Ultimate Guide to Borrowing from Licensed Money Lender in Singapore

Need a clear guide on borrowing from a lender in Singapore? Read here to learn more about your future application and the importance of licensed institutions!
Licensed Moneylending Guide

Whenever in need of financial assistance, make sure that you only apply from a licensed money lender. This is because loan sharks are rampant, waiting for the vulnerable to deceive victims of their pretentious promotions. 

Rest assured, the business of money lending is governed by the Ministry of Law for the purpose of protecting the rights and well-being of borrowers.

More importantly, when you default from payment of loans, they cannot resort to harassment, intimidation, and threat. Avoiding engagements with predators will guarantee your safety above all.

 

Things to Consider Before Borrowing From a Money Lender

Things to consider before borrowing

Like in many other things, there are a variety of factors to keep in mind before availing of your much-awaited fast cash loans from a money lender. We’ve listed them down to help you:

Self Affordability

Remember to never borrow to pay off another debt. As much as possible, do not apply for loans from a money lender to cover up an existing one. If you can afford to pay off your debts reasonably simply by being dedicated and financially responsible, then that’s what you can do. Note that most strategies in paying down debt off new loans do not work for everyone.

 

Loan Purpose

Ask yourself if you really need the fast cash loan and what is your purpose behind it. Before anything else, it is ideal to double-check whether your goal in getting a loan is reasonable. As it is urged, you shouldn’t take a cash loan from a money lender in order to live a lifestyle you cannot afford. Better yet, never borrow a cash loan that you cannot repay. Some purchases that seem necessary for your goals might also come with higher-end options that are not justifiable.

 

Loan Amount

Can you afford it? Understand the term of personal loan, from its repayment schedule, interest, loan amount, and other fees. Even when borrowing, working out on a budget is necessary. Practice in calculating the amount you will be repaying including all the payments and extra costs. You can easily compare that with what you earn to balance your current and future expenses. Take note that personal loans should be within a borrower’s means. Avoid overspending and control your cashouts

 

Licensed Money Lending

Verify if a money lender is licensed by the Ministry of Law. Singapore law requires licensed money lenders to explain the terms of your loan contract in a language clients can easily understand. If one hands you a loan contract and refuses to explain the terms in the language that you understand, it’s very likely that you are dealing with a loan shark

 

Loan Contract

Licensed money lenders also always have you sign a loan agreement. It must be printed copy and include information on the interest rate, late payment fees, the repayment period, and other necessary details.

Shop around to find the best rates and customized instant loan plan for you. To find the best deal that suits your financial worries, there is no harm in shopping around to get the ideal rates. This allows you to select from a variety of licensed money lenders that meet your demands. Consider all the contributing factors that may affect your account, credit score, as well as your future purchases and transactions.

 

What Type of Loans You Can Borrow From Licensed Money Lenders?

Types of loan you can borrow

There are two major types of loans, secured and unsecured loans. As the name implies, unsecured personal loans and other loans have no collateral backing, thus, require no security. Should a borrower fails to pay the loan, the money lender must initiate a lawsuit to collect what is owed.

With this, the licensed money lender will issue funds based only on the borrower’s creditworthiness and promise to repay. On the other hand, secured loans are wherein the borrower puts up their assets as collateral for the deal. With this, the licensed money lender can use the asset to repay the funds it has advanced the borrower. 

Moreover, these are the kinds of loans people can apply from most money lenders in Singapore:

  1. Personal Loan & Foreigner Loan

In Singapore, money lenders do not require borrowers to provide any collateral such as house, car, or other possible assets to avail a personal loan. It is approved based on creditworthiness, which depends on your credit score, monthly or annual income, repayment history, employer reputation, etc. 

A personal loan can be used for multiple purposes, like meeting expenses of a medical emergency, travel, house renovation, as well as debt consolidation, etc which comes with flexible tenure either for the short term or long term.

