Why you need to know about maximum loan quantum meaning
New to the world of borrowing? One of the most important things you need to know when it comes to borrowing is how much you are eligible to borrow from the lender. In this case, the lender could be traditional banks, financial institutions, loan sharks, or licensed money lenders in Singapore. Just a word of caution: do not go to loan sharks no matter how desperate you may be.
Maximum loan quantum meaning
Loan quantum is defined as the amount of money you can borrow from the lender. By extension, the maximum loan quantum refers to the maximum amount of money you can borrow from the lender.
As you might already guess, the maximum amount of money that one can borrow varies from person to person as well as the specific type of loan that he or she is looking at taking up.
Just to put it out there, how much you earn on a monthly basis is a huge determining factor when it comes to loans. The more money you make every month, the more money lenders are willing to lend you — it really is as simple as that!
Different loan types come with different maximum loan quantum
Car loan: Maximum loan quantum meaning
If you don’t already know, driving is incredibly expensive in Singapore. In general, the maximum amount of car loan you can get is 60% or 70% of your car’s Open Market Value (OMV).
Here’s a quick guide on the maximum car loan you can get, based on your vehicle’s OMV:
Motor vehicle with OMV ≤ $20,000: maximum loan quantum is 70%
Motor vehicle with OMV > $20,000: maximum loan quantum is 60%
Mortgage loan: Maximum loan quantum meaning
For the uninitiated, a mortgage loan is also known as a home loan or housing loan.
For HDB flat homeowners, the maximum amount that you can borrow via the HDB Concessionary Loan is up to 90% of your flat’s value or selling price, whichever is lower. If you want to take a bank loan to finance your HDB flat instead, the maximum amount that you can borrow is up to 80% of your flat’s value or selling price, whichever is lower.
For Executive Condominium and private property homeowners, you can only zoom in on bank loans. The maximum amount that you can borrow via private bank home loans is up to 75% of your property’s value or selling price, whichever is lower.
Keep in mind that home loans are subject to Total Debt Servicing Ratio rules that limit how much you can actually spend on loan repayments every month.
Borrowers in Singapore are not allowed to spend more than 60% of their gross monthly income on loan repayments. This includes things like your monthly home loan repayment, student loan repayment, car loan repayment, personal loan repayment, renovation loan repayment, credit card bills, and more.
Renovation loan: Maximum loan quantum meaning
The maximum amount that you can borrow from a renovation loan is usually capped at 6x your monthly income or $30,000, whichever is lower.
Personal loan: Maximum loan quantum meaning
While banks in Singapore are more than happy to let their wealthy customers borrow up to $200,000, a safer range that is accessible to most people is 4x their monthly income. That said, licensed money lenders may let you borrow up to 6x your monthly income if you make at least $20,000 annually.
What’s the maximum loan quantum offered by licensed money lenders in Singapore?
When it comes to unsecured loans, you can obtain a maximum loan amount from licensed money lenders in Singapore as follows:
- Up to $500: If your annual income is less than $10,000 (Foreigners residing in Singapore);
- Up to $3,000: If your annual income is between $10,000 and $20,000 (Foreigners residing in Singapore);
- Up to $3,000: If your annual income is less than $20,000 (Singapore Citizens and Permanent Residents);
- 6x your monthly income: If you earn more than $20,000 (Singapore Citizens, Permanent Residents, and Foreigners residing in Singapore)
Want to apply for a loan right away? Click here to check your maximum loan quantum now.