Imagine you’re planning to buy your dream car or perhaps your first home in Singapore, but you’re not quite sure how to finance this significant step. Maybe you’re facing unexpected medical bills and need a financial solution that won’t break the bank. This is where understanding the world of loans, specifically secured loans, becomes invaluable.

Secured loans bridge financial gaps, offering you the money you need by using something you own as a safety net for the lender. It allows you to use your assets, such as a car, home, or even savings, to secure the funds you need under more favourable conditions.

But, as with any financial decision, there’s a lot to consider before taking the plunge. This guide is designed to walk you through everything you need to know about secured loans in Singapore, making the complex world of finance a little easier to navigate.

Whether you’re taking a significant step in life or managing unforeseen expenses, understanding secured loans can help you make informed and confident financial decisions.

What are Secured Loans?

Secured loans require borrowers to have a collateral as a security measure for lenders. In Singapore, secured loans account for a significant portion of the financial market, offering borrowers access to larger loan amounts and lower interest rates compared to unsecured loans.

Types of Secured Loans

To help you find the most suitable option for your financial needs, consider these common types of secured loans available in Singapore.

Car Loans

Car loans are used to purchase new or used cars, with the vehicle itself acting as collateral for the loan. These loans typically come with low interest rates and loan terms of up to seven years.

Mortgage loans

A home loan is designed for buying real estate, with the property serving as collateral. Loan terms for mortgage loans in Singapore can extend up to 30 years, giving borrowers enough time to repay their loans.

Share-Secured or Savings Secured Loans

Share-secured or savings-secured loans enable borrowers to use their savings as collateral. Borrowers can still continue earning interest on their deposits if they take out this type of loan. With a repayment period of up to five years, it gives borrowers flexibility.

Secured Credit Cards

Secured credit cards are suitable for individuals with limited credit history. They require a cash deposit as collateral and typically have credit limits equivalent to the deposit amount.

Secured Lines of Credit

Secured lines of credit offer borrowing flexibility, with assets like real estate or savings acting as collateral. These lines of credit provide borrowers with the ability to access funds as needed, making them a versatile option for managing financial needs.

Car Title Loans

Car title loans are short-term loans that use a borrower’s car title as collateral. These loans offer borrowers quick access to funds, with loan terms typically lasting between 30 to 60 days. For banks, the loan term can be longer.

Pawn shop loans

These loans provide instant cash loans against valuable items like jewellery. It gives borrowers a convenient way to access funds using their personal belongings as collateral.

Bad Credit Loans

Meant for those with low credit scores or bankrupt individuals, this type of loan offers access to financing secured by various forms of collateral. These loans provide borrowers with bad or a low credit score an opportunity to rebuild their credit while addressing their financial needs.

Want to learn how to improve your credit score? This guide can help.

Pros and Cons of Secured Loans

To get to know secured loans better, take a look at its pros and cons below.


Lower interest rates

Secured loans offer lower interest rates due to reduced lender risk, making them an attractive option for borrowers seeking affordable financing.

Higher loan amounts

The collateral pledged by borrowers enables lenders to offer larger loan amounts. That’s why it gives access to funds that might not be available through unsecured loans.


Risk of losing collateral

In case of default, borrowers risk losing their collateral. It’s worth noting that this could have significant financial and personal consequences.

Limited flexibility

The use of loan amounts is often tied to the collateral, restricting borrowers’ flexibility in using the funds.

Key Considerations of Secured Loans in Singapore

Considering getting a secured loan in Singapore? Here’s some factors you should remember.

Choosing the Right Collateral

The choice of collateral significantly impacts the loan amount, terms, and interest rates. Borrowers should consider the value, liquidity, and marketability of their collateral when selecting the most suitable option.

Interest Rates and APR

Interest rates and APRs are other crucial factors in assessing the cost of a secured loan. It’s important for borrowers to compare these figures against market averages and consider the impact of additional fees on the overall loan expense.

Fixed vs. Variable Interest Rates

Borrowers should weigh the benefits of fixed and variable interest rates based on their financial stability and risk tolerance. Fixed rates provide certainty and predictability, while variable rates offer the potential for lower rates during periods of low interest rates.

Additional Fees

All loans come with upfront fees, such as origination fees, appraisal fees, and late payment penalties. All of these can significantly add to the total cost of the loan.

Loan Amounts

Borrowers should assess their repayment capacity and borrow only what they can afford to repay, avoiding financial strain and potential default. Keep in mind that it’s not recommended to borrow more than what you need.

Credit Score and Income Requirements

Improving credit score and income is recommended in Singapore, whether you’re taking out a secured loan or not. These two can help you meet loan approval criteria, enhancing your chances of securing favourable loan terms and interest rates.

Dealing with Default Scenarios

There’s a legal process that follows a loan default in Singapore, including timelines, borrower rights, and potential outcomes. Proactive steps, such as renegotiating loan terms or exploring debt consolidation options, can mitigate the impact of potential defaults.

Finding Secured Loans in Singapore

Secured loans are available from a variety of sources, including banks, credit unions, and online lenders. Borrowers should ensure that the money lender is registered with the Monetary Authority of Singapore (MAS) for financial safety.

The Bottom Line

Secured loans in Singapore offer a solution to financing significant purchases or consolidating debt, often with great terms thanks to the collateral. However, the inherent risk of losing valuable assets necessitates a thorough evaluation of your financial situation and the loan’s terms.

By understanding the types of secured loans, weighing their pros and cons, and considering the key factors outlined in this guide, you can make informed decisions that align with your financial objectives.To further enhance your decision-making process, consider the following questions:

  • What type of secured loan best suits your financial needs and goals?
  • How can you take advantage of your collateral to secure the best loan terms and interest rates?
  • What steps can you take to mitigate the risk of default and protect your collateral?

By answering these questions and using the information provided in this comprehensive guide, you can fully understand the secured loan landscape with confidence and make informed decisions that support your financial health.

Ready to take out a secured loan in Singapore? MoneyIQ SG can help. Get a tailored loan offer here.

Published On: March 18th, 2024

Share This Story:

Subscribe to our eNewsletter:

Get A Personal Loan Now!

Thank you for your interest! As much as we want to extend our help, the loan offers are NOT available for foreigners in Singapore for the time being.

Please come back and check it out again in the future.

Terms and Conditions

Only 21 years old and above is eligible for loan application.

To preserve the confidentiality of all information you provide to us we maintain the following Privacy Principles.

By clicking "Submit" and providing your personal data, you consent to our loan providers contacting you via the telephone and email and permitting to do a search on the Credit Association Singapore (CAS) web portal for the loan application purpose.

We only collect personal information that we believe to be relevant and required to understand your financial needs.

We will only use any information collected as minimally as possible, mainly to assist us in customising and delivering loan packages that are of interest to our customers.

We will not make unsolicited requests for customer information through email or the telephone, unless customers initiate contact with us.

We have established strict confidentiality standards for safeguarding information on our customers.

Our loan providers will not use or disclose information collected from you other than for the purpose made known to you, authorised by you or required by the Law.

Recent Articles