Features Banks Moneylenders
Loan amount Up to 10x monthly salary Up to 6x monthly salary 
Interest rate From nearly 4% p.a. Up to 4% per month
Repayment period Up to 5 years Up to 12 months subject to the terms & conditions of the agreement
Application approval A few days Within 30 minutes 
Eligibility Must be 21 years old and have a minimum annual income of $30,000 for citizens and permanent residents and $40,000 for foreigners Must be 18 years old with a minimum annual income of $18,000 for citizens and permanent residents and $24,000 for foreigners
Typical requirements For citizens and PR: NRIC, proof of income, and proof of residence.

For foreigners: Passport, work permit, proof of residence, income, and employment letter.

In general, banks have higher requirements for you to qualify. 

 

  1. Payday Loan 

Payday loans are short-term loans that can help you cover immediate cash needs until you get your next paycheck. These are typically due within two weeks—or close to your next payday. It functions differently than personal and other typical loans from money lenders. Depending on where you live, you can get a payday loan through a physical branch with a licensed money lender. 

Moreover, accessing a payday loan from a licensed money lender is convenient as borrowers only need to meet a few basic requirements, which include a stable source of income. As long as the income is consistent, you are almost guaranteed to find a willing money lender.

As the name indicates, in a Payday Loan, you can borrow up to one month’s worth of your salary from a  licensed money lender to help with your short-term financial issues and repay it back on your next paycheck.

Features Moneylenders
Loan amount Up to 1 month of your salary
Interest rate Up to 4% per month
Repayment period Within a month or on next payday
Application approval Within 30 minutes 
Eligibility Must be 18 years old with a minimum annual income of $18,000 for citizens and permanent residents and $24,000 for foreigners
Typical requirements For citizens and PR: NRIC, proof of income, and proof of residence.

For foreigners: Passport, work permit, proof of residence, income, and employment letter.

 

  1. Monthly loan

Similarly to payday loans, this type of deal is on a term-basis. If you want to find a way to pay for your home improvements, vacations, or even pay back your car loans, a monthly loan from a licensed money lender can still be the right service for you. Monthly loans are likely to offer you stability when you have a tight budget.

Features Moneylenders
Loan amount Up to 6x monthly salary
Interest rate Up to 4% per month
Repayment period Up to 12 months subject to the terms and conditions of the agreement
Application approval Within 30 minutes 
Eligibility Must be 18 years old with a minimum annual income of $18,000 for citizens and permanent residents and $24,000 for foreigners
Typical requirements For citizens and PR: NRIC, proof of income, and proof of residence.

For foreigners: Passport, work permit, proof of residence, income, and employment letter.

 

  1. Business Loan

Given, as the name suggests, this type of package is something you can avail of in meeting urgent needs for your growing business or ventures. These are welcome for start-ups and small businesses are corporate entities. 

If their commercial activities indicate their earning and growth potential, banks will quickly rally behind them. On the other hand, CEOs and sole proprietors with bad credit can always seek help from a licensed money lender, who can then offer them up to S $200,000 payable within a year.

Features Banks Moneylenders
Loan amount Up to $500,000 Up to $200,000
Interest rate From nearly 12% p.a. Up to 15% per month
Repayment period Up to 5 years Up to 2 years subject to the terms & conditions of the agreement
Application approval A few days Within 30 minutes
Eligibility
  • Company must be registered in Singapore
  • 30% of shareholders have to be Singaporean PRs or citizens
  • Business must be operational for at least 2-3 years
  • No more than 10 employees aor annual turnover not exceeding S$1 million
  • Company must be registered in Singapore
  • Operational for at least 1 year
  • Has a minimum turnover of $60,000
Typical requirements NRIC of all business partners, profile, income tax notice, financial statement, utility bills, tenancy agreement, etc.

Banks may require a guarantor.

 

  1. Bridging Loan

Bridging loans are specially designed for Singaporeans who want to purchase a new property, like a house or flat, but need to borrow additional capital to fund the purchase. Bridging loan from a licensed  money lender can help you bridge a financial or working capital gap when upgrading or moving home.

