Online Borrowing Guide: Licensed Money Lenders in Singapore

Are you looking for a private legal money lender in Singapore? Whether this is your first time or tenth, the process to get a loan from an authorised money lender can be confusing. Even experienced borrowers may have missed out on important information that would have saved them time and money.

Here is a comprehensive look at everything you need to know before you take a loan from a licensed money lender in Singapore.

This in-depth guide takes you through each step of the process, so you are equipped with the most relevant information to choose the most reliable money lenders in Singapore for your needs.

What are legal or licensed money lenders in Singapore?

A legal money lender in Singapore is a business that has obtained a licence to engage in money lending services. An authorised money lender in Singapore is allowed to lend money to members of the public and then receive that amount back with interest and other fees.

Also keep in mind that while they may not be a big bank, a licensed money lender is NOT a loan shark, which is illegal. They are private money lenders in Singapore conducting a legal and authorised business.

An authorised money lender in Singapore is licensed by the Ministry of Law (MinLaw) and registered with MinLaw’s Registry of Moneylenders. These registered local money lenders must follow the guidelines and regulations set by MinLaw and conform to the laws in the Moneylenders Act 2008.

Note that licensed money lenders’ new rules may be introduced by the government from time to time. Keep checking back for the latest updates and information.

How do loan companies get a money lender licence and conduct their business?

Obtaining a money lender licence

The process to obtain a money lender licence in Singapore is tedious and the requirements intentionally rigorous. This ensures that every legalised private money lender in Singapore conforms to the highest standards.
Licences are valid for twelve months and are reviewed regularly. For the time being, the Registry of Moneylenders has stopped issuing new money lending licences.

You can check the money lender licence of a lender by viewing the MinLaw list of authorised lenders. This list is constantly updated when new licences are issued or existing ones are expired or revoked.

Employment of licensed money lender staff

Legalised money lenders in Singapore must obtain written approval from the Registrar before employing any individual to work in their office. They must also:

Provide the names and details of every assistant employed at the company

Provide written notice to the Registrar within seven days of an employee ceasing to work for them

The Registrar may refuse to approve individuals who have:

Been convicted of any offence involving dishonesty or moral turpitude

Been convicted of any offence involving corruption, drug trafficking, and other serious crimes

Broken any provision of the Moneylenders Act

Previously operated a money lending business in Singapore or another country

This ensures that the licensee and their team are of good character.

Furthermore, legitimate money lenders in Singapore must appoint a Test-Qualified Manager to manage operations. This individual is required to meet the below criteria in order to qualify as one:

Pass the Moneylenders’ Test;

Obtain at least 4 GCE ‘O’ Levels passes, including English Language or equivalent; and

Be fit, proper, and of excellent character

Licence applicants must also put down a $20,000 security deposit to conduct a money lending business.

A money lender’s licence may be revoked if complaints are made or investigations reveal illegal actions and/or behaviour that contravene the Moneylenders Act.

Adhering to the Moneylenders Act

The Moneylenders Act was enacted to regulate the money lending industry. It defines the legal framework in which registered money lenders conduct their business in Singapore.

Among other things, it lays the foundation for the creation and regulation of Credit Bureau Singapore as well as the collection, use, and disclosure of borrowers’ information for money lending purposes.

What is the Moneylenders Credit Bureau (MLCB)?

Many borrowers may be unfamiliar with the Moneylenders Credit Bureau, but it plays a critical role in the process of money lending. The organisation was created under Section 30D of the amended Moneylenders Act. MinLaw has designated Credit Bureau Singapore as the operator of the MLCB.

The MLCB manages all borrower data in Singapore pertaining to loans and repayments with legalised money lenders in Singapore, including licensed online money lenders in Singapore that let borrowers kickstart their loan application process online. Licensed money lenders can and should access this information when assessing a loan application from individuals borrowing from licensed money lenders online or in-person.

The most relevant data they consider is a borrower’s outstanding loans and repayment history. This information is used to assess the creditworthiness of a potential borrower and manage credit risks when extending a loan.

Many licensed online money lenders in Singapore like Prosper Credit work closely with the MLCB.

Prosper Credit is a legalised money lender in Singapore that offers various personal and business loans.

What are the differences between banks and licensed money lenders in Singapore?

On the surface, banks and licensed money lenders perform the same role — lend money to the public and then recoup it with interest.

A bank is usually the first option most people would consider. However, a registered reliable money lender in Singapore can be just as good, or in some cases, more suitable for some.

