Your Guide to Getting a Loan from a Licensed Moneylender

Dice with the letters L.O.A.N on top of a document with the word ‘APPROVED’ stamped on it to indicate the concept of a loan approval

Without the right know-how, getting a loan from a legal moneylender in Singapore can be a tricky affair. In this guide, we walk you through how to identify licensed moneylenders, what they can and cannot do, how they compare with banks, and more. Read on for a complete guide to borrowing from a legal moneylender in Singapore.

THIS GUIDE COVERS:

How to identify licensed moneylenders in Singapore

A licensed moneylender is a registered loan company that conducts legal money lending with borrowers. It is authorised, licensed, and regulated by the Ministry of Law. Governed by the Moneylenders Act, there are strict rules and regulations that licensed moneylenders have to abide by.

man checking loan rate of money lenders

If you’re looking to get a quick cash loan to tide you through an urgent period, a licensed moneylender can help. In fact, licensed moneylenders are very inclusive — they aim to help anyone who needs to get a loan fast with minimal hassle, even if you have a bad credit history and have been rejected for bank loans in the past. 

To check whether a moneylender is licensed, all you have to do is access MinLaw’s list of licensed moneylenders in Singapore. The list is periodically updated to show which moneylenders are in operation, as well as the ones that have been suspended. 

As of the time of writing, there are 154 licensed moneylenders in Singapore. The Ministry of Law has the authority to suspend moneylender licenses as it deems fit.

The following is a set of activities that licensed moneylenders may engage in.

01

Advertise, but not wherever they want

Licensed moneylenders are only allowed to advertise via their websites, at their business premises (interior and exterior), or in business or consumer directories (in print or online media).

02

Charge an interest rate of up to 4% per month

The maximum rate of interest a licensed moneylender may charge in Singapore is capped at 4% per month. This holds regardless of the borrower’s income and whether the loan is an unsecured or secured one.

Similarly, the maximum late interest payment fee that moneylenders are permitted to charge is capped at 4% per month if the borrower fails to make the payments on time. The late interest can only be charged on the amount repaid late. The moneylender cannot levy late interest on outstanding amounts that aren’t yet due to be repaid. For instance, if you borrow $2,000 and repay $1,000, the late non-payment fees can only be charged on the remaining $1,000.

03

Charge late fees and administrative fees (capped)

A licensed moneylender’s late payment comes with a fee. All licensed moneylenders are allowed to impose:

a fee ≤ $60 for each month of late repayment;

a fee ≤ 10% of the principal of the loan when a loan is granted; and

legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

The total charges imposed by a licensed moneylender — such as interest, late interest, upfront administrative, and late fees — cannot exceed an amount equivalent to the principal of the loan i.e. if you borrowed $2,000, the total of the late repayment fee, the processing fee, and the legal costs claimable by the moneylender cannot exceed $2,000.

04

Offer loans to borrowers with a steady income

The maximum loan amount you can get for an unsecured loan is dependent on your annual income. Accordingly, you can get:

Up to 6 times your monthly income, if you earn at least $20,000 per year (Singaporeans, Permanent Residents, and Foreigners)

Up to $3,000, if you earn less than $20,000 per year (Singaporeans and Permanent Residents)

Up to $3,000, if you earn at least $10,000, but less than $20,000 per year (Foreigners)

Up to $500, if you earn less than $10,000 per year (Foreigners)

Secured loans typically come with a cap on how much you’re allowed to borrow, depending on the value of your collateral, e.g. your home or car.

According to the latest property cooling measures, if you are getting a home loan where the Option to Purchase is granted on or after 16 December 2021, your Total Debt Servicing Ratio (TDSR) has to be ≤ 55% for the purchase of properties. This metric takes into account all your existing debt obligations, such as a car loan and other secured and unsecured loans.

MinLaw regularly updates licensed moneylenders’ rules on their page on borrowing from licensed money lenders, so check it out for more up-to-date details.

