Best Licensed Moneylenders: Guide to Borrowing Personal Loans From Legal Moneylenders (Singapore)

Are you looking for a list of the best licensed moneylenders in Singapore?

Singapore is among the most expensive countries in the world, so it’s no wonder you may be strapped for cash. With inflation and the high cost of living, we often find ourselves in a financial pinch.

Renovating your home, purchasing a car, and paying for your studies are worth a king’s ransom in Singapore. To pay for these, you might need the help of a personal loan or a renovation loan.

What can you do to ease your financial burdens? 

The solution is choosing the right moneylender.

Wait, are there other options aside from banks? What if I have a poor credit score, or that I need a personal loan fast?

Well, there is a solution. In Singapore, other than banks, borrowers can consider getting a personal loan from licensed moneylenders. These licensed moneylenders are unlike loan sharks. They are private financial institutions that are mandated by the Ministry of Law. They help to provide another option for individuals with financial difficulties. 

If you’re unfamiliar with loan packages and their terms, you’re on the right page. We don’t want to be cheated or fall prey to a loan scam. 

In this guide to borrowing, we’ll explain the factors to consider, how much you can borrow, and the legal documents needed. We’ll also tell you about licensed moneylenders’ maximum allowed fees, how to avoid loan sharks, and what organisations can help with your financial difficulties.

Let’s get started!

What Do You Need To Do Before Borrowing From A Licensed Moneylender? 

MinLaw advises people to consider several factors before taking up a loan that can be summed up in two main categories:

• All the alternatives: potential government schemes for which you qualify and different moneylenders that offer favourable financial packages
• The conditions: make sure you understand the contract and that you can repay your installments according to schedule

These factors ensure you’re getting a fair loan, but let’s see how you can get the right loan:

Decide On The Type Of Loan You Need

Before applying for a personal loan in Singapore, you need to understand the differences between a secured and an unsecured loan.

There are different types of loans you can get, and although the legal slang can be confusing, it’s worth the effort to decipher it. You can’t pick the right option without genuinely understanding your alternatives.

• Secured loans: You guarantee your loan with collateral. This choice ensures access to more significant amounts and lower interest rates, though there’s always the risk of losing your collateral. Examples of collateral include a house, a car or any valuable asset you own. 
• Unsecured loans: You do not need to provide any collateral. How much you can borrow depends on your monthly income. For some, they can borrow up to six times of their monthly earnings. 

Other specific loans can be included in these two categories, such as:

• Personal loans
• Urgent cash loans
• Car loans
• Home loans
• Renovation loans
• Transfer loans
• Payday loans
• Line of credit
• Balance transfer
• Wedding loans
• Personal installment loans
• And so forth

All the options above are usually amassed under the name of personal loans, though they have different characteristics.

For instance, you can use personal installment loans for anything you want – a holiday, a wedding, or even a Secretlab chair.

Now let’s say you need that money to renovate your apartment. In this case, a renovation loan could be better because it usually features lower interest rates. However, the money will go directly to your contractor, and it doesn’t cover certain things, such as that new Aeron.

So the personal installment loan option is better for versatility, whereas the customised renovation loan is best if you want a more affordable option.

What Is A Credit Score And How Will It Affect Your Loan Application?

A credit score affects loan applications because it’s a number that quantifies your financial trustworthiness.

Your credit rating is based on your past financial transactions, purchasing habits, and previous loans. So basically, if you don’t have bad debt or erratic purchasing patterns, chances are your credit score is high.

But it doesn’t hurt to check it at Credit Bureau Singapore.

When you apply for a personal loan with a licensed moneylender, the professionals will be able to check on your credit score as well.

Oftentimes, those with a higher or good credit score can borrow a larger loan amount. The better score reflects their reliability and loan repayment ability.

For those with a bad credit score, it might be harder for them to get a loan from banks.

However, as mentioned at the start of the article, licensed moneylenders are here to provide individuals with an alternative to banks. Licensed moneylenders are a lot more lenient than banks when it comes to personal loan applications. 

In short, most legal moneylenders in Singapore put less emphasis on your credit score compared to banks, but they want to see your dependability.

To improve your credit score, start paying your old bills and debt to show them you’re a financially responsible person.

How Much Can You Borrow From A Licensed Moneylender In Singapore? 

The Ministry of Law established the following maximum amounts that you can borrow from a licensed moneylender in Singapore.

Most moneylenders will stick to these guidelines, but some financial institutions may impose additional conditions. That’s usually the case with banks, which set a minimum threshold of $30,000/year income or a specific age between 21-65 years.

