Legal Licensed Money Lender Borrowing Guide Singapore 2023

If you’re considering a loan, you might be wondering: Are licensed money lenders safe? Also, will they come after me or my family members if I fail to repay the loan I’ve taken up?

Additionally, how do I know if a money lender I’m researching is a legal business? For those of you who might be unfamiliar with licensed money lenders in Singapore and how they work, you’ve come to the right place.

This handy guide contains the answers to a host of frequently asked questions, ensuring that you are equipped with the knowledge to find the most reliable money lenders in Singapore.

Licensed money lenders in Singapore – who are they?

Licensed money lenders in Singapore are authorised money lenders regulated under the country’s Ministry of Law. They are required to follow strict legislation set out by the Registry of Moneylenders and are a legal alternative to taking up loans from a bank.

The Moneylenders Act stipulates that only licensed and legal money lenders are allowed to loan money to businesses and individuals.

Therefore, borrowing from other unlicensed entities, such as loan sharks is illegal. Both borrower and money lender may face legal and financial repercussions, including a fine of not less than S$50,000 and not more than S$500,000 if they’re 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, they are likely illegal businesses. You should never take up a loan from these unlicensed organisations, even if your financial straits are dire.

What are the main differences between a bank and licensed money lender?

Most licensed money lenders in Singapore provide a wide array of loans, from personal loans and renovation loans to car loans and debt consolidation loans.

The selection is almost identical to what a bank offers. In that case, what separates licensed money lenders from banks? Read on to find out.

1. Licensed money lenders can provide faster approval

Unlike banks, most licensed money lenders have less stringent requirements for borrowers to take up a loan. This is one reason why some people may know licensed money lenders as “quick money lenders” – they can be faster than banks when approving and disbursing loans.

For this reason, many individuals find it much more convenient to borrow from a licensed money lender than a bank.

2. Licensed money lenders have less stringent requirements

Licensed money lenders not only provide fast, nearly instant cash, but they also allow you to take up 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 that you can get a loan even if you have a bad credit history.

What’s more, it’s even possible to find money lenders with no credit checks.

3. Money lenders require face-to-face verification for approval

Licensed money lenders require borrowers to head down to their offices before confirming a loan. 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 fraud and scams, such a practice can be more help than hindrance. It allows both parties – money lender and borrower – to confirm the legitimacy of the deal, before committing to a legally binding agreement. This reduces the chances of you falling for 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 that you do not have to visit the bank’s office to get your loan approved, although physical verification may be required by the bank on a case-by-case basis.

The table below highlights more key differences between borrowing from a bank and a licensed money lender:

Interested in finding out more about borrowing from an authorised licensed money lender in Singapore?

Find out more at MM Credit.

How do you spot an illegal money lender in Singapore?

There are a few telltale signs when an unverified and unlicensed personal loan money lender in Singapore offers you a deal that seems too good to refuse. Here are six of them:

1. The company does not have a money lender licence

You can check the money lender licence of the company by referring to this official list of Licensed Moneylenders in Singapore. If your money lender is not on this list, the lender is likely an illegal business.

This list also states the money lenders whose licences are currently suspended. Check through it thoroughly to ensure that you’re working with an authorised money lender in Singapore.

2. The loan requires minimal identity verification

Sometimes, illegal money lenders may offer to confirm a loan and have the money delivered right to your doorstep with just a text or phone call. They may also offer high loan amounts without needing to verify your income or employment status.

These are red flags because licensed money lenders are not allowed to approve a loan application without an in-person verification process. Remember, this in-person process safeguards both you and the money lender. Therefore, if your lender does not want to meet you in person, it is likely that the firm is an illegal money lender.

3. Charges and fees that are beyond the legal limits

Under the Ministry of Law’s regulations, the maximum interest rate a licensed money lender can charge is 4% per month (up to 48% per annum).

If the borrower repays an instalment late, the maximum late interest rate is 4% per 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.

4. Loans that exceed legal borrowing limits

The Ministry of Law mandates that licensed money lenders do not lend more than what is allowed.

Refer to the table below to find out how much you can borrow for unsecured loans, which largely depends on your residency status and income level:

5. Advertising through personal messaging

Furthermore, approved money lenders in Singapore are only allowed to advertise on certain channels, which include 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 instant messaging platforms touting the best loan deal are unlikely to be from legal money lenders in 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.

6. They operate round the clock

Licensed money lenders have fixed office hours that are stated on their website. If any money lender claims to be a 24-hour money lender, they are likely illegal.

Guide to choosing the best licensed money lender

When comparing money lenders, it is not always immediately clear which could be the best fit for you, given the number of options that are available. However, it can make the process easier if you know what you are looking for. I.e. your must-haves before applying.

