Long-Term Personal Loans: Which Is Better? for a full breakdown.
Admin fee. A licensed moneylender loan with a 10% admin fee deducted at disbursement means a $5,000 approved loan delivers $4,500 to you. Your effective borrowing cost is higher than the interest rate alone suggests. Always calculate the total repayment amount, not just the monthly payment, before you sign.
How much you borrow. Borrowing more than you need increases your interest cost every month for the life of the loan. Borrow the exact amount the situation requires, not a round number above it.
Frequently Asked Questions
What is the maximum interest rate a licensed moneylender can charge in Singapore?
The maximum interest rate is 4% per month on the outstanding balance, as set by MinLaw with effect from 1 October 2015. This cap applies regardless of your income, credit profile, or loan amount. Any lender quoting above 4% per month is not a licensed moneylender. Verify all licensed moneylenders at the MinLaw Registry.
What is the difference between a flat rate and EIR?
A flat rate calculates interest on the original loan amount for the entire tenure, even as you repay. An EIR calculates interest on your remaining outstanding balance each period, reflecting the true cost of borrowing. EIR is always higher than the flat rate for the same loan. MAS requires all banks to disclose both. Always compare loans using EIR.
Do licensed moneylenders charge a flat rate or EIR?
Licensed moneylenders charge a monthly rate on the reducing balance. As you repay principal, the interest charged each month falls. This is effectively how EIR works. You are charged on what you still owe. The statutory cap is 4% per month on the outstanding balance.
Can I get a personal loan from a bank if my credit score is low?
A low CBS credit grade significantly reduces your chances of approval from a bank. Banks typically want a grade of BB or above. If your CBS grade is below that threshold, a licensed moneylender does not check your CBS report. They assess your MLCB record instead. For full guidance on borrowing with a low credit score, read How to Get a Loan in Singapore When Your Credit Score Is Low.
Does applying to multiple banks affect my credit score?
Yes. Every bank loan application triggers a hard enquiry on your CBS report, which is visible to every subsequent lender who checks your file. Multiple hard enquiries in a short window signal credit-seeking behavior and can reduce your grade. Apply to one lender at a time, or use a loan matching platform that identifies suitable lenders before submitting a formal application.
How much can I borrow from a licensed moneylender?
Your maximum borrowing amount from licensed moneylenders is set by MinLaw and applies across all licensed moneylenders combined. For Singapore Citizens and PRs with annual income below $20,000, the cap is $3,000. For those with annual income of at least $20,000, the cap is 6 times your monthly income. For the full breakdown with income examples, read How Much Can You Borrow From a Licensed Moneylender in Singapore?
Before You Choose a Loan
The interest rate is the start of the comparison, not the end of it. Two loans with the same rate can have different total repayment amounts depending on admin fees, tenure, and how the interest is calculated.
The comparison that matters is simple: take the total amount you will repay across the life of the loan and divide it by what you actually receive. That is your real cost of borrowing.
Lendify.sg lets you see offers from multiple licensed lenders side by side, rates, fees, and terms, before any application is submitted.
Compare personal loan rates on Lendify.sg
