Licensed Private Money Lender vs. an Unlicensed Money Lender: What’s the Difference?

The primary difference between a licensed private money lender in Singapore versus an unlicensed money lender involves their means of gaining customers.

The Ministry of Law reminded the public to be extra cautious about how they conduct business with money lending companies. According to the ministry’s Registry of Moneylenders (ROM), a new personal loan scam has victimized some borrowers since September 2019 after responding to text messages on WhatsApp. If you receive an unsolicited text from people that you suspect as loan sharks, don’t respond or download any files that they send to you.

A New Type of Scam by Unlicensed Lenders

A New Type of Scam by Unlicensed Lenders

ROM announced a new type of scam that targets potential victims through WhatsApp. These illegal lenders would then demand that you pay them as soon as you send a loan application. Since September, the criminals have swindled at least $110,000 from several victims. You should be vigilant when receiving messages from unknown parties on apps or other channels.

Call 1800-722-6688 to be familiar with these loan scams. You may also check for relative news from to know more about how to protect your financial and personal information. In addition, call 1800-255-0000 to report any illegal activity related to unlicensed money lenders. Criminals have become more creative with their schemes, which can be so convincing that there are subtle differences from a licensed money lender. However, there are still some clues that indicate whether you are dealing with an unlicensed moneylender.

How Do Unlicensed Moneylenders Operate?

How Do Unlicensed Moneylenders Operate

Unlicensed moneylenders have become smarter with their schemes, including unsolicited messages sent to potential victims. The messages usually contain a PDF file, purportedly from the Monetary Authority of Singapore or the Ministry of Law. The document requires the borrow the pay a deposit amount and a 7% GST for the loanable amount.

Some unlicensed moneylenders may also send another PDF document, which informs you about an ongoing loan process. Once you decline to pay or cancel the loan, they will harass you by saying that these loans are already approved or demand payment for canceling it. Once again, licensed lenders will NOT ask for payment before you receive the loan proceeds. Be suspicious if they ask you to pay fees and other charges in advance. Most lenders usually deduct GST, administrative and processing fees from the loan’s principal amount.

How to Recognize a Licensed Moneylender

The Ministry of Law said that all licensed moneylenders must not engage in cold calls or unsolicited messages to the public. Licensed lenders also require loan applicants to visit their approved place of business. This is important to verify the person’s identity. If a moneylender doesn’t appear on the ROM’s list of licensed moneylenders, then it’s almost certain that they are illegally operating in Singapore.

Licensed moneylenders also won’t reach out to you randomly, whether or not you actually need to borrow money. More importantly, they won’t demand payment before disbursing the loan proceeds. Some lenders may charge an administrative fee or a processing fee, but it’s usually deducted from the principal amount after they approve your loan application.

Other Safety Tips

It can be difficult to avoid personal loan scams even if you are aware of preventive measures, especially since some unlicensed money lenders can fabricate details to make it appear like they are legitimate. When in doubt, look out for these common warning signs to know if you are dealing with an illegal moneylender:

  • When they ask for sensitive information such as SingPass, NRIC and bank account details even if you didn’t apply for a loan
  • If the contract lacks important information such as late repayment fees or the type of loan 
  • If you experience hostile treatment after missing a payment due date

Legitimate moneylenders won’t resort to harassment, violence or force when collecting payments. Once you receive the loan contract, you should review the terms carefully and clarify any concerns with the lending company. They must be able to answer your questions without being rude, which is typically a common occurrence among unlicensed moneylenders. Licensed moneylenders will only ask for personal information when you initiate a loan application with them.

Don’t assume that you are lucky if a lender doesn’t scrutinize your credit score or payment history. Unlicensed lenders only want to get your money as quick as possible without leaving a trace. This includes ignoring your creditworthiness. Loan consumers are all potential victims for them, although high-risk borrowers are more vulnerable since they tend to seek alternative loan providers.

An unsecured website is also a red flag for loan scammers. If you don’t see a padlock symbol, this means that anyone could view your personal information as you input it on the website. Licensed lending companies also have “https” in their URLs. You should see these two before typing confidential information on their website. Does the lender have a physical office as well? You need to make sure that they operate on a verified address. Do this by paying a visit to their listed site on the website. While there, you can ask questions about their loan offers.

You may think that an in-person visit is a time-consuming task, but it’s better than having to lose money due to a loan scam. If a lender also pressures you into deciding quickly, it’s also a warning sign. Saying things like it’s a limited offer or you can’t find a similar deal are hard-sell tactics to close a deal. A licensed money lender will give you enough time to think, while scammers will trick you into believing that their offer won’t be there if you leave without signing a contract.


Are you still uncertain about the legitimacy of your chosen moneylender? Contact Loan Advisor today to know more about how you can protect yourself from becoming a victim of loan scams. You should use our loan comparison tools not only to choose a reputable and licensed money lender, but also check out Loan Advisor’s best licensed money lender reviews to help you with a decision.

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