How to Estimate Personal Loan Repayments Before Applying in Singapore

You can work out roughly what a loan will cost you before you speak to anybody, and doing so changes the conversation. It moves you from asking what you can get to knowing what you can afford, which are different questions with different answers.

The first thing to understand is how interest is charged. On a reducing balance, interest each month is calculated on what you still owe, so as the balance falls the interest falls with it. On a flat rate, interest is calculated on the original amount for the whole tenure, which costs considerably more for the same headline percentage. Licensed moneylenders in Singapore charge on the reducing balance, capped by regulation. If a rate sounds low, establish which of the two it is before comparing anything.

The second is the administrative fee, which is charged once at disbursement and deducted from what you receive. This means the cash reaching your hand is less than the principal you agreed to repay. It also means the fee weighs much more heavily on short tenures: the same one-off fee spread over three months is far more costly, relative to the sum borrowed, than the same fee spread over two years. This is why short-term borrowing looks cheap monthly and is not cheap overall.

So there are three numbers worth writing down for any loan you are offered, and only three. What you actually receive, after the fee. What you pay each month. And what you repay in total across the whole tenure. The last one is the number people skip and the one that tells you the most.

There is also a hard ceiling worth knowing about. Under Singapore’s rules, the total charges on a loan — interest and fees combined — cannot exceed the principal you borrowed. Whatever the tenure, you cannot end up owing charges greater than the sum you took. If any quotation implies otherwise, that quotation is wrong.

The calculator on this site does this arithmetic at the maximum rates permitted by law, so what it shows is the most a loan of that size and tenure could cost you. Your assessed rate may be lower. Work backwards from a monthly repayment you are comfortable with, rather than forwards from the largest amount available, and you will generally arrive at a better decision.