Legal Licensed Money Lenders in Singapore 2023
The Most Comprehensive Guide
- Rose RT
- March 4, 2023
- 12 min read
No matter how much you earn, there may be times when you need financial help. Sometimes, we might need a leg up in finances for personal reasons, business expenses, medical costs, or for our children’s education.
In the past, some people may have had some reservations about borrowing from a licensed money lender. This was mainly due to misconceptions they might have about legal money lenders.
Who are licensed money lenders in Singapore?
Let us clear a common misconception – an approved money lender in Singapore is NOT a loan shark. Every legal money lender in Singapore has undergone a strict qualification process to obtain a money lender license.
A legal money lender is a business that has been authorised and licensed by the government to lend money to members of the public. Each authorised licensed money lender is under constant scrutiny to abide by the Moneylenders Act.
Today, everyone from business owners to middle-class housewives to struggling domestic workers take loans from money lenders in Singapore.
There is no need to feel embarrassed if you need to borrow money from private money lenders. You are joining thousands of your relatives, colleagues, friends, and neighbours who have done the same thing.
Where can I find a list of licensed money lenders in Singapore?
You can find an updated list of licensed money lenders on the Ministry of Law’s Licensed Money Lender registry. If the money lender you are approaching is not on this list, beware – they could be illegal.
Should you choose a bank or licensed money lenders?
When most people think of getting a loan, their first instinct is to approach a bank. Banks have been around all our lives and they have good reputations as well as very large reserves of cash. To the ordinary person, licensed money lenders may not seem like an option.
In truth, a licensed money lender can offer terms and deals that are attractive to the borrower. Hence, some borrowers turn to a money lender if they cannot qualify for a bank loan.
Here are some differences between applying for a loan with a bank versus a licensed money lender:
| Banks | Licensed money lenders | |
|---|---|---|
| Eligibility criteria |
Strict
|
Less strict
|
| Documents required | Extensive documents required | Minimal documents required |
| Loan approval time | Up to 2 weeks | Less than 30 minutes |
| Disbursement | To a bank account | To a bank account or in cash |
| How to apply | Online or at a branch office | Walk-in to the office or online application (in-person verification is still required by law) |
| Maximum loan | Up to 10 times monthly income | Up to 6 times monthly income |
| Repayment period? (Personal loan) |
Up to 5 years | Up to 2 years |
| Interest rate | 3.5-11% per annum | 1-4% per month |
| Processing fee | 6.5-20% per annum | Up to 10% of the loan amount |
In short, why should you borrow from a Singapore money lender?
EASY ELIGIBILITY
Lenient eligibility criteria mean that almost anyone can qualify
SIMPLE PROCESS
Easy to apply with few documents required
FAST APPROVAL
An instant money lender can approve a loan within 30 minutes
IMMEDIATE CASH
The loan can be disbursed to you in cash immediately after approval
How do I find legal money lenders near me?
How do I identify an illegal money lender in Singapore?
They do not have an office. Instead, they would ask to meet in public places.
They advertise their services on SMS, WhatsApp, WeChat, Facebook, or email
They ask for your SingPass or other login credentials as well as the passwords
They keep your original NRIC, FIN card, or passport
They ask you to sign an incomplete loan contract or do not give one at all
If, at any point, you feel uncomfortable with the process or the lender, do not sign anything.
What are the interest rates and fees if you take a loan with a private money lender in Singapore?
An authorised money lender in Singapore has to operate according to strict guidelines, which are listed on the Ministry of Law website. Here is the summary:
1. Licensed money lender Singapore interest rate
Private money lenders’ interest rates are capped at 4% per month. The best licensed money lender in Singapore may offer lower interest rates as a promotion but they cannot exceed that limit, regardless of the type of loan.
2. How do licensed money lenders calculate interest – the reducing balance method
A personal loan money lender in Singapore is only allowed to charge interest on the outstanding amount of a loan. As the borrower pays off the loan, the amount of interest charged falls. This is known as the reducing balance method of calculating interest
To illustrate this, let us consider a $10,000 loan with an interest rate of 4% per month. This is how the payments are calculated over 6 months if the borrower pays every instalment on time.
| Month | Balance | Interest (4% of the previous month’s balance) |
Principal | Instalment Amount (Interest + Principal) |
|---|---|---|---|---|
| 0 | $10,000.00 | $- | $- | $- |
| 1 | $8,492.38 | $400.00 | $1,507.62 | $1,907.62 |
| 2 | $6,924.46 | $399.70 | $1,567.92 | $1,907.62 |
| 3 | $5,293.81 | $276.80 | $1,630.64 | $1,907.62 |
| 4 | $3,597.95 | $211.75 | $1,695.87 | $1,907.62 |
| 5 | $1,834.24 | $143.92 | $1,763.70 | $ 1,907.62 |
| 6 | $0 | $73.37 | $1,834.24 | $ 1,907.62 |
Lenders also charge a late interest on late payments, up to 4% a month. This interest can only be charged on the overdue amount.
