No matter how much we have saved, there may be instances where you will need a boost in your cash flow. However, financial emergencies become doubly stressful when you are a foreigner living in Singapore. Fortunately, Singaporeans and foreigners have plenty of options to choose from, such as banks and licensed money lenders.
What if you’re faced with restrictions when applying for bank loans? You can turn to a credible and licensed money lender for financial assistance. But is borrowing from a legal money lender really safe?
This guide will help you spot illegal money lenders and where to find the list of licensed money lenders. Plus, we’ll also list tips on how to choose the best loan provider for your needs.
How Can Licensed Moneylenders Help Singaporeans and Foreigners?
Licensed money lenders in Singapore are approved lenders under the Ministry of Law. These licensed lenders can provide loans to Singaporeans, permanent residents, and foreigners. MinLaw regulates and checks all the legal lenders’ activity so they will never offer unreasonable loan rates nor use deceitful tactics.
Licensed money lenders will cater to your needs by offering customizable personal or emergency loan packages. Additionally, their application process is quicker and less stringent compared to banks. That said, if you need an instant cash loan, a licensed money lender may provide you with fast cash disbursement.
But don’t immediately deal with the first money lender that offers you a loan. Make sure that they are licensed and registered under the Ministry of Law.
How To Spot Illegal Moneylenders
Unlicensed money lenders are widely referred to as “ah long” or loan sharks. They are notorious for charging ridiculously high interest rates. Worst of all, they use abusive language and harassment tactics. To avoid dealing with loan sharks, here are a few tips to spot unlicensed money lenders.
1. Not on the List of Licensed Money Lenders
The easiest way to verify the credibility of the money lender is by checking the list of licensed moneylenders in Singapore on the MinLaw website. The Registry of Moneylenders provides an updated list of licensed lenders every month.
So before dealing with any lender, make sure that they are on the list and that their license hasn’t been suspended. Additionally, avoid blacklisted money lenders in Singapore when taking out a personal loan.
2. Unreasonable Rates and Fees
Legal money lenders are only permitted to charge an interest rate of up to 4% per month. This cap applies regardless of your monthly income and whether you’re taking out a secured or unsecured loan. So a lender that charges over 4% per month is a red flag.
Additionally, licensed money lenders are also only allowed to charge the following fees:
- An administrative fee of not more than 10% of the principal loan. This fee is charged upon loan disbursement.
- A late fee not exceeding S$60.
- Legal costs ordered by the court for a successful claim during recovery of the loan.
If a lender asks you for payment before loan disbursement, then you may be dealing with a loan shark. Remember, licensed money lenders will not charge any fees before your loan is granted. Lastly, they will not deduct admin fees from your principal loan amount.
3. Sends Unsolicited SMS and Emails
According to the Singapore police, loan sharks are using text messaging and online platforms to send unsolicited loan advertisements. Aside from that, they may trap unsuspecting victims into an online loan scam through unofficial websites, masquerading as a legal money lender.
To avoid falling for such deceitful tactics from an unlicensed money lender, make sure to verify the website address of the legal loan provider. It must be the same as the one registered on the list of licensed money lenders.
Keep in mind that a licensed money lender can only advertise through these three channels:
- Business or consumer directories, both in print and online media
- Official money lender’s business website
- Within or on the exterior of the money lenders’ business premises.
All other channels are prohibited.
4. Abusive Language and Harassment Behavior
All activities of a licensed money lender are regulated under the Moneylenders Act. That said, they are not allowed to harass or threaten borrowers. They will also prioritize the borrower’s confidentiality, privacy, and integrity.
Unlicensed money lenders, on the other hand, are the complete opposite. They will use abusive language and behave threateningly towards you. In fact, there was a recent report about a loan shark sending S$1,000 worth of food deliveries to harass debtors.
5. Shady or Non-Existent Contract
Licensed money lenders are required to provide you with a printout of the loan contract. The document must state all the terms and conditions of your agreement, including loan amount, interest rates, tenure, fees, and more.
Loan sharks are more likely to disburse cash after a verbal or text agreement. They will not provide you with a loan contract or will have you sign an incomplete document.
Other red flags you should watch out for:
- Asking for your SingPass user ID and/or password
- Refusal to give back your NRIC card or other personal IDs
- Withholding a part of your principal loan amount for any reason
Are There 24-Hour Open Lenders in Singapore? Is It Legal?
There are no 24-hour legal money lenders in Singapore. If a lender advertises a 24/7 loan service, they are likely operating illegally.
However, if you need urgent cash, you can always access a licensed money lender’s website. Legal money lenders have an official website that is accessible 24/7 where you can send your online loan application. Your personal loan application will be processed and approved the next business day.
If you were to apply on a Sunday morning, you may be able to receive your cash loan on Monday morning. It’s best to check the operating hours of the money lender of your choice.
List of Registered or Licensed Moneylenders in Singapore
Taking out a personal loan from a licensed money lender is a good alternative to bank loans, especially when you’re facing restrictions. However, this is only a viable option if you’re dealing with a credible and licensed money lender.
Click here to view the list of licensed moneylenders.
Guide in Choosing the Best Loan Provider for You
As of April 2022, there are around 154 licensed money lenders in Singapore. Choosing the right one for your financial needs can be overwhelming. Here are a few tips to help narrow down your choices:
- Credibility: Aside from verifying that the licensed money lender is on the MinLaw list, you should also read customer reviews and feedback. Take into account the reputation of the company in the market. Use Google Reviews or look into money lender forums.
- Interest Rates: As previously mentioned, legal lenders are only allowed to charge up to 4% interest rate per month. So choose a loan provider that offers competitive interest rates. Use loan comparison tools to compare the interest rates between different money lenders.