05

Offer borrowers flexible repayment schedules

Most licensed moneylenders offer flexible repayment schedules starting from as little as less than one month and usually going up to 24 months, so consider your income, budget, and financial obligations very carefully before signing your loan contract with the stipulated loan terms. Always negotiate your repayment schedules to your advantage.

Here are 5 myths about borrowing from licensed moneylenders – it’s always useful to have the right understanding of what they do before you take a loan.

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licensed moneylender?

R2D Credit is your best option.

After having identified what moneylenders are allowed to do, take a look at what they can’t do.

01

Solicit loans through messages or cold calls

Licensed moneylenders cannot solicit loans through social media platforms, text messages, WhatsApp, emails, flyers, direct phone calls, etc.

Been receiving annoying spam messages asking you to take up loans? Those are likely sent by unlicensed moneylenders and/or scammers. Do not entertain them.

02

Perform loan transactions entirely online

It is a must for licensed moneylenders to meet the borrower in person at their office premises to conduct face-to-face verification of the borrower’s identity before granting any loan.

In short, licensed moneylenders in Singapore are not permitted to perform loan transactions entirely online.

03

Skip contract explanation and financial assessment

Financial assessments such as checking a borrower’s tax notices and payslips must be executed by moneylenders before a loan can be approved.

Likewise, the law requires lenders to explain all loan terms clearly to borrowers in language that you fully comprehend. Borrowers may clarify or ask loan officers to repeat information if necessary — a good, licensed moneylender will not hesitate to go the extra mile so that you know all that the loan contract entails.

You should also receive a copy of the loan contract. Apart from understanding all the contractual terms, pay extra attention to the repayment schedule, interest rates, and slew of fees applicable.

04

Keep your NRIC or any other personal ID documents

Make sure your licensed moneylender doesn’t withhold your NRIC, driver’s licence, passport, or other personal ID documents as it isn’t within their legal right to do so. They are also not allowed to acquire any information that contains passwords to your Singpass account, internet banking account, email account, etc.

05

Withhold a receipt each time you make your loan repayment

Ensure the moneylender issues you a receipt each time you make your loan repayment, and check that all details are correct (e.g. name, amount paid, outstanding amount, date).

Definitely make it a habit to retain all statements of accounts and receipts of payments, as documentation of payments.

Banks vs licensed moneylenders: Which is the better option?

While you can borrow money either from a bank or a licensed moneylender in Singapore, there are some key differences you need to know about. Depending on how soon you need the loan, your credit rating, and your eligibility, you may prefer one over the other.

Here’s a quick comparison between borrowing from a bank and a legal moneylender, assuming you are getting a personal loan:

women checking what is the better option

BANKS

MONEYLENDERS

Max. sum you can borrow

Up to 10x monthly income

Up to 6x monthly income

Max. repayment period

Up to 5 years

Up to 12 months

Loan approval duration

Up to 2 weeks (for a new customer)

The same day, typically within 30 minutes of face-to-face verification

Typical interest rate

3.5 – 11% per annum

1 – 4% per month

Ease of loan approval

Stringent

Lenient

Processing fee

Typically 1% of the approved loan amount, some charge no processing fee

Up to 10% of the approved loan amount

Application procedure

Apply online or visit the branch office

Apply online or visit the lender’s office, but identity verification before loan approval has to be done in-person.

Can’t qualify for a bank loan?

We offer fast loan approval with less stringent criteria.

Advantages and disadvantages of borrowing from a legal moneylender in Singapore

Borrowing from licensed moneylenders often comes with its own set of advantages and disadvantages.

ADVANTAGES

DISADVANTAGES

Near-instant approval
(usually less than 30 minutes)

Simple application process

Minimal documents required

Fund disbursed by cash or bank transfer immediately after loan approval

Accessible to most people, including those with bad credit history

Allows the borrower to get up to 6 times their monthly income

Hefty late charges (late interest up to 48% p.a. on overdue principal and/or interest)

High interest of up to 4% per month (up to 48% p.a.)