Here are the main differences between banks and legitimate local money lenders.

	Banks	Licensed Money lenders
Reputation	Recognisable names	Smaller companies
Availability	Depending on banking hours	24/7 online application
Eligibility	Stringent	Fewer requirements
Loan Process	Can take up to 2 weeks for a new customer	Within a day
Loan Amount	Up to 10x monthly income	Up to 6x monthly income
Interest Rates	3.5 - 6% per annum	1- 4% per month
Loan Term	Up to 7 years	Up to 24 months
Loan Disbursement	Bank Order Bank Account	Cash Bank Transfer

Reputation

Banks have established, recognisable names that reassure us we won’t be exploited. In contrast, the majority of people who recognise a money lender’s business name only do so if they’re looking to borrow from or are already borrowing from a licensed money lender.

The bad reputation of illegal loan sharks also discourages borrowers from looking beyond banks when they need a loan.

But in reality, licensed instant money lenders are also professional and reliable, especially if you deal with some of the most established and trusted money lenders in Singapore.

Availability

Banks operate strictly by business hours and may have limited hours for loan applications.

Licensed online money lenders in Singapore also operate by office hours, but you can apply on their websites 24/7 instantly. That being said, you’re still required to go down to the online money lender’s registered office in Singapore to do a quick face-to-face verification as required by the law.

Note that someone claiming to be a 24-hour money lender is likely running an illegal operation. Even the most trusted online money lenders in Singapore do not have offices that operate 24 hours daily.

Eligibility

Banks have very high eligibility standards for loans. They assess and scrutinise each applicant’s credit score, borrowing history, employment status, residency status, and income bracket — to apply for a bank loan, you need to earn at least S$20,000 per year.

On the other hand, licensed fast money lenders have fewer requirements, and are generally open to a wider segment of potential borrowers. You can still get an approved loan with bad credit. There is also no minimum income, though this would affect your borrowing limit.

Loan Process

The loan process followed by every bank and money lender is directly related to their eligibility criteria.

Banks, with their strict conditions, adopt a very intensive and in-depth process. This involves extensive credit assessments, detailed analysis, and interviews.

On the contrary, registered money lenders are less strict. With fewer eligibility criteria and lower requirements to meet, the process can be completed in less than 30 minutes. The interview process is also less formal and stressful. Licensed quick money lenders can also disburse the loan immediately in cash or via bank transfer, hence they’re commonly recognised as instant money lenders.

Loan Principal (Amount Loaned)

Borrowing from a licensed money lender will limit the loan principal to 6 times the applicant’s monthly income. Banks can loan as much as 10 times the borrower’s monthly income, though this very much depends on the applicant’s income and credit score.

Interest Rates

One of the most important differences between banks and private money lenders is that private money lenders’ interest rates are higher. Banks may reject loan applicants who have had credit issues in the past. Many of these applicants can still get a loan from a licensed money lender online and in-office.

Legal local money lenders protect themselves from the increased risk of default from such borrowers by imposing higher interest rates. The cap on interest rates is 4% per month.

Loan Term (Repayment Period)

A legal money lender’s loan term usually ranges from 1 to 12 months. The most reliable money lenders in Singapore may offer a term as long as 24 months. Bank loan terms tend to stretch across an even longer period, which can go up to seven years.

Loan Disbursement

Banks usually only disburse the loan amount through a bank order or directly to the borrower’s bank account. A private money lender in Singapore usually instantly disburses the funds in cash or via bank transfer after the loan contract has been signed.

Interested in applying for a loan with an authorised money lender in Singapore?

How to spot an illegitimate money lender in Singapore

They are not registered with MinLaw

MinLaw maintains an updated register of all legal money lenders in Singapore. If a money lender is not on the list, they are almost certainly illegal. You may inform the police if you suspect illegal activity.

No physical office

As they are not legitimate businesses, illegitimate money lenders cannot obtain a relevant business licence or rent premises. Instead, they would usually process your loan entirely online, such as through SMS or WhatsApp with no physical meet-ups.

They may also attempt to meet borrowers in public places or inside other businesses, like a coffee shop. Call ahead on the landline number provided to verify that their location is a legitimate, physical office.

Unprofessional behaviour

Loan sharks may intimidate you in a bid to get you to sign up for their loan. These illegitimate quick money lenders might also rush you through the application process and refuse to answer your queries. Unlike them, a legitimate money lender would clearly explain all the terms and conditions. If there is anything unclear, they would be ready to explain it to you. Do not deal with anyone who makes you feel uncomfortable.

