What Is A Moneylender And What Should You Take Note Of?

Personal Finance

What Is A Moneylender And What Should You Take Note Of?

August 26, 2022

In such uncertain and troubling times, we may find ourselves needing a little extra money from time to time.

Whether it’s for an unexpected medical bill or a much-needed hefty purchase, many people turn to money lenders.

But what exactly is a money lender?

In this blog post, we’ll learn everything about legal money lenders in Singapore, from loan limits to interest rates, due diligence, and lodging a complaint against a money lender.

So if you need some quick cash from a money lender, keep reading to learn more.

What Is A Money Lender?

A money lender is a financial institution or organisation that offers loans for interest.

Money lenders usually offer higher interest rates than bank loans but offer a rather convenient application process.

Their quick application and approval process makes them preferable over banks.

That said, it’s important that you only reach out to licensed money lenders in Singapore.

Licensed money lenders are government-approved financial organisations (or institutions) registered with the Registry of Moneylenders.

These institutions offer loans to those in need but do so as per the Moneylenders Act, which protects both the lender and the borrower.

How Much Can You Borrow From A Money Lender?

If you are going for an unsecured loan, the maximum amount you can borrow from a money lender depends on your income.

  • If your annual income is less than $10,000, you can borrow a maximum of $3,000 as a Singapore citizen or permanent resident (PR). However, you can only borrow $500 if you are a foreigner residing in Singapore.
  • If your annual income falls between $10,000 and $20,000, you can borrow a maximum of $3,000 – no matter your residency status.
  • If your annual income is equal to or more than $20,000, you may borrow up to six times your monthly salary, whether you are a permanent resident or foreigner residing in Singapore.

For secured loans, you can borrow greater (uncapped) sums against an asset that can be used as collateral such as a property or vehicle.

In this case, your money lender will have the right to seize the asset if you fail to repay your loan.

What Are The Interest Rates Charged By Money Lenders?

Thankfully, the moneylending industry is well regulated, and strict laws apply to loan interest and other costs.

Here’s what money lenders can charge as per the latest Moneylenders Act passed on 1 Oct 2015:

  • An interest rate not exceeding 4% per month. This applies to late payments as well.
  • A late fee not exceeding $60 on every late repayment.
  • An administrative fee not exceeding 10% of the principal loan amount.

Important: Note that the late fee only applies to current repayments exceeding the allowed 14-day due date period.

A money lender can’t charge you for outstanding payments that are not yet due.

How To Apply For A Loan

First, you have to confirm your eligibility for a personal loan. You can only apply for a personal loan from a licensed money lender in Singapore if:

  • You are at least 18 years old
  • You are employed or have a stable monthly income
  • You have a valid PR status or citizenship

As explained earlier, the amount you can borrow will depend on your monthly salary and residency status.

If you meet the above criteria, you can visit a licensed money lender in person and fill up an application form. You will have to produce the following documents:

  • NRIC or passport
  • Letter of employment
  • Latest computerised payslip
  • Current credit score and CPF statement
  • Tenancy agreement, employment letter, employment pass, and bank statements (for foreigners)

Once the paperwork is in place, the money lender will evaluate your application and get back with a response in a few days.

What To Do After The Loan Is Granted

Once your loan application gets approved, your licensed money lender should provide you with a copy of the loan agreement and an account statement.

You must carefully read these documents and only sign them after fully understanding the contracts’ terms and conditions and the repayment schedule.

Don’t hesitate to ask for any clarifications as you will be getting into a legal obligation to make monthly repayments.

Once the contract is signed, your money lender will deliver the principal loan amount after deducting an administrative fee.

Remember, the money lender cannot deduct more than 10% of the principal amount. So, make sure to check the fee.

When you receive the principal amount, you can use it however you like. But of course, you will be required to make monthly repayments until you’ve completely repaid the loan amount, interest, and other costs (if any).

Try your best to pay monthly installments within the due date to avoid late fees and interest.

Also, maintain a proper repayment record and keep payment receipts as they will come in handy if any disputes arise in the future.

What To Consider Before Taking Up A Loan From A Money Lender

Now that you know how money lenders operate, let’s look at some factors you should consider before taking up a loan from a legal money lender in Singapore.

