Are licensed money lenders safe? Will they come after me, or my family, if I fail to repay?
How do I know if a money lender is legal? For those who may be unfamiliar with licensed money lenders in Singapore and how they work, you have come to the right place.
Here, we answer all your frequently asked questions so you are equipped with the knowledge to find the most reliable money lenders in Singapore.
Licensed money lenders in Singapore are authorised money lenders regulated under the Ministry of Law. They operate under a strict legislation governed by the Registry of Moneylenders, MinLaw and are a legal alternative to borrowing from the bank.
The Moneylenders Act stipulates that only licensed and legal money lenders are allowed to loan money to businesses and individuals.
Borrowing from other unlicensed entities, such as loan sharks, are thus illegal, where both borrower and money lender may face legal and financial repercussions, including a fine of not less than $50,000 and not more than $500,000 if convicted of engaging in unlicensed moneylending.
You can visit the Ministry of Law’s website for the latest list of licensed money lenders. If a money lender is not on this list, it is highly likely that they are illegal.
Many money lenders provide a wide array of loans from personal loans, renovation loans, car loans to debt consolidation plans – much like banks, if not better.
What are their main differences? Read on to find out.
Unlike banks, most licensed money lenders have less stringent requirements for borrowers to take out a loan. It is one of the reasons why some may know licensed money lenders as “quick money lenders” – they can be faster than banks when disbursing cash loans.
For this reason, many borrowers find it much more convenient to borrow from a licensed money lender than from a bank.
Instant money lenders not only provide fast cash, they also allow you to take a loan more easily than other financial institutions. While credit history is important when you apply for a bank loan, licensed money lenders usually do not practise credit discrimination – which means you can get a loan even if you have bad credit history.
It is even possible to find money lenders with no credit checks.
Licensed money lenders require borrowers head down to their office before confirming a loan in-person. This comes under one of the Ministry of Law’s rules for all licensed money lenders to have a physical office and conduct face-to-face verification with the borrower before approving any loan application.
In today’s age of Internet frauds and scams, such a practice can be more of a help than harm. It allows both parties – the money lender and the borrower – to confirm the legitimacy of the deal, before committing to a legally binding agreement, thereby reducing the chances of one falling into an identity fraud or other ruses adopted by sophisticated scammers today.
Loan applications for banks, on the other hand, can be done entirely online. This means you do not have to visit the bank’s office to get your loan approved, though a physical verification may be exercised by the bank on a case-by-case basis.
See this table below that highlights more key differences between borrowing from a bank and a licensed money lender:
|Borrowing from banks||Borrowing from licensed money lenders|
|What is the maximum loan I can take?||Up to 12 times monthly income||Up to 6 times monthly income|
|What is the repayment period? (Personal loan)||Up to 5 years||Up to 24 months|
|Approval rate||Up to 2 weeks||Can be less than a day|
|General requirements||Stable income
Good credit scores
|Must be employed
No history of defaulting on prior loans
|Interest rate||3.5-11% per annum||1-4% per month (up to 48% per annum)|
|Application process||Online or physical application||Online or physical application but face-to-face verification required|
|Processing fee||Interest, processing and other fees can add up to 6.5-20% p.a.||Up to 10% of loan principal|
Interested in finding out more about borrowing from an authorised licensed money lender in Singapore?
There are a few telltale signs when an unverified, unlicensed personal loan money lender Singapore offers you a deal that seems too good to refuse.
You can check the money lender license of the money lender by referring to the list of Licensed Moneylenders in Singapore. If your money lender is not on this list, it is likely that this lender is illegal.
The PDF also provides a list of money lenders whose licenses are currently suspended. Check the list to make sure you’re working with an authorised money lender in Singapore.
Sometimes, illegal money lenders may offer to confirm a loan and have it delivered right to your doorstep with just a text or phone call. They may also offer high loan amounts without the need to verify your income or employment status.
In reality, licensed money lenders are not allowed to approve a loan application without an in-person verification process, which safeguards both your and the money lender’s interests. So if your lender does not want to meet you in person, it is likely that this is an illegal money lender.
Under the Ministry of Law’s regulations, the maximum interest rate a licensed money lender can charge is 4% monthly (up to 48% per annum).
If the borrower is late on their repayment, the maximum late interest rate is 4% a month as well. The late interest can only be charged on an amount that is repaid late. This cap applies regardless of the borrower’s income and whether the loan is an unsecured or secured one.
The Ministry of Law also mandates that licensed money lenders do not lend more than what is allowed.
You may refer to the table below to find out how much you can borrow for unsecured loans, depending on your residency status and income level:
|Borrower’s annual income||Singapore Citizens and Permanent Residents||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||6 times monthly income||6 times monthly income|
Lastly, approved money lenders in Singapore are only allowed to advertise on certain channels, which includes business or consumer directories, websites belonging to the money lender and advertisements placed within the money lender’s business premises.
All other advertising channels are prohibited; offers sent via WhatsApp, Telegram or other personal messaging channels touting the best loan deal are unlikely to be a legal money lender Singapore.
