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Why Even the Rich Take Loans: And What You Can Learn from Them
23 September 2025 | Monetium Credit
Unfortunately, financial insecurity is something of a reality of our times. Sure, you probably currently benefit from the financial resources to be content with your ongoing monetary situation, and you think you have enough money saved up to get you through unfortunate situations that will test your patience and financial outlook. But, at least for the vast majority of us, our plans do not always correspond with the reality we face. In truth, we are all just a major event away from struggling financially, and if this happens, one of the only solutions we have at our disposal is to utilize the services of moneylenders.
Why rich take loans? Sometimes it’s about sizing the right moment and investing in lucrative ventures that might one day result in a significant ROI. Even if your net worth is considered to be superior to that of other Singaporeans, chances are you do not currently own the necessary liquidity for urgent business investments or the purchase of high-value properties. Maybe, for example, you are worth $1 million. This will be quite irrelevant as long as you cannot free up your illiquid assets and transform them into cash. A personal, secured loan can be an option to consider regardless of your current financial situation or the assets you possess.
Time Is of the Essence
In the business world, perhaps the most important element that can predict the success of an investment is time. How fast did you react after you discovered a real estate deal that seemed too good to be true? What measures did you take to secure a deal with a high yield potential? At least in Singapore, where the maximum interest rates possible by law are limited to 4% per month, going for a personal loan, with a short to medium-length repayment schedule, might be advantageous, as if you borrow at low interest rates, chances are you will recoup your investment in the future.
In many cases, going for a loan is a more financially advantageous decision than trying to sell your illiquid assets and potentially missing out on future monetary gains. Plus, if you are wealthy and you are looking to reduce your tax bills, then you can use the interest of the loan to reduce your fiscal liability, as credit interest is often tax-deductible.
Not least, short-term credits, if paid back on time, might be an efficient way to radically improve credit scores, which is crucial if you are looking to obtain a long-term financial package, like a mortgage provided by our agency, and you want to obtain the best repayment terms on the market. It’s no wonder that why rich take loans. It’s a viable instrument for long-term profits.
It Can Be a Profitable Investment
Realistically, the feasibility of using personal loans as investment instruments will be dependent on the interest rates of the financial packages you contract. If you, for example, obtain a financial credit with a 20% interest rate, then chances are, any type of investment you want to make will come with a risk factor that’s hard to justify. But if we are talking about a total yearly interest rate of less than 10%, the utilization of loans as an investment tool suddenly becomes more viable.
Our professional team will assess your application, considering metrics like your credit score and the collateral you can present. However, realistically, the more you want to borrow, the lower the APR will be. Let’s say, for example, you are willing to borrow $100,000 with a 10% interest rate and a one-year repayment period. To gain a profit, you will need to invest your money into an activity that will bring you a net income of more than $110,000.
Will it be easy or guaranteed? No, but it is possible. Investing, for example, in equities might, in the right circumstances, bring you a return of up to 15% per year, while real estate could potentially bring you a return of more than 20% if you are investing in a hot area, in which property values continue to climb rapidly.
Think of the Long-Term Profits
Sometimes, it’s not even about making a quick buck. Let’s say you pay back your loan, and for the time being, you are $10,000 in the hole, as the interest rate of the credit catches up with you. The Singapore real-estate prices rose by 4.74% last year, and if this trend continues, this means your $10,000 loss could turn into an almost $14,000 net profit if you decide to sell in five years’ time. So why rich take loans? Simply put, it can be an investment instrument that’s hard to beat.
The key to utilizing loans as an investment instrument is not to let interest rates compound. Do you plan to pay back your credit by the end of the year? Then sure, the potential returns might be worth it. But if you let the monthly payments add up, for let’s say three years, the gains you can expect from your investments will become harder to achieve. It’s one thing to pay back 10% per year and be done with the credit after only one year, and another to do so for three years and pay 30% more than what you’ve initially borrowed.
That said, once your credit is paid back, the opportunities for long-term investments are almost limitless. Forex trading or investing in startups could bring you up to 30% profit per year, while real estate, even if volatile, is known as one of the most reliable ways to invest liquidity in 2025. It depends, however, on what type of credit you are eligible for. Before applying for our loans, there are a couple of essential considerations that you must be familiar with. Plus, if you have any supplementary questions, our experts will always be available for your call.
Are There Tax Advantages?
Oh yes, and that’s one of the main reasons why rich take loans. Let’s say, for example, you are the owner of a Singapore-based company and you obtain a business loan of $100,000 with a simple interest rate of 5% for one year. Maybe you use this loan to buy office equipment or invest in the ongoing training of your employees. It doesn’t matter, as at the end of the repayment period your total interest will come to $5,000. But here is the kicker, this sum can then be deducted from your company’s taxable profit, which will have a positive effect on the corporate income tax you are expected to pay.
The same is true if you are borrowing money to invest in real estate, as the interest rate of the financial package can be deducted against the property’s rental income. What is important to mention, however, is that the potential tax benefits of Singaporean loans only come into play for investments and/or business-focused financial packages. Do you plan to use a personal loan for tax-deductible purposes? Then this will not be possible, as most personal expenses are not tax-deductible. Should you invest in a loan only to collect potential tax benefits? It’s up to you. But, in the end, it’s one of the main reasons why rich take loans.
How Can You Become Eligible for a Loan in Singapore?
The eligibility criteria for SG-based loans will differ from lender to lender. However, as a general rule, most lenders, including us, will require you to be at least 21 years of age and present a stable income source, regardless of whether you are currently self-employed or working for an SG company. You will also need to be either a citizen of our country, a PR, or a foreigner with a valid employment pass that’s verifiable by our agents.
As for the necessary documentation, we will need your NRIC, recent bank statements, potentially your income tax assessment, and a copy of your work contract (if you are employed in your current position for less than three months). Are you applying for a business loan? Then, we will need your ACRA BizFile and certification of incorporation, a copy of your corporate tax returns, personal financial reports of your shareholders, and your firm’s latest profit & loss statements.
How much can you borrow? This will depend on what type of credit package you want to access, and whether or not you are willing to also provide collateral alongside your application. For unsecured loans, as long as you have a yearly wage exceeding $20,000 per year, you can borrow up to six times your monthly wage. So, at $100,000 per year, this means you are allowed to borrow up to $50,000. These limits, however, only apply to unsecured loans. If you want to borrow more, you will typically be required to guarantee your application with collateral. And these can be pretty much anything from real estate and vehicles to IP or even precious metals.
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