OCBC personal loan review: Interest rates, approval times and loan amounts

Being in debt isn't fun, and you definitely shouldn't be taking out personal loans for fun.

But in certain cases, it can be a smart financial move-when you're saddled with high interest debt like credit card debt, and want to consolidate your loans to lower your interest payments.

Many banks in Singapore offer personal loans. Let's see how the OCBC Personal Loan measures up.

OCBC personal loan eligibility

To apply for an OCBC personal loan, you need to be at least 21 years of age. You need to earn at least $20,000 in annual income if you are Singaporean/PR or $45,000 if you are a foreigner.

OCBC personal loan interest rate (2022)

OCBC offers several different ways to borrow money. Their standard personal loan is called OCBC ExtraCash Loan, which offers you a loan size of two to six times your monthly income. Wah, six times leh!

Take note, you can only take a 6x loan if your annual income is above $120,000 - earn so much still take loan for what, right?

OCBC ExtraCash personal loan's current interest rates range from 5.42 per cent to 5.54 per cent (EIR of 10.96 per cent to 13.92 per cent).

It's significantly higher when you compare it to the current rates that other banks are offering, such as 3.88 per cent for POSB and DBS personal loans, 3.2 per cent for HSBC personal loan, and 3.4 per cent for UOB personal loan.

Other costs you need to factor in include a two per cent (or max. $200) processing fee which will be deducted from the loan sum you receive.

Does OCBC offer a credit line?

Yes, it's called the OCBC Cash-on-Instalments.

If you really need cash, it's better to get it through Cash-on-Instalment than to just pay directly with your credit card as the interest rate is lower.

You can borrow money for one to five years at a 3.5 per cent p.a. interest rate, and pay a $100 processing fee.

The effective interest rate (EIR) works out to about 7.27 per cent p.a. for the $10,000/3 years example.

Do note that OCBC Cash-on-Instalment comes with a one per cent processing fee too! So shop around and consider other personal loans in Singapore if you're looking for a good deal.

ALSO READ: American Express True Cashback Card review: A low-effort card with no limit on cashback

Other OCBC personal loan options

We've covered OCBC Cash-on-Instalments (the best OCBC personal loan option, though not the best on the market) and OCBC ExtraCash Loan (the more expensive of the two), but there are two more OCBC products that promise "easy cash".

The first is a standby line of credit called OCBC EasiCredit. This is like a credit card, except for cash (if that makes sense). Once approved, you can withdraw cash as and when you wish using an ATM card.

The interest rate for those who with an annual income of at least $30,000 is 20.90 per cent. Earn less than that and you'll pay 29.8 per cent, which is basically as bad as getting into credit card debt.

There's also OCBC Balance Transfer, which is a different product that allows you to consolidate outstanding credit card debt into a structured repayment plan. You can read more about balance transfers here.

OCBC personal loan promotions

Until June 30, 2022, you can receive 1.2 per cent cashback and $100 cashback when you make an online application for an OCBC Cash-on-Instalments credit line for new customers taking $10,000 loan or more.

We hope you're sensible enough to NOT overborrow just so you can get a higher cashback amount. That would be silly, considering you'll still end up paying more in interest payments.

How to use the OCBC personal loan calculator

Scroll down the OCBC page on Cash-on-Instalment (fixed repayment) and you'll find the OCBC personal loan calculator for their Cash-on-Instalment loan.

Enter how much you want to borrow and the amount of time over which you wish to repay it, and the calculator will display your monthly instalments, processing fee, interest rate and EIR.

OCBC Debt Consolidation Plan

If you've got existing high interest debt like an unpaid credit card balance, OCBC's Debt Consolidation Plan is another option.

Transfer your existing debt to OCBC and you'll pay a relatively low interest rate compared to credit card interest (though it's typically higher than that of a personal loan).

Why opt for this instead of the Cash-on-Instalments loan? Well, if you have already busted your credit limit with OCBC, you won't be eligible for Cash-on-Instalments.

Cash-on-Instalments also offers a maximum tenure of five years, while the Debt Consolidation Plan offers up to eight years.

However, debt consolidation plans are for Singaporeans/PRs with at least a year's income of debt only.

How long does approval take for OCBC personal loans?

In order to apply for an OCBC Cash-on-Instalment loan, you need to be an existing OCBC online banking account users.

If you're not, you will need to go through the entire process of setting up an OCBC internet banking account.

Later, approval will be instant and the money will be transferred to a bank account chosen by you.

A word of warning about personal loans

There are so many loans on offer, lucky you… right? Not really! While the OCBC Cash-on-Instalment personal loan certainly charges lower interest rates than a credit card would, it's still a form of high interest debt.

That means personal loans should only be used as a last resort to prevent yourself from having to fall into credit card debt or consolidate existing debt.

If you find yourself using personal loans regularly, it's time to have a look at your finances. Chances are, you need to consistently reduce your spending and/or find ways to raise your income in order to stay debt-free.

You'll also need to build up an emergency fund, which you can then turn to when unexpected expenses arise instead of getting into debt.

ALSO READ: 7 best personal accident insurance plans under $150 in Singapore (2022)

This article was first published in MoneySmart.