Understanding Personal Loan Interest Rates in Singapore
A plain-English guide to how personal loan interest rates work in Singapore, including EIR vs flat rate and what affects your rate.
What is a personal loan interest rate?
Personal loan interest rates in Singapore are quoted in two ways: the flat rate (also called the advertised rate) and the Effective Interest Rate (EIR). Understanding the difference is critical before you commit to any loan.
Flat rate vs EIR
The flat rate is calculated on the original loan amount, while the EIR accounts for the reducing balance as you repay. For a loan quoted at 3.5% p.a. flat, the EIR is typically around 6.5–7% p.a.
Always compare loans using the EIR for an apples-to-apples comparison.
What affects your rate?
- Credit score: A higher score means a lower rate.
- Income: Banks prefer borrowers earning at least S$30,000 per year.
- Loan tenure: Shorter tenures may attract better rates.
- Existing liabilities: Other outstanding loans reduce your creditworthiness.
Typical rate range in Singapore
Most banks offer personal loan EIRs between 6% and 25% p.a., depending on the applicant’s profile. Licensed moneylenders are capped by law at 4% per month.