Loan in Singapore: Your Questions Answered
These are the questions people ask most often about loan. Each answer is short; follow the links for the full detail.
What does a loan calculation tell me?
Calculates repayments for an amortising loan.
What is the formula?
PMT = P × r ÷ (1 − (1 + r)^−n).
What do I need to enter?
Loan amount (S$), Interest rate (% a year), Term (years).
Is this financial advice?
No. It is a calculation tool. For decisions about loans or investments, compare official offer documents and consider speaking to a licensed adviser.
Can you show an example?
For example, with these inputs:
- Loan amount (S$): 20,000
- Interest rate (% a year): 6
- Term (years): 5
the calculator returns:
- Monthly payment: S$386.66
- Total interest: S$3,199.36
Any tips?
- Compare loans by effective interest rate, not flat rate; the EIR is roughly double the flat rate.
- Use realistic return assumptions; long-term projections at high rates can be very misleading.
- Factor in inflation when you plan for goals that are many years away.
Background
Interest in Singapore is quoted in several ways. Mortgages and savings accounts use effective annual rates, while car loans and many personal loans are advertised at flat rates that look much lower than their true cost. Banks must disclose the effective interest rate, and comparing on that basis gives a fair picture.
Compounding is the reason long-term saving works: returns earn further returns, so the growth curve steepens over time. The same maths works against you with debt, which is why credit card balances at around 27% a year grow quickly if only minimum payments are made.
Cars in Singapore carry costs found almost nowhere else, including the Certificate of Entitlement and the Additional Registration Fee. Loans are capped at 60% or 70% of the price depending on the car's Open Market Value, and the maximum tenure is seven years.
Related calculations
- Maximum Car Loan Calculator: MAS rules cap car loans at 70% of the price if OMV is S$20,000 or less, and 60% if OMV is higher, with a maximum tenure of 7 years.
- Additional Registration Fee (ARF) Calculator: Calculates the tiered ARF for cars registered in Singapore.
- Car Depreciation Calculator: Works out the yearly depreciation buyers in Singapore use to compare used cars.
- Personal Loan Calculator (Flat Rate): Singapore banks advertise personal loans at flat rates.
Try it yourself with the Loan Calculator.
Run your own numbers: Loan Calculator