In Singapore, you can get loans from many different types of financial institutions to help you solve your financial problems for the short term. These financial institutions include banks and legal money lenders in Singapore.
Legal lenders are credit companies legally authorised to lend money to Singaporeans, Permanent Residents, and foreigners working in Singapore. They are licensed and regulated by the Ministry of Law, and they have to adhere strictly to the MinLaw guidelines in their business processes.
These private lenders are not loan sharks or illegal money lenders, though myths surrounding legitimate money lenders are aplenty.
Intrigued? Here are some ways you can differentiate between licensed and unlicensed money lenders. It pays to know how to verify a money lender’s licence thoroughly and how to check a money lender’s licence quickly — you’d never want to be dealing with someone from the wrong side.
Should all licensed lenders have a valid money lender licence?
Yes. All licensed lenders must have a valid money lender licence in order to conduct the business of moneylending in Singapore. They have to renew their money lender licence at least one month before their licence expires.
In case you’re curious, whether or not the renewal or a money lender’s licence is approved, is highly dependent on the lender’s conduct!
How to check a money lender’s licence thoroughly?
Step 1: Double-check (or triple-check) the lender’s name, contact number and office address to ensure they tally with the information found in the Ministry of Law’s official list of authorised lenders.
Step 2: Visit the money lender’s office and ask to see their money lender licence.
Step 3: Compare their money lender licence number against the information found in the Ministry of Law’s list of licensed lenders — ensure it’s the same before proceeding further!
9 things to know about lenders with a valid money lender’s licence
1. Interest rates offered by legitimate money lenders are regulated
Although licensed lenders often charge higher interest rates compared to banks, this is because they allow individuals with bad credit scores to take a loan with them (unlike banks). This increases the risk for licensed lenders. With that, many borrowers compare secured loans and unsecured loans to figure out which is the better choice. There’s no right or wrong here, but in the case of a licensed lender, they mostly offer unsecured loans — these do not require you to pledge collateral.
However, licensed lenders are not legally allowed to charge interest rates that are higher than 4% per month. Their interest rates usually range between 1-4% monthly, so if any money lender quotes you a higher rate, you are likely dealing with an illegal money lender.
2. Licensed lenders are registered with the Registry of Moneylenders’ database
Unlicensed money lenders are still on the rise despite efforts by the Singapore Police Force (SPF) to curb illegal money lenders. They can easily masquerade as authentic ones by displaying fake registration numbers which can misguide you if you’re not cautious enough.
However, it is not difficult to verify if a money lender is licensed. All licensed lenders have to be registered with the Registry of Moneylenders under the Ministry of Law.
To confirm if the money lender you are dealing with is licensed, simply check against the registered list of licensed money lenders to verify. If the money lender is not on this list, it is likely unlicensed.
You should also call the landline displayed on the list to ensure that the money lender you are dealing with is indeed the money lender listed and not an illegal one pretending to be one. Make sure to check their money lender licence thoroughly as listed in the steps illustrated above!
3. Authorised lenders have a physical office with their money lender licence certificate displayed
Before taking a loan from any money lender, you should also visit their physical premises to validate the authenticity of their registered office address.
Their money lender licence certificate should be displayed prominently in their office as well.
Ask as many questions as possible before taking a loan from the money lender, and visit their corporate website to find out more about their loans. Don’t forget to check their Google reviews as well.
Some unlicensed money lenders use fake registration numbers, office addresses, and even business names of licensed money lenders without their approval. It pays to always do your checks and verification before taking any loan.
4. Licensed lenders must adhere to data privacy laws
All licensed lenders in Singapore are required to adhere to the Personal Data Protection Act (PDPA).
They will not retain your personal documents like your original NRIC, ATM card, SingPass user ID, and password, and will never get your signature on blank or incomplete documents. If a money lender requests for you to tell them your SingPass login details, for example, beware as they probably are unlicensed.
5. Licensed lenders cannot solicit loans through illegal means
Unlicensed money lenders will use various methods to solicit new clients, such as via SMS, WhatsApp, Telegram, phone calls, or on social media platforms, which licensed lenders are not allowed to do.
Licensed lenders are only allowed to advertise through three channels:
- Business or consumer directories in print and online media
- Websites that belong to the money lender
- Advertisements placed within or on the exterior of the money lender’s office
6. Licensed lenders must provide clear loan terms in legal loan contracts
Licensed lenders will not have any hidden clauses in their loan contracts as there is transparency in their application processes. According to the Registry of Moneylenders, authorised lenders are required to state all terms and charges upfront.
Their loan contracts will clearly state the repayment terms and period, the interest rate, the loan quantum, the loan period, and other fees, if any. Should any of this crucial information be missing, do clarify it with the loan officer and ensure that it is clearly reprinted in the amended loan contract before you sign.
If any loan terms are still vague, unsatisfactory, or missing from the loan contract, it is best not to sign it — you are free to look for another licensed lender.
7. Loan officers from licensed lenders are not allowed to intimidate or harass customers
Loan executives at licensed lenders are obliged to follow a strict code of conduct at all times, even during debt recovery. They are strongly prohibited from engaging in unprofessional, anti-social, or intimidating behaviour.
Illegal money lenders, on the other hand, are usually intimidating and may even use foul language. They also tend to display pushy behaviour aimed at pressuring you to fall into their trap.
8. Licensed lenders have flexible repayment schedules
Most money lenders can provide you with the loan you need, but make sure you discuss the payment terms first. It would be wise to choose a licensed lender who offers flexible repayment schedules from as little as less than a month (for a payday loan) up to 24 months. Take note that a 12-month loan tenure is more commonly offered than a 24-month tenure.
Before signing any contract, check on the repayment terms, interest rates, and other terms to make sure they are all agreeable to you.
9. Some authorised lenders offer one-stop loan services
You should select a licensed lender like Soon Seng Credit who can provide a one-stop service for all your loan needs, for instance, renovation loans, personal loans, educational loans, business loans, and debt consolidation loans.
That way, you don’t need to apply for different loans with different money lenders, which can be tough to juggle.
Apply for the best personal loan with the most reliable money lender with money lender licence in Chinatown
Now that you’ve learned the ways on how to check a licensed money lender’s licence and legitimacy, put your knowledge to good use whenever you find yourself in need of a loan.
Soon Seng Credit is an established licensed money lender located just 2-minute walk from Chinatown MRT station, where you’ll also find plenty of landmarks and activities in the Chinatown area.
We’re one of the top money lenders in Chinatown for good reason. We have stellar reviews on Google and we always do our best to cater to our borrowers’ needs with flexible loan terms and competitive interest rates. Needless to say, we have a valid money lender licence. If you’re keen on getting a loan, feel free to reach out to us for any loan enquiry or simply submit a loan application!
Get a legal personal loan with a reliable money lender today.
