Here are the 10 Frequently asked questions when applying for a loan

Here are the 10 Frequently asked questions when applying for a loan


Frequent questions asked when applying for a loan
Frequent questions asked when applying for a loan

When faced with cash flow issues or unforeseen financial crises, you might find yourself needing to take up an urgent loan. We understand it can get quite stressful for first-timers and you might have some questions.

So over here, we’ve compiled some frequent questions asked when applying for a loan with a licensed moneylender – so you can find out all you need to know before you apply!


1. What kind of loans can I take with a licensed money lender?

There are two kinds of loans you can apply for with a licensed moneylender: Personal Loans and Business Loans.

Personal Loan

A personal loan is a versatile type of loan that you can use for various personal needs, such as weddings, funerals, etc, especially when you need a relatively larger amount of money to pay off unexpected financial expenses. They can come in the form of either secured (requiring collaterals) or unsecured loans.

These are the different kinds of personal loans available out there:


  • Payday Loans (or 1-month loans)
  • Urgent Cash Loan
  • Debt Consolidation Loan
  • Wedding Loan
  • Bridging Loan
  • Grab/Gojek Loan
  • Renovation Loan
  • Study Loan

Business Loan

While personal loans are catered to individuals, a business loan is catered to business owners to help with planned or urgent expenses (e.g. capital to start the business or money to purchase inventory).

While established business owners may turn to banks to get their loans, a small business owner might find it difficult to obtain a bank loan depending on how much they need and their business financial history.

2. What are the loan interest rates?

All licensed moneylenders in Singapore are registered under the Ministry of Law and are bound by the set rules and regulations.

In Singapore, the loan interest rates for licensed money lenders start from 1% a month and are capped at a maximum of 4% a month. Interest is also calculated on a reducing rate – the monthly interest is calculated based on the outstanding amount instead of the principal loan amount. So as the loan amount decreases every month, the corresponding monthly interest does too.

Below is an example of reducing rate and flat rate:

John borrows a total of $5,000 from a licensed money lender, with a loan tenure of 12 months at 4% interest p.a.

Flat Rate:

The lender includes the interest rate (4%) into the principal loan amount ($5,000) and divides it by 12 months. Total Flat Rate Interest = $200


# Payment Interest Principal Balance
1 433.33 16.67 416.67 4,583.33
2 433.33 16.67 416.67 4,166.66
3 433.33 16.67 416.67 3,749.99
4 433.33 16.67 416.67 3,333.32
5 433.33 16.67 416.67 2,916.65
6 433.33 16.67 416.67 2,499.98
7 433.33 16.67 416.67 2,083.31
8 433.33 16.67 416.67 1,666.64
9 433.33 16.67 416.67 1,249.97
10 433.33 16.67 416.67 833.30
11 433.33 16.67 416.67 416.63
12 433.33 16.67 416.67 0.00

Reducing Rate:

As John pays off his debt diligently every month, his interest rate decreases.


EMI = p *((r *(1+r)^n))/((1+r)^n-1))

p = principal amount

r = interest rate payable monthly

n= loan tenure (in months)


Total Reduced Balance Interest = $108.99

# Payment Interest Principal Balance
1 425.75 16.67 409.08 4,590.92
2 425.75 15.30 410.45 4,180.47
3 425.75 13.93 411.82 3,768.65
4 425.75 12.56 413.19 3,355.47
5 425.75 11.18 414.57 2,940.90
6 425.75 9.80 415.95 2,524.95
7 425.75 8.42 417.33 2,107.62
8 425.75 7.03 418.72 1,688.90
9 425.75 5.63 420.12 1,268.78
10 425.75 4.23 421.52 847.26
11 425.75 2.82 422.93 424.33
12 425.74 1.41 424.33 0.00


3. How long is the loan repayment period?

Another most frequent question asked when applying for a loan is how long you can take to pay off your loan.

It really depends on the type of loan and your repayment capabilities. Payday loans are generally repaid within one month. Licensed moneylenders usually cater to those who require short term loans with a repayment period of up to 12 months.

However, your credit history may affect the loan tenure as well.

4. What are the loan installments like?

Some loans, like payday loans, are one-off payments due on your next payday. Other loans allow you to make weekly, bi-weekly or monthly installments.

5. What are the administrative fees, late interest, late fees and any other fees a licensed moneylender can charge?

Licensed moneylenders are allowed to charge administrative fees not exceeding 10% of the total loan amount.

