Low interest loan. Those three magic words can instantly raise your hopes if you need cash urgently. However, anyone who has tried to borrow money knows it is not easy to get a low interest loan in Singapore.

You can get small loans with low interest by following some basic rules. Here, we will share the 5 things you can do to qualify for the lowest interest rates.

What are low interest loans?

A low interest loan is usually a business or personal loan on which the lender charges a competitive rate of interest.

The exact interest rate is subjective. It is affected by fiscal factors such as the prevailing economic conditions and employment figures when the loan is granted.

Where can you get low interest loans in Singapore?

Another important detail all borrowers should understand is that there are two main sources of a low interest loan in Singapore – banks and licensed money lenders.


The most common bank loans in Singapore are home loans, personal loans, car loans and education loans. Bank loan interest rates generally vary between 3.5% and 11%, depending on the type of the loan, its term, the principal amount and the borrower’s creditworthiness.

Bank loans with interest rates close to 3.5% can be an attractive option for someone who wants to get a low interest loan, especially if they can be coupled with other bank offers and deals.

Licensed money lenders

Legal money lenders in Singapore are heavily regulated by the government and the strict controls around moneylending have created a competitive field for the benefit of borrowers. The most important of these controls relevant to our discussion is the cap on interest rates. Currently, the maximum interest that a licensed lender can charge is 4% per month.

There are no lower limits set but lenders generally charge rates as low as 1% per month. This may dip even lower with promotional offers and deals for repeat customers. Some applicants may even be eligible for an interest free loan.

Before they offer applicants these lowest rates, money lenders check with a governing body called the Moneylenders Credit Bureau (MLCB), which stores data on borrowers’ loans and repayments with all licensed money lenders in Singapore.

5 ways you can qualify for low interest loans in Singapore

Now that we understand the basics, let’s get right into the 5 things you can do to get small loans with low interest.

1. Maintain good credit

The single most important thing you can do to qualify for a low interest loan in Singapore from a licensed moneylender is to maintain good credit.

This is different from maintaining a good ‘credit score’. Credit scores are allocated and maintained by the Credit Bureau Singapore (CBS), and it is only relevant when you apply for loans from a bank or other major financial institutions.

The relevant agency when borrowing money from a licensed money lender in Singapore is the Money Lenders Credit Bureau (MLCB). Lenders will submit your information to the MLCB to check your borrowing limit, existing outstanding loan principal amount with other money lenders, total payable amount, repayment records, and other information when you apply for a loan with them.

Note that while MLCB records are the main source of information for a licensed lender, they may also take your CBS credit score into consideration before approving a loan.

Two simple rules help you to maintain good credit:

Borrowers with a history of loan defaults may not necessarily be refused a loan. However, they are more likely to be charged a higher interest rate as lenders may perceive that they have a higher risk of defaulting.

2. Avoid taking multiple loans

When a licensed money lender in Singapore accesses your MLCB records, they can see the number and total value of all your existing unpaid loans. Multiple concurrent loans are an indication that a borrower is under increased financial stress. It often happens when they are taking loans to pay off existing loans in an effort to buy time.

Such loan applicants are at higher risk of defaulting and unlikely to be able to qualify for and get a low interest loan.

Avoid taking on new debt until you have settled older ones. If you need assistance to juggle multiple loans, consider a Debt Consolidation Loan.

3. Maintain a stable source of income

Lenders always consider employment status when assessing a loan application. Consistent employment indicates a steady income flow and reassures them that the applicant is likely to repay their debts.

While a formal full-time job is the best option, lenders will also consider income from part-time and casual employment. The Covid-19 pandemic has also led to many lenders relaxing their employment criteria. Find out how much you can borrow up to based on your income here.

4. Get a co-signer or guarantor

A co-signer or guarantor is someone who agrees to be responsible for repaying a loan. They do not receive the money from the loan but are legally responsible for its repayment.

A co-signer with a good credit score can help you qualify for small loans with low interest and even other fee waivers.

However, do not treat a co-signer as a blank cheque. A default on your part will damage their credit score and likely even greater damage to your personal relationship with them. If anything, be even more particular about repaying a co-signed loan and handle the debt responsibly.

5. Compare rates from different lenders

There is no one-size-fits-all ‘best’ loan. Different licensed money lenders and banks offer varying loan eligibility criteria and conditions using their own assessment criteria. An applicant’s unique financial status, reason for the loan, loan history and other factors could lead to one lender offering lower rates than another.

Your responsibility to yourself as a borrower is to compare quotes from as many licensed lenders and banks as possible. This goes beyond simply reading advertised rates; you must read the fine print to understand all the fees, penalties and additional expenses that apply.

Note that most lenders offer lower interest rates and a waiver of certain charges to regular customers.

Apply for a low interest loan with Galaxy Credit

Galaxy Credit is the ideal place to get a low interest loan in Singapore. We understand your financial concerns and are committed to offering the best rates for your circumstances. Walk in to apply or apply online with us!