Features Banks Moneylenders
Loan amount 15- 20% of the purchase price of your new home Up to 6x monthly salary
Interest rate 5-6% p.a. Up to 4% per month
Repayment period Up to 6 months Until your house completion date
Application approval A few days Within 30 minutes 
Eligibility N/A
  • At least 18 years old
  • Exercised the option to purchase OTP
  • No minimum salary required
Typical requirements NRIC, copy of the OTP, proof of residence, and income

 

Assurance You Will Get When You Borrow From Legal Money Lender:

Borrow from legal lenders

  1. Reasonable rates

Given that all licensed money lenders abide by the rules of the Ministry of Law, it is guaranteed institutions cannot charge your loans with rates over what the guidelines set.

  1. Fast approval

Unlike banks, with most money lenders, you can quickly get what you have applied for. More often than not, you can easily have your loan approved after thirty minutes.

  1. Safe and transparent

As it is noted these legal money lenders in Singapore, they only do their business according to the law and regulation set by the Ministry of Law. This ensures all transactions are secured and transparent with written terms.

  1. Flexible requirement

Unlike other institutions, one can be conveniently offered service with enough information from your personal supporting documents for the loan application process.

 

How the Laws Protect Your Rights When You Borrow From Licensed Money Lenders in Singapore

How the law protects your rights when you are borrowing

  1. Advertising restrictions

Licensed money lenders in Singapore can only advertise on their business website or just outside their office, as well as in business directories. 

On the other hand, they cannot send you SMSes about their services or advertise in newspapers/social media platforms. They are also prohibited from making false or misleading statements just to get you to borrow. It’s assured that a licensed money lender cannot invite you to take a loan or grant you with it without applying for it as well.

 

  1. Requirements when granting a loan

Before granting you a loan, licensed money lenders must,

  • Explain the terms of your loan contract in a language that you can understand;
  • Give you a signed copy of the deal which include the terms in writing; 
  • Give you a separate cautionary statement in writing; 
  • Issue you a receipt for every payment made towards the loan; and
  • Provide the borrower with a statement of accounts once every half in July or January.

 

  1. Money lender caps on loan costs

Licensed money lenders should not structure your loan such that you are likely to incur overdue fees or administrative charges many times because you are unable to repay the loan or installments on time. Should you encounter any licensed money lender, breaking these regulations, you can lodge a complaint with the Registry of Moneylenders.

 

  1. Money lender caps on the loan figure

The maximum amount you can borrow from all legal money lenders combined for unsecured loans is:

Borrower’s Annual Income Singapore Citizens and PRs Foreigners residing in Singapore
Less than $10,000 $3,000 $500
At least $10,000 and less than $20,000 $3,000 $3,000
At least $20,000  Six times monthly income Six times monthly income

 

  1. Money lender debt collection

A licensed money lender can take steps to recover their debts from you. They may engage debt collectors to help them. However, violent threatening or harassing behavior is not allowed. 

This includes: stalking you or your family members; sending unenclosed notices of demand to your workplace, openly displaying notices of demand outside of your residence, and/or calling you repeatedly at unreasonable hours, as well as disturbing you around affecting your neighbors.

 

If You Accidentally Borrowed From an Illegal Money Lender, Here Are Loan Advisor’s Steps You Must Keep in Mind:

What to do if you accidentally borrowed from loan sharks

  • Keep calm.
  • Don’t make any or additional payment.
  • Contact the Police at ‘999’ or the X-Ah Long hotline over at 1800-924-5664.
  • You can easily check the list of legal lenders in Singapore that are under the Ministry of Law online to avoid potential problems in the future.

As you experience financial difficulties, there could be a ton of ways to get through it. In situations like this, it’s best to consider getting help from a money lender, specifically the licensed money lender to guarantee smooth loan transactions, and more importantly, your safety.

 

Is It Safe To Borrow From A Licensed Money Lender?

The short answer is yes, it’s safe to take a loan from a legal money lender

But only deal with licensed money lenders. These are legitimate financial institutions in Singapore that are administered by government agencies.

