All You Need to Know About 12-Month Cash Loans

12-month cash loans receiving approval

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Are financial burdens keeping you up at night? 12-month cash loans may just be the perfect solution for when you’re in dire need of emergency funds but aren’t too comfortable about committing to long loan tenures.

As the name suggests, 12-month cash loans are instalment loans with a 12-month repayment term. Once your loan application has been approved, you’ll receive the funds in a lump sum, and the loan repayment will be made over the next year.

What affects your approval for 12-month cash loans?

To get approved for a 12-month cash loan from a licensed money lender or bank, you need to make sure that you are eligible for them and meet the criteria for the loan. Here are two major factors that determine whether your loan application gets approved:

1. Income and existing deb

Before a lender approves your loan, they need to assess how much you can afford in terms of loan repayments. To determine that, they will look at your proof of income and any outstanding debts or other personal loan commitments that you may have to assess your borrowing power.

It’s important to note that you do not necessarily need a monthly fixed salary to be eligible for a loan. As long as there’s proof that you can pay your dues, it usually comes through. For self-employed people, this information will come in handy.

2. Credit score

Your credit score is used by financial institutions or licensed moneylenders to gauge your creditworthiness. It’s primarily based on a credit report sourced from credit bureaus. In Singapore, it would be Credit Bureau Singapore. Generally, the higher your credit score, the more likely you are to get approved for a loan, and the lower your interest rate can be.

You can request a copy of your credit score online or at any SingPost branch and/or the Credit Bureau office at a small fee.

Following that, you’ll need to know how a loan’s interest rates are calculated. It can be tricky, but taking the time to learn and understand this calculation can bring you greater savings and open the door to more opportunities. Here are two methods that banks and licensed money lenders typically use:

The Flat Rate Method (FRM)

This is when your interest rate remains fixed throughout your repayment period, making it easy for monthly payments.

Interest Payable Per Instalment = (Original Loan Amount x Number of Years x Interest Rate Per Annum) ÷ Number of Instalments

Suppose you’d like to borrow S$10,000 at an interest rate of 7% p.a., here’s how much your total and monthly interest charges will be:

Principal Loan Amount (S$) Loan Tenure Interest Rate (p.a.) Monthly Interest Repayment (S$) Total Interest Payable (S$)(S$)
10,000 12 months 7% 58.33 700

Reducing Balance Method (RBM)

The RBM formula relies on the outstanding principal amount per month rather than the total sum you borrowed. This means that your interest rate will differ every month according to how much you have paid so far. Ideally, you’d pay much less if the lender uses the RBM formula.


Interest Payable Per Instalment = Effective Interest Rate Per Instalment x Outstanding Loan Amount

Suppose you’d like to borrow S$10,000 at an interest rate of 7% p.a., the total interest charges payable is just S$10,383.

Principal Loan Amount (S$) Loan Tenure Interest Rate (p.a.) Monthly Interest Repayment (S$) Total Interest Payable (S$)
10,000 12 months 7% 1st Month 58

2nd Month 54

3rd Month 49

4th Month 44

5th Month 39

6th Month 35

7th Month 30

8th Month 25

9th Month 20

10th Month 15

11th Month 10

12th Month 5


This is a full S$317 less than if the lender were to determine your interest via Flat Rate Method.

Benefits of 12-month cash loans

  • Lower interest rates: With 12-month cash loans, you will generally be able to obtain a lower instalment amount because of a lower effective average monthly interest rate. This is especially true if your lender uses Reducing Balance Method to calculate your monthly interest charges.
  • Sufficient recovery time: A loan paid over a 12-month term can provide you with sufficient time to sort out your finances. You’re given much more breathing room as compared to a payday loan.
  • Quick approval: Licensed money lenders in Singapore can approve your loan application in just 30 minutes. This can be done securely online. However, do note that you’ll need to visit the money lender’s business premises to review and sign the loan contract.

What kind of 12-month cash loans are there?

1. Personal Loan

It’s common for many individuals to rely on personal loans when they need cash for an emergency. However, bear in mind that you will need to meet criteria such as having sufficient financial capability to pay off the monthly instalments for a year.

As long as your credit score and financial capabilities are not a concern, receiving approval for a personal loan application is next to guaranteed.

2. Business Loan

Generally, business loans are granted to companies that require significantly higher principal amounts. Whether you are looking to stabilise, rebuild, or execute a business project from scratch, there are suitable options to ensure that your operations are up and running with the least amount of collateral required.

Where can I get 12-month cash loans in Singapore?

Dio Credit is one reputable licensed money lender in Singapore that offers loans with a 12-month tenure. The loans available at Dio Credit are tailored and simplified to match your financial situation. Contact us for a personalised loan recommendation.

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