What is a Guaranteed Personal Loan in Singapore?

Secured Personal loans are loans that require some form of security, something called collateral. Collateral can be an asset such as property in the case of a mortgage or a vehicle when applying for a car loan.

This guarantee serves as a promise that you will repay the personal loan on time. When you opt for a secured loan, you give the lender the right to sell your asset and get their fair share. However, the asset will remain in your custody until you breach the signed contract.

That is why the value of the asset has to be greater than or equal to the value of the loan.

In case the asset loses its value due to changes in the market price or other similar reasons, you will have to pay the difference if the lender has to sell the asset to recover the borrowed amount.

What are Unsecured Personal Loans in Singapore?

Unsecured loans are loans in which the lender does not ask for any type of collateral, therefore there is no collateral involved.

In the case of an unsecured personal loan in Singapore, there is no risk of lenders seizing your assets.

Since there is no collateral in unsecured personal loans, lenders will evaluate your application based on your credit score and earning potential.

Your loan application will be approved if you have a positive score and the ability to make payments.

Unsecured personal loans are very popular, but they are generally smaller since the lender has no collateral to fall back on in the event of a default.

Guaranteed Credits vs. Unsecured Credits: Advantages and Disadvantages

Both secured and unsecured personal loans have their advantages and disadvantages. Here is a table to help you understand the difference:


Secured Personal LoanUnsecured Personal Loan
1. Easy to obtain even if you have a low credit rating since lenders don’t pay much attention to your financial history when evaluating your application.1. It can be difficult to obtain if you don’t have a good credit score, in most cases above 600, as lenders primarily use your credit score when evaluating your application.
2. The loan amount can reach several million depending on the value of the collateral. The more valuable the collateral, the larger the loan.2. The loan amount is not very high as there is no guarantee that you will repay the loan on time. Therefore, lenders tend to be cautious.
3. The interest rate rarely depends on your credit rating.3. The interest rate largely depends on your credit rating.
4. You will lose your assets (collateral) if you do not repay the loan on time.4. There is no risk of losing any of your assets as there are none involved in unsecured personal loan in Singapore. However, the lender can sue you if you don’t pay your debt.
5. Interest rates are usually low for secured loans.5. Interest rates are usually high for unsecured loans.
6. Examples: auto loans, home loans.6. Examples: personal loans, credit cards.


What loan can affect my credit score?

Both loans will have an impact on your credit rating. In fact, the impact is practically the same in both cases.

If you pay your loans on time, your credit rating will improve. In the same way, if you are late on payments, your credit rating will be affected.

However many borrowers use secured loans to improve their credit history and increase their credit rating.

Secured vs Unsecured Loan: Which One Should I Choose?

There is no concrete answer to this question. Banks and financial institutions prefer that a guaranteed loan be selected as it offers them greater security in case the established payments are not met.

On the other hand, users prefer unsecured personal loans because they do not involve collateral or guarantees. However, they are more difficult to obtain; especially when you have a low credit rating.

Therefore the decision will depend on your general financial condition. If you need a large amount of money, a secured loan would be the best option because the amount of the loan will depend on the value of the collateral you intend to encumber in the current market.

Choose a secured loan only if you are 100% sure that you will be able to repay it, otherwise you may lose your asset. However, the risk may be worth it as secured loans are cheaper than unsecured loans.

Therefore, consider your situation and choose the best option based on your personal needs.

Pay attention to the lender

Regardless of whether you opt for a secured loan or an unsecured loan, it is important to use the services of a reliable financial institution.

In secured loans, each lender has its own terms. Some are more understanding and may be willing to change their terms if you have difficulty repaying the amount borrowed.

In the case of unsecured personal loans in Singapore, each lender offers different interest rates and terms and conditions. Also, some may be willing to offer their financial products to people with low credit ratings. So research the market options to find a lender that suits your needs.

Change one type of loan for another

It is possible to exchange a secured loan for an unsecured loan, but only under certain conditions. Also, your lender may offer to exchange your unsecured loan for a secured loan if you default on your payments; although it will always need your consent before doing so. While it may seem like a bad deal, some borrowers opt for this option to avoid a lawsuit.

Who offers secured vs unsecured loans?

Banks and credit unions offer secured loans. Some of the more popular options include:

There are also a large number of providers, including online lenders, that offer unsecured personal loans in Singapore. But since scams are also common, make sure you only use the services of authorized providers.


Both secured and unsecured loans can be useful depending on each personal situation. Get the proper financial guidance and choose a loan only when you’re sure you can afford it.

author avatar
TTMedia - a digital agency in Singapore that designed the creative website for OT Credit - a money lender in Singapore that offers the best loan services.