How To Choose A Licensed Money Lender In Singapore

When you need extra cash, you may consider getting a loan.

However, if you’re looking to do so in Singapore, you must choose a licensed money lender that is reputable and will offer you the best rates possible.

This blog post will guide you through the process of finding a credible money lender in Singapore.

Plus, we’ll also highlight some red flags and tips to help you stay away from loan scams.

Keep reading to find out more.

What Is A Licensed Money Lender?

A licensed money lender is a financial institution licensed by the Registry of Moneylenders, which is operated by the Ministry of Law.

Licensed money lenders are allowed to offer loans to individuals and businesses in Singapore.

However, they must follow strict regulations set by the Ministry of Law. This includes capping the interest rates they can charge and other fees.

How To Check If A Money Lender Is Licensed

The best way to check a money lender’s licence is to search for its name on the Ministry of Law’s website.

The website lists all the legal money lenders registered with the Registry of Moneylenders.

Or you can dial 1800-2255-529 to reach out to the staff at the Registry and request them to verify a money lender’s registration and legal status. They’d be glad to assist.

However, you can also assess a money lender’s authenticity by watching out for a few red flags. In general, licensed money lenders:

• Never advertise through calls, SMS, emails, or social media ads. Unlicensed or scam money lenders will reach out to you through any of these platforms.
• Do not charge any upfront fees. On the other hand, many unlicensed money lenders ask for an upfront “processing” fee.
• Aren’t allowed to charge more than or less than a 4% interest rate. You’d often see deceptive or scandalous loan schemes with very low interest rates that aim to entice you. Stay away from them.
• Have legit workplaces, which you can visit during business hours. Some unlicensed organisations only function through phone calls and pretend to offer 24-hour services. That’s another red flag.

Are Licensed Money Lenders Allowed To Advertise?

Yes, licensed money lenders are allowed to advertise their services. However, as per new advertising rules made on 1 Nov 2011, licensed money lenders can only use three of the following mediums for advertising:

1. Online or printed business and consumer directories
2. Their own official websites
3. Printed ads inside or on the outside of their offices

If you see any other forms of advertisement, such as brochures, billboards, emails, text messages, or Facebook ads, it’s better not to respond to them.

These are either from unlicensed money lenders or licensed money lenders who don’t respect these rules.

If you see such advertisements, immediately report them to the Registry of Moneylenders. The Registry will penalise licensed money lenders violating the law, while the police will investigate unlicensed ones.

Which Are The Licensed Money Lenders In Singapore?

Owing to the increasing number of loan scams, the government only allows a limited number of licensed money lenders to operate legally in Singapore.

You can find the full list of licensed money lenders on the Ministry of Law’s website.

The list will tell you the following things about a licensed money lender:

1. Its business name
2. Physical address
3. Licence number
4. Landline number
5. Website link (if available)

There are about 150 money lenders on the list, and the government strictly advises working with them only.

What Are The Fees And Rates Charged By Licensed Money Lenders?

The Ministry of Law strictly regulates the fees and interest rates licensed money lenders can charge.

As per the Moneylenders Act passed on 1 Oct 2015, licensed money lenders are not allowed to charge more than the following:

• 4% per month interest rate (for both regular and late payments)
• Up to $60 as a late payment fee
• Up to 10% of the loan amount as a legal or administrative fee

Apart from this, money lenders are also not allowed to charge any other fees.

So if a lender asks for any other charges besides those mentioned above, it is either unlicensed or violating the law.

But remember that money lenders may charge an extra $100 if they have to involve a lawyer for outstanding payment collection.

What To Do Before Taking A Loan

Before you approach a licensed money lender, here are a few things you should do to ensure a smooth and transparent loan process:

1. Confirm Your Eligibility:

First, check if you are eligible to apply for a personal loan. Here are the criteria for getting a loan from a licensed money lender in Singapore:

• You must be at least 21 years of age.
• You must have a job or a consistent monthly income.
• You must have valid citizenship or permanent resident (PR) status.

If you qualify for these checks, you can plan to get a loan.

2. Decide The Type Of Loan You Want

Before you approach a money lender, decide on your loan type. Depending on your needs and financial situation, see what kind of loan fits your need.

Usually, a personal loan is enough to cover small expenses such as home renovations, pending debts, or credit card bills.

3. See How Much You Can Borrow

Once you know what kind of loan you are looking for, the next step is to see how much you can actually borrow.

Here’s how much you can legally borrow as per the law:

• $3,000 at maximum if your annual income is less than $20,000 as a Singapore citizen or permanent resident.
• $500 at maximum if your annual income is less than $10,000 as a foreigner residing in Singapore. You may borrow $3,000 as a foreigner if your annual income falls between $10,000 and $20,000.
• Six times your monthly salary if your annual income equals or exceeds $20,000 – no matter your residency status.