What is the Moneylenders Act?

This regulation was enacted in 2008. The Act aims to protect both licensed money lenders and borrowers. Under this Act, all credible money lenders are listed in a resource found on the Ministry of Law‘s website. This resource includes these details:

  • The licensed money lender ‘s license number
  • Business name
  • Place of business
  • Key contact information


Most importantly, a licensed money lender is forbidden to practice any of the following:

  • Use of threatening or abusive language and behavior
  • Requesting details of the borrower’s SingPass ID and password
  • Withholding important identification documents, such as NRIC or passport
  • Applying pressure towards the borrower to sign a blank or incomplete loan contract
  • Approving a loan without performing due diligence
  • Approving a loan without a thorough explanation of the loan terms and conditions
  • Withholding any portion of the principal loan amount for any reason


Money lenders who are guilty of any of the activities listed above must be reported to the Ministry of Law.

 

How Do I Find Licensed Money Lenders in Singapore?

When looking for licensed money lenders in Singapore, you must first verify their credibility. Check out the list of licensed money lenders found on the Ministry of Law’s website. Additionally, be wary of these activities:

  • Licensed money lenders are not allowed to advertise via text messages, phone calls, or social media platforms.
  • Licensed lenders are required by law to meet the borrower for face-to-face verification of their identity.
  • Licensed money lenders must have an approved place of business.
  • Conducting the loan transactions only through an online process is prohibited.

 

 

How To Differentiate Between A Licensed Money Lender and an Unlicensed Money Lender

 

  1. Documentation with the Law

 

Licensed Money Lenders

Licensed money lenders in Singapore are registered in the Registry of Money Lenders. They also comply with the regulations set by the Money Lenders Act. You will find the complete list of licensed money lenders on the Ministry of Law’s Website.

Unlicensed Money Lenders

Unlicensed money lenders are involved in illegal activities. That said, if you are unable to find the money lender’s license number on the Registry, there’s a high chance that you’re dealing with illegal money lenders

 

  1. Interest Rates

 

Licensed Money Lenders

The Ministry of Law regulates how much a licensed money lender can charge. It is capped at 4% per month regardless of whether the personal loan is secured or unsecured as well as the borrower’s income.

For late interest payments, credible money lender s can only charge a 4% per month late interest rate. This late interest rate is only applicable to the outstanding balance of the loan.

Unlicensed Money Lenders

Unlicensed money lenders are known to charge unrealistically high interest rates as well as late interest rates. They charge well above 4% late interest per month.

 

  1. Fees

 

Licensed Money Lenders

Licensed money lenders are only allowed to charge the following fees:

  • Late repayment fees of up to $60
  • Administrative or processing fees of up to 10% of the principal amount when a cash loan is granted
  • Legal costs ordered by the court when a licensed lender successfully recovers a loan.


Note that the total charges by a money lender must not exceed the principal loan amount.

Unlicensed Money Lenders

Unlicensed money lenders ask borrowers to deposit the amount and GST for the loan application processing fee. And in cases wherein the borrower backs out of the loan, they will harass them plus ask them to pay money to cancel the loan application.

Some unlicensed lenders also ask their victims to pay money even before the loan contract is granted.

If you ever find yourself in this predicament, report them immediately to the Registry.

 

  1. Advertisement

 

Licensed Money Lenders

Licensed money lenders in Singapore are only allowed to advertise through these channels:

  • Business or consumer directories- both in print or online media
  • Their own websites
  • Placing flyers or posters within or on the exterior of their business premises, including the wall, door, gate, and window.

 

Unlicensed Money Lenders

Unlicensed money lenders entice their victims by sending out flyers, text messages, and emails. Their advertising schemes promise quick money without disclosing other important terms and conditions in the loan contract.

That said, if you receive a text message, email, or encounter a social media post from an alleged money lender advertising their money lending services, it’s best to ignore them.

You can report these illegal money lenders to the Registry at 1800-2255-529 or via MinLaw’s website.

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