Legal Licensed Money Lenders in Singapore 2022

Most Comprehensive Guide

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 exactly 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 in this list, beware – they could be illegal in this case.

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 for 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:

 BanksLicensed money lenders
Eligibility criteria

Strict:

  • No bad credit history
  • Stable income
  • Salary >$20,000 a year

Less strict:

  • Bad credit history can apply
  • As long able to proof source of income
Documents requiredExtensive documents requiredMinimal documents required
Loan approval timeUp to 2 weeksLess than 30 minutes
DisbursementTo bank accountBank account or cash
How to applyOnline or at branch office
  • Online application, but must visit office for final approval
  • Walk-in apply
Maximum loanUp to 10 times monthly incomeUp to 6 times monthly income
Repayment period? (Personal loan)Up to 5 yearsUp to 2 years
Interest rate3.5-11% per annum1-4% per month
Processing fee6.5-20% per annumUp to 10% of loan amount

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In short, why should you borrow from a SG money lender?

  1. Easy eligibility – Lenient eligibility criteria mean that almost anyone can qualify
  2. Simple process – Easy to apply with few documents required
  3. Fast approval – A instant money lender can approve a loan within 30 minutes
  4. Immediate cash – Loan can be disbursed to you in cash immediately after approval

How do I find legal money lenders near me?

All registered reliable money lenders can be found online. One simple way to find the best licensed money lender near you is to use Google Maps and search “licensed money lenders near me”. Take the time to compare the money lenders’ Google ratings. It’s important to read licensed money lenders in Singapore reviews before you contact any lender.

Remember, a Google rating is no guarantee that the business is legitimate. Cross-check the business’s details with the Registry of Moneylenders for official addresses and contact details.

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How do I identify an illegal money lender in Singapore?

Loan sharks are getting more sophisticated but here are some ways to identify them:

  • They are not registered on the Ministry of Law website.
  • They do not have a lender business address (and meet with you in public places)
  • They advertise their services on SMS, WhatsApp, WeChat, Facebook, or email

Sometimes, the signs only become obvious when they are processing your loan application:

  • They ask for your SingPass and other login credentials
  • They keep your 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 are the summary:

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.

How do licensed money lenders calculate interest – 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 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.

MonthBalance Interest (4% of previous month’s balance)PrincipalInstalment 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 late interests 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 and misses the first payment of $1,000. The late interest is charged on the $1,000 that is due, and not on the $9,000 that isn’t due for repayment yet.

Other fees and charges

A licensed money lender can charge processing fees and impose limited penalties:

  • Loan processing fees – cannot exceed 10% of the loan principal granted
  • Licensed money lender late payment fees – cannot exceed $60 per month
  • Legal costs ordered by the court for a successful claim for the recovery of the loan (if the borrower defaults on the loan)
  • Total charges – the combined value of processing fees, loan interests, late interests, and late fees cannot exceed the loan principal

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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 salary and repayment history with other lenders
  2. Repayment period – Try to get the maximum of 1 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 – A cash-only policy is difficult as you will need to visit the lender; ask for direct bank transfer or PayNow options

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:

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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 SG. Before you do, here’s what you need to take note of:

Eligibility

  • Nationality – Singaporeans, PRs and foreigners are all eligible for loans, provided they satisfy the income threshold
  • Documents required
    • ID proof (NRIC, FIN, or passport)
    • Proof of income (CPF contribution statements, IRAS NOA, bank statements, latest 3 months’ payslips)
    • Proof of address for foreigners (utility bills, rental agreement).
    • Work pass (for foreigners)
  • Credit history – if you are undergoing the following, your application will not be approved:
    • Currently declared bankrupt
    • Being sued for bankruptcy
    • Applying for bankruptcy
    • Applying for DRS
    • Have recent litigations with banks or licensed money lenders
    • Have outstanding defaulted loans

Nationality and income eligibility

Your nationality and income affects the maximum loan principal you can get. Here are the loan limits:

Annual incomeSingapore Citizens and PRsForeigners living in Singapore
Less than $10,000$3,000$500
$10,000 – less than $20,000$3,000$3,000
At least $20,0006 times monthly income6 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 hours 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:

  1. Check if you meet the loan requirements.
  2. Walk in the money lender’s office to apply or submit your application online on 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 interview. For those who walked in to apply, the interview can be done on the day of application.
  4. At the money lender’s office, the loan officer will verify your CPF and IRAS information and conduct a credit assessment.
  5. If you meet all the criteria, the loan officer will discuss with you the loan amount and repayment terms. Your loan can be approved in less than 30 minutes.
  6. The loan officer will explain the terms in the loan contract to you. Make sure you understand them. Once you are ok with the terms, you can sign the contract.
  7. You will then receive the loan amount immediate via cash or bank transfer.

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How to settle licensed money lender loans

Once you have signed on the dotted line and received your loan principal, you have also gained a responsibility. All borrowers should follow these guidelines when repaying a loan:

  • Borrow only what you can afford to repay.
  • Read the contract. Know the instalments due on the exact dates and the penalties.
  • Read the legal guidelines. Don’t let carelessness or ignorance cost you money.
  • Make repayment your priority ahead of all casual expenses.
  • Ask for receipts when you make payments and take screenshots of online transactions.
  • Do NOT turn to illegal money lenders!

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, despite your best efforts, you are unable to pay off your loan, the licensed money lender has a set procedure to follow.

  1. The lender will send a Letter of Demand (LOD) to the debtor’s home or office. This document contains the details of the loan, the outstanding amount, a list of additional fees and charges, and other relevant information. It will state a due date before further steps are taken.
  2. 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, most of all, any violence.
  3. The final step that a money lender can take is to bring formal court proceedings against the debtor.

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.

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