Whom to Borrow Money from in Singapore

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Whom to Borrow Money from in Singapore

Different denominations of the Singapore currency lay scattered, representing the act of borrowing money
Different denominations of the Singapore currency lay scattered, representing the act of borrowing money

Financial challenges may occur unexpectedly in life, and there will be times when we can’t meet them and need to ask for help. Knowing clearly what our options are, as well as their respective advantages, will make our lives much easier when the time of need arrives.

In this article, let’s take a look at the key things to know about the different options for borrowing—banks, family, friends, and moneylenders—and which choice we should favour according to our situation when we borrow money in Singapore.

The most preferred option: Banks

The first option that comes to mind when thinking about legal loans in Singapore is banks. These financial institutions offer several types of loans, from mortgage to renovation loans, each with its own terms and conditions, as well as perks.

To attract customers, banks often provide benefits such as zero loan origination fees and cashback for personal loans. You may also qualify for interest rate discounts as some banks offer loyalty discounts or personalised interest rates depending on your credit scores and income profile.

There is also more privacy involved when borrowing from banks, as your friends and family would likely be unaware of your loans. This means that you bear almost no social burden when you borrow from banks.

However, there are several downsides to borrowing from banks. Some don’t offer personal loans at all or require a good credit history to approve personal loans. Even if your personal loan is approved, it would likely be strictly pegged to your income, such as the UOB Personal Loan, which offers a maximum loan amount of up to 95% of the available credit limit of your UOB Credit Card account.

Furthermore, negotiations with banks in the event of late payment are also trickier than when you borrow from friends and family or licensed moneylenders. This is because the terms and conditions are set in stone, and you would have to suffer the stated penalties when the payment is late or absent. Hence, be sure to stave off repercussions and preserve your precious credit score by scrutinising the terms and conditions before borrowing money in Singapore.

The more casual option: Friends and family

For instant cash loans in Singapore, friends and family are familiar options. However, this route can get tricky to navigate. According to a PayPal survey, more than one-third of adults in the United States had loaned an average of US$450 (S$609) to friends or family, and nearly 50% of the loans were not paid back.

The lack of an official contract when borrowing from friends and family is a double-edged sword. On one hand, it is the reason it is easy to get instant cash loans in Singapore, but on the other, it’s also the cause of complications when it comes to repayment. When borrowing from friends and family, there are no forms to fill, no credit score to scrutinise, and no terms and conditions to fulfil. Even if there are some conditions, they are likely to be verbal and not set in stone. Hence, when disputes arise over the repayment of loans, it is very difficult to resolve them without destroying the relationship.

For instance, if you had lent $5,000 to Uncle Kevin (who watched you grow up and is your father’s close brother) as a personal loan, it would be awkward to demand the money back. This is especially the case when you actually need the $5,000 to repay an urgent debt or for investment purposes. This would inevitably create a rift that may spread throughout the family.

As such, it is important to clearly communicate the reasons for the loan, as well as structure the terms properly in writing, even when borrowing from loved ones. The agreement should include the amount borrowed, repayment schedule, and any other terms either side deems important, with both parties signing the agreement.

The middle ground: Licensed moneylenders

Moneylenders are an underappreciated and under-utilised option when it comes to borrowing money in Singapore. However, before proceeding to the many advantages, ensure that the moneylender you approach is licensed, registered with the Ministry of Law, and operating under Singapore’s Moneylenders Act.

A big advantage of getting instant cash loans from licensed moneylenders in Singapore is the faster approval compared to banks. A personal loan from banks may require you to go through several stages before getting your application approved, but because moneylenders respect the urgency of your financial situation, a personal loan from moneylenders always takes less than a day to get approved. Moneylenders are a reliable option when you need a loan.

So whenever you need fast cash or a long-term loan, do take the time to research your loan options.

Infographic on the key questions to think about before getting a loan

Depending on how much weight you give to each of the questions above, you can proceed to borrow from one of the options listed above.

R2D Credit is known for our simple and streamlined procedures, with quick and fast access to a legal loan in Singapore. We take pride in making the borrowing process easier for everyone. Talk to our loan officer today to discuss your options.


The information provided on our website is for educational and informational purposes only and is not intended to be a substitute for legal or financial advice. While we try to ensure that information on this website is accurate, we do not warrant that the information will be free from error. We shall not be liable for any loss or damage that may arise from the use of this website.

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