Depending on your income and loan requirements, see how much you can borrow before approaching a money lender.

Ideally, you should only borrow an amount that you are comfortable with and confident of repaying.

4. Get A Credit Report

This is an important step that a lot of people overlook.

As you know, Singapore has a strong credit scoring system, which means your credit score plays a big role in getting a loan approved.

So before you approach a money lender, it’s always a good idea to get your credit report and see where you stand.

You can get your credit report from the Moneylenders Credit Bureau (MLCB) or Credit Bureau Singapore.

5. Evaluate Market Options

Once you are confident you can get a loan, it’s time to explore the market and contact different licensed money lenders in Singapore.

Check their interest rates, fees, repayment terms, etc, and see what suits you best. There’s absolutely no need to rush, and you shouldn’t.

Getting into a loan contract is a big decision, and you must carefully evaluate all the offers before making a choice.

6. Choose Your Money Lender And Apply

Once you’ve decided on the right money lender, it’s time to apply for the loan.

For that, you’ll need the following documents:

• Your NRIC or passport
• Copy of your latest pay slip or income proof
• Copy of your latest bank statement
• Copy of your Central Provident Fund statement

Note: You may be required to submit additional documents such s an employment pass and tenancy agreement if you are a foreigner living in Singapore.

Once you’ve gathered all the documents, approach the money lender and apply for the loan. You will get approval in a couple of days if everything goes well.

What To Do After Your Loan Is Granted

Congratulations – your loan got approved.

But don’t get carried away with emotions and rush to sign the contract.

Take the time to read and understand the terms and conditions of the contract before signing it.

Ensure you understand all the clauses regarding repayment, interest rates, late payment penalties, etc.

If you are confused, now is the time to ask your money lender questions and clarify everything before things get locked.

Once you have understood the terms and signed the contract, your licensed money lender will transfer the amount to your bank account.

And that’s it – you’ve successfully taken out a loan from a licensed money lender in Singapore.

Now, be responsible with how you spend the money and make sure you make all the repayments on time.

How To Know If It’s A Loan Scam

Scammers often impersonate licensed money lenders in Singapore to fool people and extract money from them.

They run illegal money schemes (or loan scams) and label them as licensed moneylending services to make them sound genuine.

Don’t fall for such scams. Only work with licensed money lenders listed on the Registry of Moneylender’s website.

But how do you know if you are dealing with a scammer?

Here’re some common red flags:

Upfront fees or commissions: Licensed money lenders in Singapore are not allowed to charge any upfront fees or commissions.

So if a money lender asks for any processing fee before approving the loan, it’s a huge red flag.

No physical office: A money lender operating without a physical office is most likely a scammer.

Such scammers would pretend to be available 24/7 and approve a loan over a phone call or even an email conversation.

On the other hand, a licensed money lender will not approve a loan without meeting you face to face.

So if you are dealing with a lender that doesn’t have a registered office address, be very careful.

Unrealistic interest rates: Loan scams will try to lure you in with unrealistically low interest rates that are too good to be true.

Hence, if a money lender promises you an interest rate below 4% and flexible repayment terms, it’s most likely a scam.

No lender will offer you a loan at an interest rate lower than the legal limit.

No license: This is a no-brainer. If the money lender you are dealing with doesn’t have a valid money lender’s license, it’s a scam.

Always demand to see their money lender license or registration and verify it by calling the Registry or visiting its website.

Excessive and intrusive marketing: If a money lender sends you unsolicited text messages, emails, or other advertising stuff, be wary.

Licensed money lenders don’t use such marketing tactics in order to stay within the legal limits.

So if you come across any lender that matches the above criteria, it’s best to stay away and avoid it at all costs.

Where To Get Help

Don’t feel helpless if you get defrauded or approached by an unlicensed money lender. Here are some instances when you should seek help, as well as where to go.

Unsolicited Ads From Loan Scams

You can lodge a complaint with the Registry of Moneylenders or file a police report. Such scammers are treated sternly under the law and can even be jailed.

Harassment, Abuse Or Unfair Treatment

There might be times when you need help dealing with a licensed money lender in Singapore. For example, you might have been harassed, threatened, or treated unfairly by a licensed money lender.

If this has happened, you can lodge a formal complaint with the Licensed Moneylenders Association (LMA).

Or file a case with the Small Claims Tribunal or the Consumer Court under the Consumer Protection (Fair Trading) Act.

Unable To Repay Your Loan

You may even find yourself unable to repay your loan at some point.

In such cases, you can approach the Moneylenders Credit Bureau or Credit Counselling Singapore (CSS) for advice.

These organisations can advise you on how to settle a licensed money lender’s loan and help you devise a suitable action plan.

For example, they might assist you in renegotiating late interest rates or developing a flexible repayment plan.

Do you need help with securing a loan?

Experienced professionals at Credit Thirty3 can help you understand your options. Apply for a loan today.