As for late fees, should you fail to make your payments on time, moneylenders can charge up to $60 in late fees per month, as well as late interest of maximum 4%. The total combined fees (e.g. administrative, late fees and late interest) should not exceed the loan principal amount that has been approved.


These are the guidelines set by the Ministry of Law that all licensed moneylenders in Singapore must adhere to protect their borrowers’ interests. Should you encounter a moneylender charging more than they should, do report them to the authorities.

6. What is the maximum amount of money I can borrow?

For secured loans, you can borrow up to any amount that adheres to your Total Debt Servicing Ratio (TDSR) limit for property and car loans – currently maximum 55%. For HDB and Executive Condominium (EC) loans, your Mortgage Servicing Ratio (MSR) is capped at 30%. The Loan-to-Value (LTV) for car loans is also maximum 60-70% depending on the open market value of the vehicle.

For unsecured loans, the maximum amount you can borrow depends on your income and citizenship:

For Singaporeans and PRs:

1. Borrower’s annual income: Less than $20,000

Maximum amount you can borrow: $3,000


2. Borrower’s annual income: At least $20,000 and above

Maximum amount you can borrow: Up to 6 months monthly salary

For foreigners residing in Singapore:

1. Borrower’s annual income: Less than $10,000

Maximum amount you can borrow: $500


2. Borrower’s annual income: At least $10,000 and less than $20,000

Maximum amount you can borrow: $3,000


3. Borrower’s annual income: At least $20,000 and above

Maximum amount you can borrow: Up to 6 months monthly salary

7. Who is eligible to apply for a personal loan with a licensed money lender?


  • Minimum age requirement: 18 years old
  • Employed or has a source of income (e.g. part time work, freelance etc.)
  • Has not maxed out loan limits with other licensed money lenders
  • Needs to be a resident of Singapore – loan amounts and minimum income requirement may vary (refer to the above information)

8. What are the documents required to apply for a loan?

For personal loans:


Singaporeans and PR
For Employed Singaporeans:


2. CPF Contribution Statements

3. Payslips from the previous 3 months (if monthly income is more than $6,000)

For Self-Employed Singaporeans:



2. IRAS Notice of Assessment

3. Proof of income – official income statements, bank statement, invoices


1. Work Pass (EP, S Pass, Work Permit)

2. Proof of home address (eg. rental agreement, utility bills, mobile phone bills)

3. Payslips from the previous 3 months

For business loans:

1. Bank statements from the previous 6 months

2. Company Constitution (legal document that lays out the rules for how a business will be run)

3. Identification documents (NRIC or Passport) of the company’s lead shareholders and directors

4. Tenancy agreement for place of business

5. ACRA Bizfile, Notice of Assessment (NOA) of company’s lead shareholders and directors, and credit report by Credit Bureau Singapore (CBS)

9. What is the loan application process like?

1. All applications can be made online. Fill up your loan application form here.

2. Expect a reply from our loan agents within 30 minutes.

3. Our loan agents will request you to drop by at our office. Do bring all the relevant documents with you.

4. After face-to-face verification and documents check, our loan agents will go through the loan contract with you. This includes loan terms such as repayment period, fees, late interests and processing fees. Make sure you understand your loan terms fully before you sign the document.

5. Once the loan contract has been signed, you will be able to get your loan amount in cash or credited into your bank account immediately.

10. How can I compare different loans?

This is a common question asked before applying for a loan among first timers. Before deciding on a loan, compare loan interest rates, fees and loan tenure between different lenders. While interest rate is one of the deciding factors when choosing a loan, lower interest is not necessarily better.

Short-term loans usually come with higher interest rates. Long-term loans come with lower interest, but may stretch out the time you take to repay the debt.

If the interest rate offered to you is the same for both short and long term loans, choose a tenure with an installment amount that is within your budget and repayment capabilities, because extra months means extra interest paid in total.


Prosper Credit offers a variety of personal and business loans. With our flexible repayment options, you can be assured that we will tailor-make a loan plan that suits your needs.

Apply for a loan online with Prosper Credit today!





While all reasonable efforts are made to include accurate and up-to-date information on this website, errors or omissions may still occur. We are not liable for any loss or damage caused by the use of this website. The information on this website is for general information only and should not be taken as professional advice.