Loan Limit: What Is The Maximum Personal Loan I Can Get?

Keeping up with the rising cost of living can be stressful. When we require personal loans, sometimes we might be unsure if we can get the loan amount we need.

If you are wondering what is the maximum personal loan you can get, this article is for you. Here, we outline the different types of personal loans you can take and their loan limits.

What are the types of personal loans I can take from banks and licensed moneylenders?

Personal loans are versatile loans you can take for various personal uses, such as weddings, medical expenses, funerals, vacations, or paying off other urgent bills and expenses. They can be either secured or unsecured. Here are a few common types of personal loans:

1. Payday loans

If you find yourself in need of cash to pay off some urgent bills before your payday arrives, payday loans might be suitable for you. As the name suggests, they are meant to tide you over for a month until your payday comes–which is when you need to repay the loan, together with the interest. Payday loans are usually capped at your one month’s salary, and are offered by licensed moneylenders.

2. Urgent cash loans

Urgent cash loans are quick cash options that allow you to receive the money as quickly as possible–even within a day–and are provided by both licensed moneylenders and banks. The exact approval time may vary between the two, depending on the institution’s requirements.

3. 12-month cash loans

12-month cash loans have a loan tenure of 12 months, so you have ample time to repay your debt comfortably via monthly instalments.

4. Wedding loans

Weddings are big-ticket affairs and it can be tough for a couple to fork out the lump sum required to cover all their expenses. A wedding loan allows you to borrow an amount to cover all your wedding expenses while repaying your loan in comfortable instalments.

5. Study loans

Study loans typically come at a relatively low-interest rate. If you’re a Singaporean or Permanent Resident, repayment only begins after you graduate, during which no interest rate is incurred until some months after graduating.

6. Renovation loans

Renovating your home can be taxing when it comes to footing the bill for all the new furnishings, decor, and miscellaneous costs–which is why a renovation loan can be a life-saver. Like wedding loans, you don’t need to fork out a lump sum and can repay your lender in more comfortable instalments.

Taking personal loans from banks vs licensed moneylenders: How are they different?

Borrowing from a bank versus a licensed moneylender is rather different. Banks usually have more stringent requirements before disbursing a loan, hence it is worthwhile to note their differences before deciding where to borrow from:

Loan limit: How much loan can I take?

With banks, borrowers can borrow up to as much as 12 times their monthly income. Do refer to MAS guidelines for the latest updates.

For licensed moneylenders, you can borrow up to 6 times your monthly income if you’re a Singaporean or Permanent Resident and earn at least $20,000 annually. Singaporeans and PRs with an annual income of less than $20,000 may only borrow up to $3,000.

However, this also depends on your credit history, and whether you have existing credit that has yet been repaid.

Licensed moneylenders would typically do a search on the Moneylenders Credit Bureau (MLCB) platform to check your existing borrowing and repayment history, to ensure that the loan to be granted to you does not exceed the loan limits set by the Ministry of Law, as well as to help the lender determine its risk of extending a loan to you.

What if I need more money than the maximum personal loan I can get?

If borrowing up to 12 times your monthly income (with a bank) or up to 6 times your monthly income (with a licensed moneylender) is not enough, you may wish to consider a secured loan.

Secured loans require collateral in the form of property, car, or other assets. You can borrow up to 60-75% of the value of the collateral pledged, but if you fail to repay the loan, these assets could be seized by the lender.

Why you should only borrow what you can afford

Excessive borrowing, when not well-managed, can lead to dire consequences. Some may find it harder to pay off debt on time, as fees and interest rates accumulate and snowball into one big debt.

Defaulting on a loan will also affect your credit scores and hurt your future loan applications. Hence, it is always better to borrow within your means after careful calculation.