Rethink Your Decision About The Loan

Taking up a loan should only be done as a last resort. If you can cover your expenses without borrowing money, try to avoid taking a loan.

This is important because once you enter into a contract with a licensed money lender, you will have to bear all legal consequences.

Consider Your Options

Money lenders offer loans with some of the highest interest rates. Before contacting a money lender, it would be wise to explore other options first.

Government agencies occasionally offer financial assistance under different programmes and financial schemes. Be sure to research those options first.

Once you have decided to borrow from a money lender, do not rush to sign a contract.

Research the market thoroughly, reach out to different money lenders, and choose the one with the most favourable terms.

Evaluate The Amount You Need

Remember, the maximum amount you can borrow from a money lender depends on your salary. You can get $3,000 or six times your monthly salary at maximum.

So if you need a larger sum of money, you’ll have to submit an asset as collateral or reach out to a bank.

Can You Afford The Repayments?

Be realistic when considering how much you can borrow and make sure you can afford the repayments. Defaulting on payments will only make your financial situation worse.

Your Credit History Matters

Your credit history plays a big role in determining your qualification for a loan and the loan amount. If you have a bad credit history, you may not be able to borrow as much money.

What Is Your Residency Status In Singapore?

Remember that foreigners residing in Singapore can only borrow $500 if their annual income is less than $10,000.

Singaporeans or PRs, on the other hand, can borrow more in this instance.

So keep that in mind when considering how much you need to borrow.

Now that you know the things to consider on your end, let’s look at the due diligence to be done when choosing a licensed money lender in Singapore.

How To Know If A Money Lender Is Licensed

Recently, there has been a surge in loan scams in Singapore. The government has, therefore, taken strict measures to ensure that only licensed money lenders are allowed to operate in the city state.

So, every legal money lender must have a license issued by the Registry of Moneylenders, which the Ministry of Law maintains.

You can check if a money lender is licensed through the following ways:

  • The Registry of Moneylenders’ website regularly updates the list of licensed money lenders in Singapore. You can verify any money lender’s license on the Registry’s website using its name and registration number.

Or you can call the Registry at 1800-2255-529 and give it the registration number to verify.

  • Licensed money lenders have well-established physical offices. If a money lender conducts business only through phone calls or doesn’t have an office, it is likely to be a scammer.

So be sure to visit a money lender’s office before taking up a loan.

  • Licensed money lenders will never send text messages or make phone calls to promote their services. If you receive any such messages or calls, they are likely to be from illegal institutions.
  • Legal money lenders will never advertise interest rates below or above 4%. So if you see any of such ads, be wary as they are likely to be from scammers.
  • Licensed money lenders cannot collect any fees before approving a loan. So if a money lender asks you to pay any fees upfront, it’s likely to be a scam.

Now that you know how to verify a licensed money lender, let’s see what to do if a licensed money lender indulges in an unfair practice.

What Is The Process For Lodging A Complaint Against A Money Lender?

If a licensed money lender treats you unfairly or breaches the contract, you can lodge a complaint with the Registry of Moneylenders.

You can call its helpline at 1800-2255-529 to formally complain about licensed money lender harassment. Or you can do it online by submitting a simple form at the Registry’s website.

Thankfully, the staff at the Registry are professional and cooperative. They will not reveal your identity to the money lender without prior consent.

However, you may be required to appear for an interview and share the necessary information and documents to facilitate the investigation.

The information may include current loan transactions and how the money lender has mistreated you or tried to harass you for repayments.

If the Registry finds that the money lender has indeed indulged in unfair practices, it will take strict action against the errant party.

The money lender may have their license suspended or revoked and, in some cases, may even be fined or jailed.

These matters are usually pursued through the Small Claims Tribunal or Consumer Court under the Consumer Protection Act.


Licensed money lenders are a great option when you need quick cash.

However, it’s essential to exercise due diligence while choosing one and know your rights as a borrower.

If you ever feel that a licensed money lender is harassing or treating you unfairly, don’t hesitate to lodge a complaint with the Registry of Moneylenders.

Remember, the law protects you, and the Registry will take strict action against any errant money lender.

Do you need help with securing a loan?

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