For example, if a borrower is loaned $10,000 for 6 months and misses the first payment of $1,907.62. The late interest is charged on the $1,907.62 that is due, and not on the remaining total instalments amount of $9,538.10 that isn’t due for repayment yet.
3. Other fees and charges
Finding the best money lender with low interest rates in Chinatown?
Negotiating terms with the best licensed money lender
Licensed money lenders are not as rigid as banks when discussing the terms of a loan. When you meet a lender, ask for the best deal possible, as well as clauses.
These are the loan terms you should try to negotiate:
1. Interest rate
Dependent on your creditworthiness and repayment history
2. Repayment period
Try to get the maximum of two- year repayment period if your budget is tight
3. Penalties
Lenient penalties will let you absorb small missteps and still pay your debts
4. Instalment due date
Schedule it for payday or just after so you will have the cash needed
5. Repayment channels
Depending on your need, you may ask for loan disbursement in cash, bank transfer, PayNow, or another mutually agreed method
Here are some other tips to note before you apply for a loan.
Sometimes, the type of loan you apply for can affect these conditions. Soon Seng Credit offers a range of loans to suit a variety of purposes:
How to apply for a loan with the best money lender in Singapore
So, you are ready to apply for a loan from the best money lender in Singapore. Before you do, here’s what you need to take note of:
Eligibility
- ID proof (NRIC, Work pass for foreigners)
- Proof of income (CPF contribution statements, IRAS NOA, bank statements, latest 3 months’ payslips)
- Proof of address for foreigners (utility bills, rental agreement).
- Being sued for bankruptcy
- Currently under or applying for bankruptcy
- Currently under or applying for DRS
- Have recent litigations with banks or licensed money lenders
- Have outstanding defaulted loans
Nationality and income eligibility
Your nationality and income affect the maximum loan principal you can get. Here are the loan limits:
| Annual income | Singapore Citizens and PRs | Foreigners living in Singapore |
|---|---|---|
| Less than $10,000 | $3,000 | $500 |
| $10,000 – less than $20,000 | $3,000 | $3,000 |
| At least $20,000 | 6 times monthly income | 6 times monthly income |
Loan application process
Every good Singapore online money lender has a website. This means that the best online money lenders are available for applications 24/7. However, this does not mean that there are 24-hour money lenders in Singapore.
Licensed money lenders still operate within stipulated office hours, but rest assured they will get back to you usually within one working day after receiving your loan application. Any money lender that claims to be a 24 hours money lender is likely illegal.
HERE ARE THE STEPS TO APPLY FOR A LOAN:
2. Walk into the money lender’s office to apply or submit your application online via the money lender’s website.
3. For borrowers who applied online, if you qualify, the loan officer will call you within one working day and schedule an appointment with you at their office for a face-to-face verification. This is a necessary step that could not be skipped. For those who walked in to apply, the verification can be done on the day of application.
6. The loan officer will explain the terms of the loan contract to you. Make sure you understand them. Once you are good with the terms, you can sign the contract.
7. You will then receive the loan amount immediately via cash or bank transfer or another mutually agreed transfer method.
How to settle licensed money lender loans
Once you have signed on the dotted line and received your loan principal, you have also gained responsibility. All borrowers should follow these guidelines when repaying a loan:
By paying all the instalments on time, you will strengthen your credit history while enjoying the convenience of a loan.
What if you are unable to pay money lenders in Singapore?
If the loan is not repaid even after the due date in the LOD, the lender may send debt collectors to the debtor’s home or office. Debt collectors are only allowed to request payment. They are prohibited from using intimidation and harassment, issuing threats and violence.
How to deal with licensed money lender harassment?
No money lender or their outsourced debt collectors are allowed to confiscate belongings as ‘collateral’ until the debt is paid. They also cannot vandalise or damage a debtor’s home or possessions.
If you believe they are acting illegally, make a formal complaint to the Registry of Moneylenders online or call them at 1800-2255-529. You may also contact the police to report any illegal or threatening behaviour.
Keen to take a loan from the top licensed money lender in Singapore?
At Soon Seng Credit, we understand that you may be facing a difficult period in your life. We offer complete privacy, 100% confidentiality, and an understanding, empathetic team of loan officers.
Let us help you get past this minor bump in the road and achieve the dreams that you were meant to.