Unapproved advertising channels

Legal money lenders in Singapore are restricted to advertising on their websites and office signages or in business directories. If a money lender is advertising on chat apps such as WhatsApp and WeChat, or through email or SMS or flyer, they are probably illegal.

No verification process

Just as you vet potential fast money lenders, they are also obligated by law to do their due diligence with borrowers. A money lender that skips confirming your identity or verifying your documents would likely be doing so only to entrap you in their illegal activities. Don’t fall for this convenience trap. A legitimate money lender always does a face-to-face verification.

Instant loan approval

Licensed registered money lenders have to ensure their business succeeds and will only approve your application if they legitimately believe you are a genuine customer. Illegitimate money lenders simply want to lure you in with the promise of easy money.

If the fast money lenders are too eager to disburse the funds to you without the proper process, such as signing a loan contract and checking your documents, they could be illegal.

Upfront payment

No, not from them but from you. Illegitimate money lenders may ask for an upfront payment. They may call it GST or a convenience fee, but whatever name they give it or the reason for it, a legal money lender will not ask for any upfront payment.

How to choose the right licensed money lender for your needs

There are two main questions you should ask yourself when comparing licensed money lenders.

Proximity
The convenience of a nearby money lender allows you to save time and money

Quality
A reputable money lender will make your borrowing experience a seamless one and give you greater peace of mind

Proximity – How do I find a licensed money lender near me?

Quick money lenders located nearby can be very convenient if you require urgent cash or need to resolve any issues promptly.

A quick search on Google Maps and other similar apps will show you a list of licensed instant money lenders in your vicinity. Simply type “licensed money lender near me” in the search field and note down the list of money lenders that appeared.

Quality – How do I find the most reliable money lender in Singapore?

Check the MinLaw website

The MinLaw website broadcasts news and other developments relevant to the money lending industry. They publish information about money lenders who have been suspended or penalised for industry-related offences.

Check and compare reviews of licensed money lenders in Singapore

Reviews are an excellent way to gauge how good a money lender is. A reliable money lender in Singapore has a high 4 or 5-star rating and a long list of happy customers who shared their positive experiences.

Consider whether the reviews sound genuine.

Also, look at the ‘News’ tab of your search engine when you search for a money lender. They may have been in the news (for good or bad reasons).

Do the company’s former customers sound like they were in a similar scenario to yours? If so, did the money lender help them resolve their problems?

Awards and accolades

Top-rated, trusted money lenders in Singapore are recognised by the industry with awards and felicitations regularly. The money lender’s website will usually list these awards prominently. You can also verify such claims with news articles.

Communication

Communication is essential in any relationship, especially when there is money involved. Call or visit the money lender’s office and speak to the team. Ask yourself:

Are they courteous and professional?

Are they knowledgeable about the field?

Are they empathetic to your situation?

Are they clear about their fees and charges or intentionally vague?

Could you imagine yourself dealing with them for months if you take the loan?

Legitimacy

It is very important to ensure that your money lender is a legal business. You can assess this by:

Visiting their office: All legal private money lenders in Singapore must operate in a physical office.

Checking with MinLaw: They must appear on the MinLaw list of money lenders.

Interest and fees: There are limits to these and you can ascertain for yourself with a sample contract.

If you stay or work near Toa Payoh and are looking for a reputable and reliable money lender, look no further. Prosper Credit is located in Toa Payoh Central, just steps away from Toa Payoh MRT station.

All our loan officers are professional and well-trained to attend to your needs

Private money lenders’ interest rates–how are they calculated?

The way interest rates work for licensed money lenders is through imposing a reducing interest, which means that interest is charged on the outstanding amount. This way, the interest decreases as the loan is paid off. The Ministry of Law has put a cap of 4% per month on interest.

Consider a 6-month loan of $5,000 charged at the maximum 4% interest per month (which means an annual interest rate of 48%).

As you can see from the table below, the instalment amount is fixed for convenience, but the interest paid reduces after every instalment.

Here’s an example of how a monthly loan from a money lender can be calculated:

Legal money lender fees and other charges – how are they calculated?

There are often other charges and fees involved when taking up a loan from a money lender, especially if you repay your loan late. What are the licensed money lenders’ late payment fees? Read on to understand more.

Late Interest

Late interest is legally limited to 4% per month, which means 48% per year. This amount is calculated daily by dividing the 48% interest by 365 days.