The Ministry of Law recommends that you do not respond to such messages and instead report the advertisements to the Registry at 1800-2255-529 or via its website. Errant licensed moneylenders will be investigated by the Registry and unlicensed moneylenders will be investigated by the police.
Licensed money lenders have stipulated office hours stated on their website. If any money lender claims to be a 24-hour money lender, they are likely illegal.
When comparing money lenders, it is not always immediately clear which could be the best fit for you. But it can make the process easier if you know what you are looking for; the must-haves before you apply.
You would want to see how other borrowers rate this money lender and what they have to say. Are they professional? Do they treat borrowers with respect? Do they help borrowers solve their problems? These are some of the things you would be able to find out from the money lender Singapore reviews on Google.
Make a physical trip down to the money lender’s office if you are unsure of anything – seeing is sometimes believing. Many customers find that speaking with a staff onsite is a much better proof of assurance on top of all the online research and fact-checking.
Look out for a money lender in convenient locations – near MRT stations, located within malls or around the vicinity of your own home. Finding a money lender near you will save you the long travelling time, making it faster to go down and have your loan approved. Simply search “licensed money lenders near me” on Google maps and you will get relevant results.
Are you looking for a licensed money lender in the east near Bedok? Situated in the heart of Bedok, MM Credit is located right behind the Bedok North SingPost, or a 5-minute walk from Bedok MRT Station.
We are also a reliable money lender with more than 200 5-star reviews on Google.
Broadly speaking, loans are split into two main categories – secured and unsecured loans.
Secured loans are loans which require you put down a collateral -– usually something valuable, like an asset such as a car or a house. If you fail to repay the loan however, these assets could be seized by the money lender immediately.
The most common secured loans are housing loans and car loans.
Right now, the Total Debt Servicing Ratio (TDSR) stands at a maximum of 55% for property and car loans. This means that if you are currently servicing other debt obligations equal to 10% of your monthly income, the maximum property loan you can get for a property loan is up to 45% of your monthly income.
If you are taking out a loan to buy an HDB or executive condominium (EC) where the minimum occupation period of the condominium has not expired, the Mortgage Servicing Ratio (MSR) applies at maximum 30% of your gross monthly income. The MSR refers to the portion of your gross monthly income that goes towards repaying all property loans, including the loan you applied for.
Depending on the number of housing loans you have, the loan-to-value (LTV) limit changes. The LTV limit determines the maximum amount an individual can borrow from a financial institution for a housing loan. In short, it is the loan amount expressed as a percentage of the property’s value.
|Outstanding housing loans||LTV limit|
|0||55% if the minimum cash downpayment is 10%
75% if the minimum cash downpayment is 5%
|1||45% or 25%|
|2||35% or 15%|
The lower LTV limit applies if the loan tenure exceeds 30 years (or 25 years for HDB flats), or the loan period extends beyond the borrower’s age of 65 years old.
For those thinking of taking out a car loan, the maximum LTV limit is 70% if the open market value of the vehicle is less than or equal to $20,000. For vehicles above $20,000, the LTV limit is 60%.
These are loans which do not require you to pledge anything. However, this also means that the loan value will be significantly lower than a secured loan.
Below are some of the most common types of loans you can take out with a licensed money lender. Some information and rates may vary across different companies, so be sure to check with them in-person before signing on the dotted line.
Personal loans are versatile loans you can take for various personal uses, such as weddings, medical expenses, funerals, vacations or paying off other urgent bills and expenses.
They can be either secured or unsecured.
Here are a few common types of personal loans:
- Payday loan
If you find yourself in need of cash to pay off some urgent bills before payday, payday loans might be suitable for you. This loan is meant to tide you over for a month until your payday – which is when you need to repay the loan, together with interest.
Due to the short repayment period of one month, it usually has a relatively higher interest rate than other types of personal loans. Such loans are also capped at your one month’s salary.
- Debt Consolidation Loan
If you have multiple loans, a debt consolidation loan might be helpful for you.
The benefit of having such a loan is that it consolidates all the other loans that you have into a single loan. This means you will only need to make repayments to the money lender whom you have applied for a debt consolidation loan from.
This loan is meant to help you fully repay multiple creditors easily.
Debt consolidation loans would also usually come with lower interest rates and longer loan tenure than your existing multiple loans, which will enable you to repay your debts with more comfortable instalments and timeline.
- Study Loan
This loan is for parents who wish to pave the way for their children, or those who are still in pursuit of higher education for themselves. The loan can be used to finance school fees as well as other educational courses that you may be thinking of attending, but do not yet have the means to.
- Taxi/Grab/Gojek Loan
The Grab/Taxi loan is a new type of loan that has emerged in the market recently. It was created to cater to the needs of those in the booming ride-hailing market. The loan can be used to cover accidents and mishaps that may happen on the road or at work, or be used as a fund to kickstart your career in ride-hailing and/or delivery services.
- Fast Cash Loan
Fast cash loans are quick cash options that allow you to receive the money in as quickly as 15 minutes. They don’t call it a fast cash loan without reason!
