OCBC Personal Loan Review
OCBC personal loan explained with easy-to-understand examples, less the mind-boggling financial jargon.
This OCBC bank loan has 2 types of lending option:
- EasiCredit (OCBC Easy Credit) – Flexible payment over any period
- ExtraCash (OCBC Extra Cash) – Fixed monthly payment over 1-5 years
The repayment period and installment amount will determine which option works for you.
To help you decide, we will break down both options into simple terms, complete with examples.
Difficult Terms Simplified
Banks use various confusing interest rate terms in their ads. E.g. advertised rate, nominal rate, effective interest rate (EIR), and daily accrued rate.
You can’t make a meaningful comparison without understanding it.
So we have simplified these terms for you below:
1) Advertised Interest Rate
This is usually the interest rate that you see in loan ads.
It is also called the advertised rate, nominal rate, applied rate or a flat rate.
And it factors in the loan amount ONLY.
E.g. If the advertised rate is 20% per year, then you have to pay $200 of interest for S$1,000 you have borrowed.
2) Effective Interest Rate (EIR)
This is the actual interest rate that you are going to pay.
It is also known as the effective annual percentage rate (APR) or the true cost of borrowing.
And it factors in ALL of the following:
- Loan amount
- Admin/service/processing fee
- Installment frequency (e.g. repay monthly or weekly)
- How many installments
- How much is each installment amount
- Are the installment amount equal or not
E.g. The advertised rate is 20% per year. And the loan is to be repaid in 12 equal installments, with an upfront admin fee of S$100 for S$1,000 borrowed.
You will receive S$900, with a monthly installment amount of S$92.56.
The total cost of borrowing is S$100 + (S$1,000 – S$92.56 x 12 installments), or S$210.72.
The EIR is actually 38.86%!
Banks must show Effective Interest Rate (EIR) if it differs from the advertised rate. So when there’s only one interest rate indicated in the loan ad, this means it’s the EIR.
3) Daily Accrued Interest
This means interest amounts add to the account balance every day.
E.g. The interest rate is 20% per year, with interest accrued daily on a (365-day) year contract. The daily rate is 20%/365 days, or 0.05479%.
So the accrued interest of a S$1,000 loan for 31 days is equal to $1,000 x 31 days x 0.05479%, or S$16.99.
What is OCBC EasiCredit Loan?
It’s a flexible repayment loan where you can decide how long and how much you would like to repay.
The repayment amount is: 3-5% of the outstanding amount or S$50 (whichever is higher). And repayable monthly.
Its Advertised Interest Rate & EIR are the same, and it is daily accrued interest.
If you are looking for short term loans (< 12 months), and not confident of making fixed payment.
Summary of OCBC EasiCredit
|Annual Income||S$20,000 to S$29,999||S$30,000 to S$119,999||S$120,000 or more|
|Advertised Interest Rate / Year||29.8%||20.9%||20.9%|
|Effective Interest Rate (EIR) / Year||Same as above||Same as above||Same as above|
|Max Credit Limit||2X monthly salary||Up to 4X monthly salary||Up to 6X monthly salary|
|Min Repayment||5% of outstanding amount OR S$50 (whichever is higher)||3% of outstanding amount OR S$50 (whichever is higher)||3% of outstanding amount OR S$50 (whichever is higher)|
|Late Fee||S$80||25% of the amount past due, subject to min charge of S$85 and max charge of S$125||25% of the amount past due, subject to min charge of S$85 and max charge of S$125|
E.g. The OCBC loan interest rate is 29.8% per year, with interest accrued daily on a (365-day) year contract. The daily rate is 29.8%/365 days, or 0.082%.
So the accrued interest of a S$1,000 loan for 31 days is equal to $1,000 x 31 days x 0.082%, or S$25.31.
The total cost of borrowing is S$25.31 of interest + S$80 of annual fee, or S$105.31.
What is OCBC Extra Cash Loan?
It’s a fixed repayment loan where you can decide how long (from 12 to 60 months) you would like to repay.
The repayment amount is: fixed and repayable monthly.
Its Advertised Interest Rate & EIR are different, and it is daily accrued interest.
If you are looking for long term loans (> 12 months), and confident of making the fixed payment monthly.
Summary of OCBC ExtraCash
|Annual Income||S$20,000 to S$29,999||S$30,000 and above|
|Advertised Interest Rate / Year||15%||22%|
|Effective Interest Rate (EIR) / Year||> 15%||> 22%|
|Max Credit Limit||Up to 6X monthly salary||Up to 6X monthly salary|
|Processing Fee (Upfront Deduct)||S$100||S$200 or 2% of the approved loan amount, whichever is higher|
E.g. The OCBC loan interest rate is 15% per year, and the loan is to be repaid in 12 equal installments. And there’s an upfront admin fee of $200 for S$10,000 borrowed.
You will receive S$9,800, with a monthly installment amount of S$903.
The total cost of borrowing is S$200 + (S$10,000 – S$903 x 12 installments), or S$1,036.
The EIR is 18.88%.
OCBC Loan Calculator (ExtraCash)
OCBC ExtraCash loan page do not have anything to help you calculate your installment for a given loan amount.
So we created our own.
Insert Loan Amount, Processing Fee, Advertised Interest Rate, and Number of Months below.
OCBC Personal Loan Requirements
The eligibility for both types of OCBC bank loan is the same and it is as follows:
- 21 years old and above
- Singaporeans or PR: Annual Income of S$20,000 and above
- Foreigner: Annual income of S$45,000 and above
1. For Identification (Choose One)
- Singaporeans and PRs: NRIC
- Foreigners: Employment Pass, Work Permit, or Student Pass; and Passport
2. For Income (Choose One)
- Latest electronic or computerised payslip (salaried employees); or
- Last 6 months of CPF contribution history. 12 months for self-employed and commission-based earners; or
- Latest income tax statement (2 years for self-employed and commission-based earners)
OCBC Personal Loan VS Moneylender
Have you ever wondered if bank rates are cheap, why would one borrow from a licensed money lender?
Since OCBC EasiCredit and a Moneylender’s loan are very similar, we will use it to do a comparison.
|OCBC EasiCredit||Licensed Moneylender|
|Annual Income||S$20,000 onwards||Any income|
|Advertised Interest Rate||20.9% to 29.8% / Year||4% / Month|
|Effective Interest Rate (EIR) / Year||Same as above||> 4%|
|Max Credit Limit||2-6X monthly salary||S$3K to 6X monthly salary|
|Min Repayment||3-5% of outstanding amount OR S$50 (whichever is higher)||4% of the outstanding balance|
|Processing Fee||-||10% of the loan amount|
|Late Fee||S$80 to 25% of the amount past due, subject to min charge of S$85 and max charge of S$125||S$60 / Month|
From the example below, you can see the total cost of borrowing S$1,000 for a month, does not differ much – S$34.69 only.
|OCBC EasiCredit||Licensed Moneylender|
|Loan Period||31 Days||31 Days|
|Advertised Interest Rate||29.8% / Year||4% / Month|
|Amount You'll Receive||S$1,000||S$900|
|Total Cost (Interest + Fees)||S$105.31||S$140|
By paying a bit more to moneylenders, you enjoy quicker approval and lesser paperwork. This is because they are more flexible with rules and procedures.
Money lenders can also accommodate those with a lower credit score, or annual income below S$20K.