Prepare These Documents Before Visiting The Moneylender’s Office

• Proof of identity: If you’re a citizen, have your Identification card. If you’re a permanent resident or foreigner, get your Employment Pass and passport ready.
• Proof of address: Documents that attest to your residential address include utility bills with your name, rental agreements, letters addressed to you, etc.
• Proof of income: 3-month computerised payslips/ 12-month CPF statement/ Last Income Tax Notice of Assessment/ bank statement

Let’s say you’ve changed jobs recently and your current salary is smaller than the one before. In this case, it’s better to add your past 12-month CPF statement.

If you have additional income sources apart from your employment (e.g., renting properties, investments, or divorce settlements), include your NOA.

Is There A Cap On The Costs Licensed Moneylenders Can Charge? How Much Can Licensed Moneylenders Charge?

Many people in Singapore are wary about getting a personal loan from a moneylender because they’re afraid they’ll be ripped off. Many of the stories you’ve heard through the grapevine are myths or refer to loan sharks.

But we’ll deal with loan scams below.

For now, let’s see how much a licensed moneylender can charge so that you can avoid falling to loan sharks. Once you get entangled with loan sharks, you won’t be able to get any peace at all! 

We’ll use MinLaw as our source:

Interest Rates

Starting in October 2015, licensed moneylenders can’t ask for over 4%/month interest rates.

This threshold doesn’t depend on your income or the secured/unsecured nature of your loan. So, if a financial provider claims you should pay more interest because your income is small, that’s probably a loan shark. Or a licensed moneylender who’s trying to commit fraud.

The 4%/month interest rate applies for late interest too.

Here’s an example:

You took a $10,000 loan with a $300 monthly installment and a 4% interest rate. You’ve repaid $7,000 of that loan. Thus, the remaining 4% interest rate is calculated from the remaining $3,000, not from the entire sum.

Let’s say that you can’t repay that $300 this month. The late interest rate can only be charged on that $300, not on the whole $3,000 that you have left. So, the late interest rate is $12, not $120.

Additional Fees

Licensed moneylenders in Singapore can charge the following fees:

• $60/month maximum late repayment fee
• 10% inititial fee for an administrative fee after you receive the loan. Only loan sharks will ask for payment before disbursing the loan. They’ll claim that they need to check on the authenticity of your bank account or that it is a compulsory fee. It’s all a scam.
• Legal costs decided by a court in case of any proceedings in case of loan default

Pro tip: Interest rates + late interest + late repayment fees + administrative charges should not be more than the value of your loan.

For example, if you borrowed $5,000, these charges and rates should be less than $5,000.

How Do I Know If I’m Dealing With A Licensed Moneylender Or A Loan Scam? 

Falling for a loan scam is probably the greatest fear for most.

In the section above, we promised that we’d explain more about loan scams. We’ll take you through some dead giveaways that point to Ah Longs and how you can avoid them.

Refer And Check The Ministry Of Law’s List Of Licensed Moneylenders 

MinLaw lists all legal moneylenders operating in Singapore, which you can find on their website. Always check a company’s name on this register to ensure your financial provider is licensed. This list of licensed moneylenders is updated monthly. 

Remember:

• Some loan sharks have very compelling and professional-looking websites. Don’t take their word for it, even if these websites claim the Ah Longs are licensed.
• Don’t trust financial providers who claim MinLaw’s list is incomplete or mistaken. MinLaw updates every month. 
• Contact the Registry of Moneylenders at 1800-2255-529 or the police if you have significant doubts about a certain moneylender.

Look Out For The Form Of Advertisement By The Moneylender

MinLaw decided in 2011 that licensed moneylenders can advertise their activity on limited channels:

• Business directories
• Consumer directories
• Their websites
• Their physical business premises (walls, windows, doors, hallways, etc.)

It’s a scam if it is: A flyer, text message (SMS), WhatsApp message, or e-mail from supposedly legal moneylenders should set your alarm bells ringing.

In this case, you should contact the Registry of Moneylenders or make your report through the MinLaw website here.

Check The Interest Rate And Fees Offered By The Moneylender 

In the previous section, we outlined the main rules regarding moneylender’s interest rates and charges. Here’s a quick reminder:

• Maximum 4% interest rate/month calculated from the remaining amount, not from the entire initial sum
• Maximum 4% late interest rate/month of being late calculated from that month’s installment
• Maximum $60 late fee/month
• Maximum 10% admin fee after loan approval. Loan sharks may demand a sum before loan approval as a condition to facilitate your loan or to lend you more money

Also, these sums can’t amount to more than what you’re borrowing.

