Differences between a loan for unemployed Singapore residents and employed residents

Man standing between arrows pointing to loan for unemployed Singapore residents and unemployed residents
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Differences between a loan for unemployed Singapore residents and employed residents

checking blog post using mobile
Man standing between arrows pointing to loan for unemployed Singapore residents and unemployed residents



Whether you are applying for a loan from a bank or a licensed moneylender, your employment status makes a difference. While it is not impossible to get a loan for unemployed Singapore residents, having a job can make it considerably easier to get approval.

Here are the main differences between loans for employed and unemployed applicants in Singapore. By understanding the criteria that a bank or licensed money lender uses to evaluate borrowers, you can improve your chances of approval whether you have a job or not.

Applying at a bank

Banks have a very formal lending process and use very tough loan eligibility criteria. You may be able to secure a bank loan as a casual employee if you can show a steady flow of income over a long period.

On the other hand, an application from someone with no income will be rejected straight away.

Applying at a licensed money lender

Licensed moneylenders have a lower eligibility threshold than banks. They may extend loans to people who have jobs, those who have retired or lost their jobs, and even people who have never been employed. It all depends on the assessment criteria they apply.

Some of the factors they consider are the applicant’s credit score, credit history, and reason for unemployment.

 Differences between loans for the employed and unemployed

Getting loan approval is only the first hurdle if you are unemployed. A bank and a licensed money lender will apply different conditions to a loan based on the applicant’s employment status and history. Here are the four main differences to consider:

Loan capital

Loan capital refers to the size of the loan. Employed borrowers who can demonstrate a strong work history will be eligible for larger loans than their unemployed counterparts.

Interest rates

Even when the loan capital is the same, lenders may charge borrowers with jobs a lower rate of interest. Lower interest means less money has to be repaid to the lender.

Term of loan

The term of the loan is the length of time that a borrower has to repay it. A longer loan term means that the borrower has to pay smaller instalments even if the loan principal and the interest rate are the same. Employed borrowers usually enjoy longer loan terms.

Fees and penalties

Lenders are very cautious about lending money to unemployed individuals because of the higher likelihood of default. They protect themselves by levying fees and penalties even for slight delays and missed payments. On the other hand, they may excuse an employed borrower from such stringent rules.

Note that these considerations are only relevant for a loan for unemployed Singapore citizens and PRs. Foreigners who live and work in Singapore have additional conditions attached to their loan criteria.

Green sign saying 'Loan Approval' indicates it's not impossible to get a loan for unemployed Singapore residentsImproving your chances of approval

You will not necessarily be refused a loan just because you don’t have a formal job today. A licensed money lender may still extend you a loan, albeit with tougher loan conditions. Here are three simple ways that you can improve your chances of loan approval.

Part-time work

Many employers find that they get better value for money and improved results by employing part-time and casual employees. If you have lost your regular job or want to work in your spare time, part-time work is the perfect option.

Both licensed lenders and banks look favourably upon borrowers who have demonstrated a desire and ability to work outside of a 9 to 5 job.

Informal employment

Have you been looking after your neighbours’ kids as a casual nanny? Do you get paid to walk your friends’ dogs? Have you been earning money through ads on a website that you run?

All these avenues of income will be considered strong pros in the eyes of a lender. Just make sure that you keep a formal record of the income and can show it to them via bank or online transactions. Some jobs even pay workers in cash every day.

Maintaining a good credit score

You can maintain and even improve your credit score even when you are unemployed. Follow these simple guidelines:

      ●    Never default on a loan

      ●    Don’t miss payments to any creditor

      ●    Avoid late payments to any creditor

      ●    Maintain a range of credit (loans, credit cards, overdraft, etc.)

      ●    Don’t enquire about your credit score unnecessarily

 Alternatives for unemployed legal residents

If you are currently unemployed and have had your loan application rejected, don’t give up. A licensed money lender may approve the application if you can get a guarantor (co-signer) or if you leave something with them as collateral.

Besides a loan for unemployed Singapore residents, they can also opt to use a pawn shop or sell old or unused items for cash.

If you need help to make the right choice or simply need to ask some questions, contact CompareSing today.


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