licensed money lender guide

Moneylending has become an essential industry in Singapore. It has helped millions of people across generations with their financial needs.

Along with the growth of this industry, illegal money lenders and loan sharks have also begun to surface. One may face the urgent need to borrow money from a financial institution or a money lender at one point in time. Those who do not qualify for bank loans would opt to borrow from money lenders.

Singaporeans must be vigilant in choosing which money lenders to trust. Proper information protects them and their money from predatory lenders. So, to be covered by the country’s Ministry of Law, one must only borrow from the list of legitimate money lenders.

This article guides readers in identifying reputable and legal money lenders in Singapore and everything you need to know before borrowing from one.

What is a Licensed Money Lender?

A moneylender offers various financial services, including payday loans, personal loans, business loans, etc. Borrowers approach money lenders for a particular loan amount, especially during financial emergencies. 

List of Licensed Moneylenders in Singapore

Through the Ministry of Law, the Singapore government, has ensured that Pte Ltd and other financial institutions follow specific rules before lending loans to Singaporeans.

The government granted licenses to these money lenders in Singapore. You can find the list of licensed moneylenders here for more information.

How Licensed Money Lenders Can Help You

Licensed money lenders in Singapore have helped thousands of people in need. They could provide financial remedies to Singaporeans without high-interest rates. In cases of financial difficulties like medical emergencies, you can get your loan approved fast as they are equipped to respond to the immediate needs of their clients.

  • During a financial crisis, these licensed money lenders can give quick cash.

This feature allows people who need capital to run their business or need money to pay an existing loan. During situations like the COVID-19 pandemic, licensed money lenders can offer help to families who most need assistance. With unemployment cases and emergency medical bills, the role of money lenders is more crucial than ever.

  • They offer flexible repayment options.

This option allows clients can negotiate how to pay the loan or debt they acquired. Borrowers can arrange for a reasonable loan tenure and low-interest rates on their loans. They can talk to financial institutions granting them loans to ensure they get the best possible deal.

  • Lenient requirements and fast approval. 

A bank would often require several documents and a long processing time. For this reason, many Singaporeans choose a licensed money lender instead of applying for a personal loan in a bank. A bank can even have higher interest rates than a licensed money lender in some cases. 

Permitted Loan Amount, Rates And Fees, And Repayment Terms

Licensed money lenders are legally restricted in terms of the amount they can lend, fees they can charge, and allowed interest rates. They are also legally bound to give you details on your lending agreement and repayment schedule or terms. The loan contract must:

  • Reflect the principal loan amount, the interest rate applied, and the amount payable.
  • Be signed by the borrower and the moneylender.
  • Contain all essential information about the loan.

To protect the borrowers better, the Ministry of Law has implemented the amended money lenders Act 2018 and the money lenders Rules 2018. Both were put in force last November 30, 2018, to ensure that borrowers have safe access to personal credit.

The new rules also limit how much one can borrow from all moneylenders combined. This cap will help borrowers regulate their borrowing behavior.

Moreover, the rules also provide a self-exclusion framework where a money lender is restricted from lending to individuals who applied for self-exclusion. 

This aggregate loan cap is facilitated by a regulatory framework introduced to the money lenders Credit Bureau (MLCB). This framework enables MLCB to function as a central repository of moneylending data and help borrowers make informed and better borrowing decisions.

How To Find The Best Licensed Money Lender in Singapore?

There are many licensed money lenders in Singapore, and it could be a daunting task to choose the right one. Additionally, private money lenders also add confusion to borrowers who are aiming to find legit money lenders that offer unsecured loans. To help you with this, here are some critical aspects:

1. Credibility

When finding the right moneylender for a loan, always take your time to review their credibility. Consider the length of years that the company has been in the industry. You can also check for the company’s track record, reputation, and trustworthiness through customer testimonials and reviews (e.g., Google reviews).

2. Products and Services Offered

Not all lending companies have products that cater to the same group of clients. Some specialize in business loans while others cater to personal needs. Do research or inquire about the products and services they have on board to know whether they have one that suits your financial needs. 