1. Check out the licensed money lender’s reviews

You can check out the licensed money lender Singapore reviews on Google to see how other borrowers rate their services and what they have to say about the business. Are they professional? Do they treat borrowers with respect? Do they help borrowers pinpoint loans that solve their specific financial problems?

Additionally, you can make a trip down to the money lender’s office if you are unsure of anything – seeing is believing, after all. Many people find that speaking with a staff member onsite is much better proof of assurance on top of all the online research and fact-checking they perform.

2. Proximity: Find a licensed money lender nearby

Look out for a money lender located in a convenient location – near an MRT station, within a mall, or around the vicinity of your own home or workplace. Finding a money lender near you will save you precious travelling time, making it faster to visit the company’s office and have your loan approved. Simply search “licensed money lenders near me” on Google Maps and you will receive the 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 Central SingPost, or a 5-minute walk from Bedok MRT Station.

We are also a reliable money lender with more than 250 5-star reviews on Google.

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What are the types of loans offered by the best money lenders in Singapore?

Broadly speaking, loans are split into two main categories – secured and unsecured.

Secured loans

Secured loans are loans that require you to put down collateral – usually something valuable like a car or house. This then ‘secures’ the loan, hence the name. However, if you fail to repay the loan, these assets can be seized by the money lender.

The most common secured loans are housing loans and car loans.

Currently, the Total Debt Servicing Ratio (TDSR) stands at a maximum of 55% for property and car loans. This means that if you’re currently servicing other debt obligations equal to 10% of your monthly income, the maximum property loan you can obtain is up to 45% of your monthly income.

If you are taking out a loan to buy an HDB flat or executive condominium (EC) where the minimum occupation period of the condominium has not expired, the Mortgage Servicing Ratio (MSR) applies. This is set at a maximum of 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 that 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.

The lower LTV limit applies if the loan tenure exceeds 30 years (25 years for HDB flats), or if the loan period extends beyond the borrower’s age of 65 years old.

If you’re thinking about taking up a car loan, the maximum LTV limit is 70% if the open market value of the vehicle is less than or equal to S$20,000. For vehicles above S$20,000, the LTV limit is 60%.

Unsecured loans

These are loans that do not require you to pledge anything as collateral. However, this also means that the amount you can take up will be significantly lower than a secured loan.

The following are some of the most common types of loans you can apply for from a licensed money lender. Certain details and rates may vary across different companies, so be sure to check with them in person before signing the loan contract.

Personal loan

Personal loans are versatile loans you can take up for a variety of purposes, whether it’s paying off medical expenses, a wedding, or a funeral. They can be secured or unsecured.

Here are several common personal loans:

1. Payday Loan

If you find yourself in need of cash to pay off some urgent bills before your salary gets credited, payday loans might be suitable for you. This loan type is meant to tide you over for a month until payday – which is when you need to repay the loan and the accumulated interest.

Due to the short repayment period of one month, payday loans usually have a relatively higher interest rate than other types of personal loans. Additionally, this loan type’s maximum amount is capped at a month’s salary.

2. Debt Consolidation Loan

If you’re juggling multiple loans or credit card debts, a debt consolidation loan might be helpful for you.

The benefit of taking up such a loan is that it consolidates all the other loans 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 a longer loan tenure than your existing loans. This enables you to repay your debts with more comfortable instalments and a better timeline.

3. 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 themselves. A study loan can be used to pay off your current school fees or other educational courses that you may be thinking of attending, but do not yet have the means to.

4. Taxi/Grab/Gojek Loan

The Taxi/Grab/Gojek loan is a new type of loan that has emerged in the market recently. It was created to cater to the needs of those working in the ride-hailing market. The loan can be used to cover accidents or mishaps that may happen on the road. Alternatively, the funds can be used to kickstart your career in ride-hailing or delivery, for instance by acquiring a vehicle.

5. Fast Cash Loan

Fast cash loans are quick cash options that allow you to receive your funds in as quickly as 15 minutes. They don’t call it a fast cash loan without a reason.

Business loans

Another common loan type is the business loan, which includes start-up business loans and unsecured business term loans. We all know that setting up a business takes time and effort, but capital is equally important. While business loans can be offered as either an unsecured or secured loan, the final amount depends greatly on the company’s size and business model.

For that same reason, you may find that interest rates vary quite a bit between one business loan and another. Additionally, licensed money lenders can freely set the late interest and late fees that they charge for business loans. These have no upper limit, but they aren’t allowed to levy charges like an early redemption penalty, unlike banks.

Therefore, it’s even more important that you clarify the fine print with the licensed money lender that you’re checking out. After all, a business loan is a larger and longer commitment as compared to a personal loan. On the bright side, the funding does allow you to grow your company at a higher pace.