- Fees: Choose a licensed money lender who follows the stipulated caps on fees. Additionally, the legal lender must also clearly disclose all the fees you’re going to be charged with. Some lenders keep fees to a minimum so make sure to compare different loan plans.
- Flexible Repayment Schedule: Legal money lenders are open to discussing your financial needs. Choose a loan provider who offers flexible personal or emergency loan plans that will suit your financial capacity. The loan repayment plan must be feasible and it shouldn’t cause additional financial strain in the long run.
Example of Loan Calculation
For this illustration, let’s assume that your principal loan amount is S$2,500. The loan provider charges a 3% interest rate per month and your monthly installment is S$250.
How is your interest rate calculated?
S$2,500 x 4% = S$100
Your first month’s interest rate is S$100. At the next installment, you’ll have to pay 4% of the outstanding balance and so forth. To illustrate:
S$250 – S$100 = S$150 will go towards repaying your principal loan amount.
S$2,500 – S$150 = S$2,350 is your outstanding balance after the first-month installment.
So, the second month’s interest is 4% of S$2,350, meaning S$94.
What if you’re late in repaying your monthly installment?
The maximum fees that a money lender can charge is a S$60 late fee and a 4% late interest rate for every month the loan is repaid late. Using the example above:
S$250 (monthly installment) x 4% = S$10
S$10 (late interest) + S$60 (late fee) = S$70
Note: The licensed money lender is not allowed to charge a late interest of 4% out of your principal loan amount.
Ready To Apply?
- Age: 18 years old and above
- Minimum Monthly Income:
- Singaporean: S$1,500
- Foreigner: S$2,000
Singaporean and Permanent Residents
- Identity card/NRIC
- Proof of residence such as utility bill, tenancy agreements, or letter addressed to you
- Recent 3 months payslip and employment letter if your current employment is less than 6 months
- SingPass to log into CPF, HDB, IRAS website
- A valid work permit/S-Pass/Employment Pass
- Proof of residence as a utility bill, tenancy agreements, or letter addressed to you
- Proof of employment, such as staff pass or company pass
- Recent 3-month payslips and employment letter
- Latest bank statement of account to which yearly or monthly salary is credited
- SingPass to log into the IRAS website
Step 1: Call or Apply Online
- Go to your chosen legal loan provider’s website to apply online.
Step 2: Fill In Necessary Information
- You may need to provide standard details, such as your name, citizen status, monthly income, and desired loan amount.
Step 3: Log In to the Website Using Your SingPass
- This will pre-fill your financial data on the money lender’s website.
Step 4: Upload All Necessary Documents
- You will need to provide a copy of your payslips and tax statements to verify your income. Plus, you will also need to upload utility bills to prove your residence.
After your application is assessed, a loan agent will contact you and schedule a visit to the licensed money lender’s office for a face-to-face consultation. Once the loan agent has fully explained the terms and conditions of the loan, they will provide you with a printout of the loan contract.
Lastly, when the loan contract is signed, you will receive your money on the same day.
Frequently Asked Questions
How Much Can I Borrow From Licensed Money Lenders?
For secured personal loans, you can borrow any amount.
For unsecured loans, the loan amount you can borrow will depend on your annual income and citizen status. Please refer to the table below
|Borrower’s annual income||Singapore Citizens and Permanent Residents||Foreigners residing in Singapore|
|Less than $10,000|
|At least $10,000 and less than $20,000||$3,000|
|At least $20,000||6 times monthly income||6 times monthly income|
How Do I Lodge A Complaint Against A Money Lender?
If you encounter a legal money lender who participates in unfair practices, you must immediately report them to the police or contact the Registry at the telephone number 1800-2255-529.
You may be required to tell the agent the money lender’s details, including the business name, license number, and contact details. Rest assured that the Registry will not disclose your details to the money lender without your consent.
Additionally, you may need to attend a meeting with a licensed officer from the Ministry of Law to provide all relevant information, such as:
- Loan transactions
- Illegal paperwork
- Recording of harassment or illegal behaviors.
What Should I Do Once My Loan Has Been Approved?
1. Make Sure You Receive the Full Principal Amount
The money lender must provide you with the full principal amount. As previously mentioned, a licensed money lender in Singapore can only charge up to 10% of the principal amount for administrative fees.
2. Keep Necessary Documents
Secondly, you need to keep the following documents for your reference:
- A copy of your loan contract
- Receipts of all payments you’ve made towards the loan
- Statement of accounts for all your outstanding loans
- Copies of statement of accounts, receipts, and other necessary documents
3. Promptly Pay Your Installments
Make sure that you repay your monthly installments by the due date. Failing to do so will lead to late interest and late fees. These charges can accumulate causing your debt to snowball.
Is There A Way To Get A Lower Interest Rate?
Your interest rate will depend on several factors, such as your annual income, credit score, and your previous records.
For instance, if you have a good credit score, the licensed money lender can offer lower interest rates. Rest assured that licensed lenders will take into account your ability to pay and will offer an amount that you can safely borrow so you will not suffer additional financial difficulties.
In case of financial crises that require urgent cash, personal loans are an ideal choice. Taking out a loan from a licensed money lender will help you pay off a home renovation, car repairs, emergency hospital bills, and more. However, make sure that you are dealing with a licensed money lender.
- Licensed money lenders in Singapore are approved lenders under the Ministry of Law.
- MinLaw regulates and checks all the legal lenders’ activity so they will never offer unreasonable loan rates nor use deceitful tactics.
- There are no 24-hour legal money lenders in Singapore. Legal money lenders have an official website that is accessible 24/7 where you can send your online loan application.
- Verify the credibility and license of a money lender by checking out the list of registered licensed money lenders in Singapore on the MinLaw website.
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