3. Low-Interest Rate

Every lending institution has a specific interest rate. Choose a lender that offers the lowest interest rates with no hidden charges. You may also use their loan calculator to test out any loan you consider. 

4. Flexible Terms

Inquire about the payment schedule and the terms and conditions included. Go for one that has manageable terms and conditions and flexible payment terms. Before signing any deal, read through all the information, and ask questions on sections which are not clear.

You can look up business or consumer directories to find a licensed money lender near you. Yet, an easier way to find a reputable money lender is through loan comparison sites. With this service, you can get free quotes from reputable loan providers and quickly choose one that suits you best.

What Does a Typical Application Process Look Like? 

Everything that involves money, like taking a loan, should be carefully thought of. So, only proceed when you are satisfied with the traits and policies of a certain loan provider.

Here’s how a typical application may go:

1. Checking for Eligibility

The amount of loan you are eligible for depends on your annual income. This loan cap applies to Singapore citizens, permanent residents, and foreigners living here.

For a clearer picture, check out this table:

Annual Income of BorrowerSingapore Resident / Permanent ResidentForeigners
Below S$10,000S$3,000S$1,500
S$10,000 to less than S$20,000S$3,000S$3,000
S$20,000 and above6x the monthly income6x the monthly income

2. Preparing the necessary documents

Before going to the money lender’s office, prepare all the necessary documents required. These include

Eligibility: 

  • At least 18 years old 
  • Proof of income/employment (payslips)
    • For Singaporean/PR residents: You must have regular employment or a source of income above $1,500 per month
    • For Foreigners/Expats working in Singapore: You must have regular employment or a source of income above $2,000 per month

Requirements:

For Singaporean / Permanent ResidentIdentity card / NRIC
  • Proof of residences such as a recent bill or letter addressed to you (only applicable if you do not own the residence)
  • Tenancy agreement (only applicable if you are renting a flat)
  • Recent 3 months payslip and employment letter if your current employment is less than 6 months
  • Know your SingPass (to log into CPF, HDB, IRAS website)
For foreigners
  • A valid work permit / S Pass / Employment Pass
  • Passport
  • Proof of employment (staff pass or company pass)
  • Recent 3-month payslips & employment letter
  • Proof of residence such as a tenancy agreement, recent bill or letter addressed to you
  • Latest bank statement of account to which yearly or monthly salary is credited
  • Singpass (to download IRAS NOA)

3. Applying for the desired loan

Below are the usual steps in applying for an unsecured loan (e.g. personal loans):

  1. Call or Apply Online: Apply from the comfort of your home 
  2. Visit the Office For In-Person Consultation: Upon confirmation, you will be asked to come to the office to customize your loan plan
  3. Receive Your Money on the Same Day: Get your cash as soon as the loan agreement has been signed

man borrowing money from moneylender

How To Spot Unauthorised Money Lenders

Unlicensed or unauthorized money lenders are also called Ah Long. They work outside the rules and regulations of the government. In many cases, they would take advantage of the difficult situation of the people by making the loan interest rates so high. Also, they would harass and pressure loanees into paying off the money they borrowed. 

How to spot a loan scam:

  • You received unsolicited offers coming from various messaging platforms. In Singapore, a licensed lender can only advertise in three channels, namely in print or online media, websites owned by the creditor, and ads within or on the exterior of its business premise.
  • The loan offer is incomplete. According to the money lenders Act, all lenders must provide complete terms. The terms must include the final cost of the principal loan plus the interest to be included in a legal contract.
  • The creditor does not have a physical address or contact details. Loan scammers do not want you to know their address, so it would be impossible for you to track them or file a complaint against them. When a creditor does not give you its physical address, phone number, or email address, there is a high chance that it is not a legitimate office.
  • The creditor requires you to give an up-front payment, or they are asking for “high processing fees.” A creditor asking for a fee before the approval of the loan application is likely a scam. A legal money lender can only charge 10% of the loan amount as a processing fee. Also, the late payment fee should only be limited to $60.
  • The creditor asks for a gift card as a form of payment. Similar to cash, gift cards are impossible to trace. Hence, it is a favorite currency among scammers. If a creditor asks you to pay through a gift card, try finding another money lender who can give you a loan.
  • The website of the moneylender is not secure. One way to check this is to find the padlock icon on the left side behind the URL. If you feel that the website is not secure, do not hesitate to cut your transaction with the creditor and stop using their website. Do not risk giving your details to questionable people.