The other most common type of loan is the business loan, such as start-up business loans, unsecured business term loans and so on. We all know that setting up a business takes time and effort, but first it needs capital. While it can be offered as an unsecured loan, the loan amount and loan value can differ quite greatly, depending on the size and nature of the business.
For the same reason, you may find that interest rates may vary quite a bit between one business loan and another. A rule of thumb however, is that monthly loan money lenders are not allowed to charge an interest rate of more than 4% every month and this applies to business loans as well.
If any of these loans sounded appealing to you, here’s good news – you can find all these loans at MM Credit, one of the top ten money lenders in Singapore.
When taking a loan, a private money lender’s interest rates may not be the only fee you have to pay. There is sometimes a processing fee involved, capped at up to 10% of the loan principal.
When payment is made past the deadline, licensed money lenders can also impose a late fee (capped at $60 a month) as well as a late interest fee of not more than 4% per month for each month the loan is repaid late. Note also that the late interest can only be charged on an amount that is repaid late. The money lender cannot charge on amounts that are outstanding but not yet due to be repaid.
Looking for a licensed money lender with low interest rates?
Getting a loan should not be a decision you make on the spot. Take time to compare money lenders and consider your finances carefully to ensure that you are able to repay the loan on time.
Here are some things you can do on your own before getting a loan:
With a new loan to repay, you might find yourself financially tied from month to month. Setting aside a monthly budget – one that accounts for all your necessities and bills – can give you greater clarity on how to manage your accounts.
It’s having the certainty of being able to pay back each month’s instalments that’s going to give you a peace of mind.
The law requires money lenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract. Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable.
A loan is a legal contract, there is no going back once it’s signed. You want to make sure to read all the fine print, the terms and conditions that come with taking on a loan to make sure that you are able to see to its repayment smoothly without much difficulty.
Since licensed money lenders approve loans only in person, you want to be sure to check that you have all the documents necessary before going down to get a loan. It will also help speed up the approval process, which is what we all want.
To be eligible for a loan, you need to be between 18-65 years old, have a consistent stream of income and be residing in Singapore. Remember to check your borrowing limits under the ‘Exceeding legal borrowing limits’ section above as well.
Have you decided to apply for a loan with a licensed money lender? Top licensed money lenders can disburse what you need within 30 minutes, so you don’t have to worry about any delays.
Here’s the step-by-step process of applying for a loan:
- Apply online via the licensed money lender’s website or walk in to their office.
- If you have applied online, the loan officer will call you within one working day to schedule an appointment with you to come down to their office.
- Prepare all necessary documents (see documents required section below) and bring them down to the office.
- During your short interview with the loan officer at the money lender office, the loan officer will verify your documents, check your financial status and check your loan history with other lenders via the Money Lenders Credit Bureau (MLCB) platform.
- If there are no issues, your loan can be approved within 20 minutes.
- After which, the loan officer will explain the loan terms in the loan contract carefully to you. Read and understand it well. Remember to ask any questions you have along the way and negotiate your terms before signing on the dotted line.
- Receive your funds in cash or bank transfer immediately.
If you are an employed Singaporean or PR taking a personal loan, you should prepare your NRIC, CPF contribution statements and the latest 3 months’ payslip.
Self-employed persons should also produce their IC, have their IRAS Notice of Assessment and proof of income documents in place of an income slip.
For foreigners taking a personal loan, you will need to bring with you your employment pass, proof of home address, such as a tenancy agreement or recorded billing address, as well as your latest 3 months’ payslip.
For business loans, you will need to have on hand the latest 6 months’ bank statements, constitution of the company, NRICs of the major shareholders and directors, tenancy agreement, NOA of the company’s major shareholders and credit report with Credit Bureau Singapore (CBS).
Ready to apply for your loan?
- Make sure the correct principal amount of the loan is disbursed to you. The money lender is only permitted to charge an upfront processing fee of up to 10% of the loan principal.
- Pay the loan instalments on time to avoid incurring late payment fees and late interest.
- Make sure the money lender issues to you a receipt every time you make any repayment towards your loan, and check that the details are correct (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 that the details are correct (e.g. name, amount, date).
- Be sure to retain all statements of accounts and receipts of payments, as documentation and evidence of payments.
Governed by the Ministry of Law, licensed money lenders have the right to seek repayment when it is due.
There are various ways they can do so, including sending a Letter of Demand by post to you or your employer’s address, visiting your home or office to collect the money and filing for litigation against you in court.
However, there are some things that money lenders cannot do when it comes to seeking repayment. They include: harassing borrowers with multiple SMS/calls, making multiple calls to the borrower’s home and office, causing distress to their family and colleagues, contacting borrowers during unusual hours or visiting and loitering around the borrower’s home and workplace multiple times or during unusual hours.
Please contact the police if you face such situations.
We all understand that there are days when we need a little help getting by.
MM Credit provides a wide variety of loans to cater to your needs. With friendly and patient services, you can be sure that you’re getting only the best deal in Singapore.