High processing fee (up to 10%)

Short loan tenure (typically up to 12 months repayment period)

DISADVANTAGES

Hefty late charges (late interest up to 48% p.a. on overdue principal and/or interest)

High interest of up to 4% per month (up to 48% p.a.)

High processing fee (up to 10%)

Short loan tenure (typically up to 12 months repayment period)

24-hour moneylenders in Singapore: Do they exist?

There aren’t any 24-hour moneylenders in Singapore that are licensed, legal ones. Those that run 24/7 are likely to be illegal.

Although licensed moneylenders have websites that run 24/7 (i.e. you can submit your loan application on the licensed moneylender’s website anytime and anywhere), their physical offices have fixed office hours and do not operate round the clock.

How to determine which licensed moneylender is the best one for you

Even among the licensed moneylenders, the one that serves your needs best may vary. Here are some characteristics that define the “best” moneylenders in Singapore to help you decide:

Legal moneylender with license certificate and qualifications

A good variety of loans is offered to meet your needs

Fast loan application and approval process

Quick loan disbursement

Competitive interest rates and charges

Credible reputation

Verified reviews on Google and other websites

Negotiation is possible for a loan repayment schedule that works for you

Patient, knowledgeable loan officers who go the extra mile to ensure borrowers fully understand all loan terms

Convenient office location

Depending on your situation, a moneylender that possesses a few of these qualities may be right for you. For example, if you are dealing with rapidly growing debt from multiple loans, you would look for licensed lenders who offer competitive interest rates.

If you have multiple loans, you might also pay attention to moneylenders near you who happen to provide debt consolidation loans.

Looking for a reliable lender?

R2D Credit is a licensed moneylender since 2009 and we have served more than 2,600 borrowers, with over 1,800 5-star reviews on Google.

How to borrow from licensed moneylenders in Singapore

The process to borrow from a licensed lender is straightforward.

1

Go to your licensed moneylender’s loan webpage

2

Check that your licensed moneylender is indeed legitimate – call them and check that their details are the same as those stated on MinLaw’s list

3

Fill out the online loan application form with your personal details (e.g. name, contact number, salary, and the desired loan amount)

4

Wait for a loan officer to contact you

5

Set up an appointment to meet your loan officer at your licensed moneylender’s registered business address

6

Meet your loan officer; bring all necessary documents with you when you visit

7

Ensure you are clear about all the loan contract’s terms and conditions, late charges, interest payments, repayment schedules, etc. before signing the contract. Feel free to get your loan officer to clarify anything you may be unsure of

8

Thereafter, your cash loan will be disbursed immediately via cash or bank transfer.

Documents required

Employed Singaporeans: IC, CPF contribution statements, latest 3 months’ payslip (if monthly salary > $6,000)

Self-employed Singaporeans: IC, IRAS Notice of Assessment (NOA), proof of income (bank statement or any official income statement)

Foreigners: Employment pass, proof of home address (tenancy agreement, proof of billing address), latest 3 months’ payslips

What happens if you’re unable to pay the moneylender

If you don’t repay your loan on time, expect to incur late fees, late interest, and compound interest on the amount that’s repaid late. If your loan is a secured one, your pledged collateral may be at risk of being liquidated.

Should you find yourself in such a situation, try to request a realistic payment extension — work things out amicably with your licensed moneylender as many are usually willing to negotiate reasonably.

What to do if you encounter harassment from a licensed moneylender

Common acts of harassment include:

Spamming the borrower with SMSes and calls

Spamming the borrower’s home and office with calls

Contacting the borrower during odd hours

Visiting/ loitering around the borrower’s home and workplace repeatedly
or during unusual hours

Threatening the borrower

Using abusive language with the borrower 

Using violence on the borrower

You may report to the Registry of Moneylenders at 1800-2255-529 or via their website should you wish to lodge a complaint against a moneylender. Rest assured your personal details will be kept confidential. Additionally, the Registry will investigate errant licensed moneylenders.

At R2D Credit, we ensure that all our staff adheres to the highest standard of professionalism and ethics.

Seeking a trustworthy licensed moneylender in Singapore?