When Does A Personal Loan Make Sense?

When Does A Personal Loan Make Sense?



This article is sponsored by Standard Chartered Bank (Singapore) Limited (“SCBSL”). 

A personal loan can be a boon in times of financial need. Although there are costs associated with taking out a loan, the advantages of doing so can outweigh its monetary costs.

Here are four such situations in which getting a personal loan may make sense:

1. When you need to finance home improvement

If you own a home, you probably have a list of things you’d like to upgrade, renovate or repair. However, home improvement isn’t cheap. According to renovation platform Qanvast, renovating an entire 3-room HDB flat (65 square metres) could cost at least S$18,000.

If you need help in tiding you over this expense-heavy period, a personal loan may be a good option to consider. It could help you manage these expenses by breaking down large payments into more affordable monthly instalments.

2. When you need to pay for medical emergencies or treatments

Singapore may have an efficient healthcare system, but it can be quite costly. While government schemes like Medisave and Medishield Life can help provide some financial buffer, they will not cover some non-surgery related costs, such as the loss of income. Recovery from a bypass, for example, may put a desk-bound employee out of work for 4 to 6 weeks, and those performing manual labour out of work for 3 months.

If you or a family member is faced with such a situation, a personal loan could help you pay off your medical expenses if you’re short on funds. With Standard Chartered’s CashOne, you could get cash as soon as the next working day^ – this could be crucial if you need to pay for medical emergencies.

3. When you need to finance a small business or side income gig

Thinking of financing a business or side income gig? Consider getting a personal loan.

The idea may seem odd to some – business loans exist after all, and they generally provide lower interest rates. However, using a personal loan to finance your business or side gig has several advantages:

Note: This infographic does not serve as a representation of any financial institution.

4. When you need to save on interest charges

If you have several high-interest debts, consolidating them with a personal loan could help reduce your interest charges.

Consolidating your debts simply means combining them into a single loan. A personal loan may offer lower interest rates than those incurred by your existing debts, so consolidation may help you save on interest payments. Most credit cards in Singapore, for example, charge an effective interest rate (EIR) of 24% p.a. to 27% p.a. In contrast, Standard Chartered’s CashOne Personal Loan offers interest rates at 4.98% p.a. (EIR from 9.29% p.a.*) or 5.68% p.a. (EIR from 10.74% p.a.*) depending on the loan amount and tenure.

Here’s how much interest you may save by consolidating credit card debts under a loan tenure of 1 year with Standard Chartered’s CashOne Personal Loan:

Existing debts
Personal loan
Bank A credit card:
S$10,000 at EIR 25.5% p.a.

Bank B revolving credit line:
S$5,000 at EIR 19.8% p.a.

Bank C personal loan:
S$10,000 at 8% p.a. (EIR 14.45% p.a)
S$25,000 at 5.68% p.a.
(EIR 10.74% p.a*)
Total interest payable
Bank A: S$1,285 +

Bank B: S$507 + 

Bank C: S$750 + 

= S$2,542
Interest savings

The figures used are for illustrative purposes only and are computed on a per annum basis. Other relevant fees & charges are not included in the calculation above. Interest rates quoted in the calculation of “Existing Debt” are based on general product offerings in Singapore and do not serve as representation of any financial institutions.

Based on the example above, consolidating your high-interest debts under a personal loan could potentially save you thousands of dollars.

Can you afford repayment?

Always make sure that you can afford to meet your personal loan monthly repayments. Defaulting on your loan repayments not only incurs late fees and higher interest charges, but also affects your credit bureau rating. However, if you have a repayment plan in place, then a personal loan could be great for tiding you over certain life events.

Looking for a personal loan? Apply for CashOne online and get cash as soon as the next working day.

^Standard Chartered Bank (Singapore) Limited’s Next Day Cash Terms and Conditions apply. For full Terms and Conditions, refer to https://www.sc.com/sg/terms-and-conditions/next-day-cash-terms-and-conditions.

*The EIR for the applied rate of 4.98% p.a. is calculated based on a loan amount of S$50,000, while the EIR for the applied rate of 5.68% p.a. is calculated based on a loan amount of S$20,000. Both calculations take into consideration the first year annual fee of S$199. Click here for the full CashOne Comparison sites Terms and Conditions.

All information provided is on an “as is” basis and for informational purposes only. All Standard Chartered Bank CashOne Personal Loan applications are subject to SCBSL’s loan approval process at its sole discretion. SCBSL is not liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. For more information on the Standard Chartered CashOne Personal Loan, visit sc.com/sg/CashOne now.

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