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 money lenders in Singapore.

Find out what loans are suitable for you.

Interest rates and other fees of licensed money lenders in Singapore

When you’re taking up a loan, a private money lender’s interest rates may not be the only fee you have to pay. Occasionally, a processing fee is involved, which is capped at up to 10% of the loan principal amount.

When payment is made past the monthly repayment deadline, licensed money lenders can also impose a late payment fee (capped at S$60 a month) and a late interest fee of not more than 4% per month for each month that the loan is repaid late. Do keep in mind that the late interest can only be charged on the amount that is repaid late. The money lender cannot charge the above fees on amounts that are outstanding but not yet due to be repaid.

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Things to note before applying for a loan with an approved money lender in Singapore

Getting a loan should not be a decision that you make on the spot. Before you take out a monthly loan with a money lender in Singapore, make sure you understand all the fees and charges involved. Do take the time to compare money lenders and consider your financial situation carefully to ensure that you can repay the loan you’re thinking of taking up on time.

Here are some things that you can do on your own before getting a loan:

1. Create a monthly budgeting plan

With a new loan to repay, you might find yourself financially tied up 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 finances.

Having the certainty of being able to pay back each month’s instalment is going to give you some much-needed peace of mind.

2. Clarify all doubts before signing the loan contract

The law requires licensed 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 applicable fees.

A loan is a legal contract and there is no going back once it’s signed. Therefore, read all the fine print and confirm that you can repay the loan smoothly before signing the contract.

3. Prepare your documents early

Since licensed money lenders approve loans only in person, do check that you have all the documents necessary before visiting a licensed money lender to apply for a loan. Having all the necessary documents on hand helps to speed up the approval process too, which is what any applicant would want.

4. Check your loan eligibility

To be eligible for a loan from a licensed money lender, 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 too.

What is the application process for a loan?

Have you decided to apply for a loan with a licensed money lender? The top licensed money lenders can disburse your funds 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, all the way until the loan is approved:

1. Apply online via the licensed money lender’s website or in person at their office.
2. If you have applied online, a loan officer from the company will call you within one working day to schedule an in-person office appointment.
3. Prepare all the necessary documents (see “Documents required for a loan application” below) and bring them to the office.
4. During your meeting with the loan officer at the money lender’s office, they will verify your documents, check your financial status, and verify your loan history with other lenders via the Money Lenders Credit Bureau (MLCB).
5. If there are no issues, your loan can be approved within minutes.
6. After which, the loan officer will carefully explain the loan terms to you in the loan contract. Read and understand it well. Remember to ask any questions that you have along the way and negotiate your terms before signing on the dotted line.
7. Receive your funds in cash or via bank transfer immediately.

Documents required for a loan application

If you are an employed Singaporean or Permanent Resident taking up a personal loan, you’ll need to prepare the following documents:

1. NRIC
2. CPF contribution statements
3. Latest three months’ pay slips

For self-employed individuals, you’ll need to prepare:

1. NRIC
2. IRAS Notice of Assessment
3. Proof of income

For Foreigners, the documents needed are a little different:

1. Passport
2. Work pass
3. Proof of residential address (tenancy agreement, telephone bill, etc.)
4. Last three months’ pay slips

Ditto for business loans, where you’ll need:

1. Company’s business profile (BizFile) from ACRA
2. Last six months’ bank statements
3. NRICs of major shareholders and directors
4. Tenancy agreement of physical office/shop
5. Latest income tax assessment of company’s major shareholders and directors
6. Credit report of major shareholders and directors from the CBS
7. Latest financial statements and business contracts

Are you ready to apply for your loan now?

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What should I do after being granted a loan by a private money lender in Singapore?

1. Ensure that 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 amount.
2. Pay the loan instalments on time to avoid incurring late payment fees and late interest.
3. Make sure the money lender issues a receipt every time you make any repayment towards your loan, and check that all the details are correct (name, repayment amount, date, etc.).
4. 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 (name, loan amount, date, etc.).
5. Be sure to retain all statements of accounts and receipts of payments as documentation and evidence of payment.

What can licensed money lenders do if I don’t repay my loan?

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. These include: harassing borrowers with multiple SMS/calls, making multiple calls to the borrower’s home and office, causing distress to the borrower’s 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 find that the licensed money lender you’ve engaged is resorting to such tactics.

Do you need a loan with a good licensed money lender in Singapore?

MM Credit is one licensed money lender in Singapore that offers a wide variety of loans at competitive rates. Furthermore, applying for a loan with us is quick and easy. Simply fill up this contact form and our experienced loan officers will get back to you with a personalised quote as soon as possible.

Contact us today.