Other Prohibited Practices for Licensed Moneylenders

The unscrupulous practices of loan sharks have skewed an unfair image and impression to licensed money lenders. Thus, the government has put regulations on the money lending practice. To inform you better, here are unacceptable acts that licensed money lenders are not allowed to do:

  • Ask for your Singpass details, including passwords
  • Any form of abusive language, threats, or harassment
  • Keep on hold essential documents like your NRIC, IDs, Bankbooks, or ATM cards
  • Ask you to sign any blank document
  • Approve your loan via email or SMS
  • Grant the loan without explaining in detail the terms and conditions
  • Put on hold a part of the principal amount for whatever reason

How to Report Unlawful Money Lenders

Should you encounter any of these instances, report to the Ministry of Law’s Registry of Moneylenders through their website or complain through 1800-2255-529. For harassment, you can also report the incident to the police as matters of harassment should be taken out seriously by the police force.

Other Questions You Might Be Looking for Answers

Here are some advisory from the Ministry of Law to borrow wisely:

What should I consider before taking up a loan?

  • Consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations. Borrow only what you need and are able to repay. Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family.
  • Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable.
  • You should shop around different moneylenders for the most favourable terms. You should not rush into and commit yourself to a loan until you are satisfied with the terms and conditions.

Can I rely on the content of an advertisement to take up a loan from a moneylender?

You are advised to seek clarifications on specific terms of the loan contract before signing up with a licensed moneylender, and not to rely solely on the content of advertisements from the moneylender.

In the event that I am standing as a surety for a loan, what should I look out for?

You should ensure that:

  • You understand your responsibilities as a surety;
  • You receive a copy of the Note of Contract at the time that the loan is granted to the borrower;
  • The moneylender has explained the terms in the Note of Contract in a language that you understand; and
  • The moneylender does not keep your NRIC card or any other personal ID documents (e.g. driver’s licence, passport).
  • The moneylender does not acquire any information that contains passwords to your user accounts (e.g. Singpass account, Internet banking account, email account).

What should I do after being granted a loan?

  • Make sure the moneylender delivers to you the correct principal amount of the loan. The moneylender is only permitted an upfront deduction of a loan approval fee of up to 10% of the principal amount.
  • Pay the loan instalments on time to avoid incurring late payment fees and late interest.
  • Make sure the moneylender issues to you a receipt every time you make any repayment towards your loan, and check it for correctness (e.g. name, amount, date).
  • Make sure you receive a statement of account for all your loan(s) at least once every January and July, and check it for correctness (e.g. name, amount, date); and
  • You should retain all statement of accounts and receipts of payments, as documentation and evidence of payments.

Conclusion

Despite the importance and significance of a licensed money lender in Singaporean society, there has been a rise in illegal or unauthorized lenders in Singapore. Today, they are all over the internet, and borrowers need to be more cautious with their money.

Key takeaways:

  • Often, loan sharks charge unreasonable fees and high-interest rates. As a result, people who loan from them suffer financially.
  • Given the rise of unlicensed money lenders, Singaporeans must become vigilant in identifying a licensed money lender.
  • You may check the FAQs of the Ministry of Law to learn more about the practice of lending money in the country. 

While there are a lot of Pte Ltd lenders in the market, remember that not all have the same quality of service. Raffles Credit Pte Ltd is a licensed money lender with excellent customer service. They have been on the market for several years and have granted loans to hundreds of clients.