Loan Tenure in Singapore: What You Need to Know

So you’re scrolling through your favourite shopping app and eyeing a new gadget you have been dreaming about for months. Before you click the “Buy Now” button, you remember that you have one tiny problem , your bank account balance.

Personal loans come in handy in times like this for sure, but before you dive headfirst into borrowing, there’s a term you need to wrap your head around: loan tenure.

Learning the ins and outs of loan tenure can make or break your borrowing experience. Understanding loan tenure meaning can actually save you a ton of headaches (and dollars) down the road.

The loan tenure meaning is simple: it’s the time you and the bank agree on for you to return their money plus some extra which is the interest.

For example, you took a big holiday to Japan. You could save up for years, or you could take a loan and go sooner. If you choose the loan route, you’ll need to decide how long you want to be paying it off.

A shorter loan tenure means higher monthly payments but less interest overall. A longer tenure means smaller monthly payments but you’ll be paying more interest in the long run. It’s like choosing between eating a whole durian in one sitting or spreading it out over a week – there’s pros and cons to both.

Banks in Singapore offer different loan tenures depending on what you’re borrowing for. A personal loan might have a tenure of 1 to 5 years, while a home loan could stretch up to 30 years.

Keep in mind that just because a bank offers you a certain loan tenure doesn’t mean you have to take it. You can have some wiggle room to negotiate especially if you’ve got a good credit score.

Loan tenure is not just a random number they pluck out of thin air though. It is based on many factors.

Ever notice how banks seem to have a thing for young people? When it comes to loan tenure, your age plays a big role. If you’re in your 20s or 30s then banks might offer you longer loan tenures. Why? Well, they figure you have got plenty of working years ahead of you to pay back that loan.

On the flip side, if you’re closer to retirement age, then do not be surprised if the bank offers shorter loan tenures. It’s not ageism. They just want to make sure you can pay off the loan before you start collecting your CPF. So if you’re thinking of taking a loan in your golden years you should be prepared for a bit of a squeeze on the repayment timeline.

Let’s talk about the moolah you’re bringing in. If you’re earning big bucks, banks might offer you shorter loan tenures. They assume you can afford higher monthly payments so you can clear your debt faster.

But what if you’re not exactly rolling in cash? Don’t worry since the banks or licensed moneylenders have got your back too. They might offer you longer loan tenures which means smaller monthly payments. Loan tenure here is all about making sure you can manage your repayments without having to survive on instant noodles.

Different strokes for different folks, right? Same goes for loans. The type of loan you’re after and what you’re using it for can affect your loan tenure. Let’s say you’re after a quick cash injection to buy the latest iPhone. For short-term loans like these, you’re looking at tenures of a few months to a year. If you’re eyeing that swanky condo in Orchard Road, that’s a whole different ball game. Home loans typically come with much longer tenures, sometimes up to 30 years! It’s like the marathon of the loan world. Banks understand that unless you’re some big shot CEO, you’ll need a good long while to pay off something that big.

It’s simple really – the more you borrow, the longer your loan tenure is likely to be. People borrowing a small amount, to get a new laptop, for example, might be looking at a shorter loan tenure. Those taking out a hefty loan for your dream wedding complete with a 10-course Chinese banquet should expect a longer tenure.

With a longer loan tenure, your monthly repayments will be lower.

Lower monthly payments mean you’ve got more cash for other stuff.

Banks might be more willing to lend you money if you’re spreading the repayments over a longer period.

As mentioned above, you’ll end up paying more interest over time.

You’ll be in debt for a longer time. It’s like having a stone in your shoe – not unbearable, but annoying for a longer period.

If it’s a home loan that you applied for, then you’ll build equity in your property more slowly.

As expected, You’ll save money in the long run. Think of it like buying groceries in bulk – more painful upfront, but cheaper overall.

You’ll be debt-free sooner which is great if you don’t like having loans. It also means your credit score will increase faster.

For home loans, you’ll build equity faster.

Your monthly repayments will be heftier which can be potentially overwhelming.

With more of your income tied up in loan repayments, you might have less wiggle room for other expenses.

Banks might be pickier about giving you a loan with a shorter tenure, especially if your income isn’t sky-high.

It is not just about getting your hands on some extra cash. More importantly, it is about figuring out how to repay it without turning your life into a nightmare. At the end of the day, choosing the tenure is all about balance. You want to make sure you can afford your monthly repayments without having to give up your weekly chicken rice fix. So take your time and do your homework. Don’t be afraid to ask questions, too. Remember, a loan is a long-term commitment.

You are probably thinking – “Wah, so many things to consider, how to choose?” Well, that’s where platforms like LenderSG come in handy as the ultimate matchmaker to help you find the perfect loan.