Check If The Licensed Moneylender Has A Physical Address

Illegal moneylenders don’t have physical addresses because that way, the police could pinpoint them quickly. Instead, they may approach you in a parking lot, a park or even outside your bank.

Ah Longs will try to close the deal in an e-mail or a shady place. Depending on your loan amount, some can ask you to a fancy restaurant.

Remember: Authorised moneylenders are obligated to do due diligence at their headquarters before signing the loan contract, although you can apply on their website. Loans can only be disbursed after meeting you.

Licensed Moneylenders Will Ask You For A Face-To-Face Verification 

This face-to-face verification is essential and obligatory before loan approval.

However, to save time and speed up the process, many licensed moneylenders allow you to submit your paperwork and application online.

Remember: After approving your loan request and before transferring you the cash, the moneylender must do face-to-face verification at their headquarters.

What Should You Take Note Of When Dealing With A Licensed Moneylender? 

Even licensed moneylenders can use illegal practices sometimes. Be wary and report the following behaviours:

• Threats
• Abusive language
• Physical assault
• Asking to withhold your ID
• Asking you to disclose your Singpass or bank account passwords
• Asking to use your credit card
• Not explaining your contract
• Asking you to sign blank or incomplete contracts
• Avoiding due diligence
• Asking for extra charges and interest than the legally established ones

If anything like this happens to you, contact the Police and the Registry of Moneylenders.

So, What Should You Do When Your Loan Has Been Approved? 

After your loan has been approved, make sure:

• The licensed moneylender hasn’t charged more than 10% for the admin fee.
• You are given and keep all the documents:
  • Contract
  • Receipts each time you pay an installment
  • Statement of account
  • Copies of all these documents
• You reimburse the installments according to the agreed schedule to avoid snowballing interest.

What Should You Do If You Are Unable To Repay Your Loan? 

If you can’t repay your debt, the licensed moneylender can employ a debt collection agency. Unfortunately, Singapore laws don’t currently regulate these agencies’ activity, although violent practices and harassment are prohibited.

To avoid going down this road, try the following solutions first:

Speak To Them And Request For An Extension 

Honesty is the best policy because it reflects your dependability.

You can negotiate an extension directly with your credit provider. Usually, licensed moneylenders are more lenient and will listen to your story. In fact, most borrowers have shared that these lenders will come up with a new loan repayment plan that meets their needs.

Explain your situation and come up with a repayment plan for more success. Also, include documents that prove why you’ve had a hard time repaying your debt and how you’re planning to correct this in the future.

File For Bankruptcy 

If you owe over $15,000 and can’t reimburse this amount even after restructuring your debt, the alternative is filing for bankruptcy. That way, you won’t be charged any more interest, and your moneylender can’t take you to court.

However, filing for bankruptcy reflects poorly on your credit rating, preventing you from obtaining new loans.

Instead, here’s what you can try.

Here Are Some Organisations That Might Be Able To Help You:

Credit Counselling Singapore (CCS)

CCS is a local NGO that offers free financial counselling. They’ll empower you with customised debt management plans, budget planning skills, and financial literacy. CCS agents can negotiate with your moneylender on your behalf and help you restructure your debt.

Registry of Moneylenders (MinLaw)

MinLaw regulates moneylender’s activity. Make sure your financial provider is listed on their website and read through their FAQ for more information.

Credit Collection Association of Singapore (CCAS)

CCAS offers professional help in the case of a legal dispute with your moneylender.

National Council on Problem Gambling (NCPG)

Have you seen the advertisement where a scruffy dad asks his daughter for her piggybank to gamble? 

If your gambling addiction is determining or aggravating your debt problems, seek help at NCPG. You’re not alone. You’ll find out how to manage your gambling problems so that you can consequently recover financially.

Credit Association of Singapore (CAS)

CAS is the licensed moneylenders’ association. They’ll assist you with valuable info regarding moneylenders, types of loans, and conditions.

ComCare (MSF)

ComCare assists people from low-income backgrounds through:

• Resources and publications
• Short to medium-term assistance
• Public assistance for people who can’t work
• Student care, childcare, and kindergarten subsidies
• Urgent financial assistance

In Conclusion

Many Singaporeans face financial difficulties. If that happens to you, wage your options carefully and select the right personal loan for your needs. If you’re looking for personal loan options, you can consider these top-rated licensed moneylenders here.

Remember to assess all the alternatives. Check several moneylenders’ websites and shortlist fitting financial packages according to your needs.

If you have difficulty obtaining or reimbursing your loan, steer clear from loan sharks. Instead, ask for professional assistance from the best and most reliable financial institutions. Submitting a loan query is completely free!