In a case where $1,000 is due, 48% is $480.

Divided by 365, the daily interest is $1.32

If the payment is made 10 days late, the total late interest is $13.20

Compound Interest

Compound interest on the loan is also limited to 4% per month or 48% per year. When a payment is late, compound interest continues to accumulate. The delayed payment does not affect the interest on the principal amount which is not due.

Late Fees

Money lenders may also charge late fees for late payments, which are capped at $60 a month for every month of late repayment.

Processing Fees

If your loan application is successful, money lenders usually charge a processing fee of up to 10% of your loan amount.

Searching for a loan from a money lender with low-interest rates?

Things to consider before you apply for a loan with a money lender in Singapore:

Getting a loan may seem like the way out of a challenging situation. However, taking the wrong loan for the wrong reasons can put you in an even more difficult spot.

Before you apply for a loan, ask yourself:

Do I really need the money? You must have a solid reason to go into debt, not a frivolous one.

Do I need another loan? Taking on an unreasonable amount of debt can be disastrous in the long run.

Do I need a loan from a licensed money lender? An informal loan from friends or family may work instead.

Can government agencies or social service organisations help? They provide financial management and counselling at no cost. Find out more here.

Can I repay it on time? You may be digging yourself into a bigger hole by taking on more debt.

Do I need a guarantor? Becoming a guarantor for a loan has its consequences.

What’s the impact on your credit score? A bad loan today may affect your future credit applications.

Documents required when applying for a loan

You will need to produce these documents for verification when applying for a loan from a licensed money lender in Singapore:

Proof of identity: NRIC, Passport, Work Pass (for foreigners), etc — This ensures that a borrower is taking on debt in their name.

Proof of income: CPF statements, IRAS NOA, payslips for at least the past three months — Money lenders are more likely to extend loans to borrowers who have a consistent source of income, such as through employment or other means. A higher salary usually means that a borrower has access to larger loans, lower interest, and better terms.

Proof of residency: Utility bill, phone bill, tenancy agreement, etc — This is required for foreigners to ensure that they are residing in Singapore.

Note that all information that you share with a lender is protected by the Singapore Personal Data Protection Act 2012 (PDPA).

Here are some common FAQs when applying for a loan.

Have more questions for us?

What is the process of getting a loan from a licensed money lender in Singapore?

Once you have decided on a money lender, this is usually the loan application process you need to go through:

1

Apply for your loan online via the money lender’s official website.

2

A loan officer will contact you to schedule an interview at their office.

3

During the interview, the loan officer will ask you questions to understand your financial needs and verify your ID, income, and employment information. They will also check your eligibility and loan principal limits.

4

Your loan can usually be approved in 15-20 minutes if there is no problem.

5

Once your loan is approved, the loan officer will go through the loan terms stated in the loan contract with you.

6

If you agree to all the terms, you can sign the loan contract. Make sure you read through everything thoroughly before signing.

7

Once the loan contract is signed, the money is immediately disbursed to you in cash or via bank transfer.

Prosper Credit offers a seamless and professional loan process.

How you can settle your debt with a licensed money lender on time

Here are some basic but very effective ways of ensuring that you repay your debt promptly.

Borrow only what you can repay

Think about the interest and additional stress of a large debt. Don’t borrow the largest amount possible just because you qualify.

Familiarise yourself with the loan terms

You and only you are responsible for the debt you take on. It may be tedious but ensure you read every sentence in the loan contract and understand it completely.

Maintain employment

For many borrowers, one of the main reasons they’re unable to repay their debts is the loss of income. So it’s important to keep your job, look for a higher-paying one, and if necessary, work part-time as well. Ensure that your income is sufficient to repay your debt.

Have a repayment plan for all your debts

It can be difficult and stressful to list down all your debts but it is necessary. Look at all your financial obligations and work out how best to meet them.

Cut back expenses

Every unnecessary expense takes you closer to defaulting. Build the discipline to say ‘no’ to things you don’t need.

Seek help from loved ones and non-profit agencies

Family and friends may be able to help you with cash. Government and social service agencies can help you build a budget or negotiate with your creditors.

What if I am unable to pay money lenders in Singapore?

A loan can be a lifeline when money is tight, but it is only a temporary measure. You are legally obliged to repay the loan and all associated expenses, including late payment fees.

What action can a money lender take if you are unable to repay your loan?

Legal money lenders usually take action in three escalating steps:

1

Send a Letter of Demand (LOD) to your home or office address. This is a letter stating what you owe, when it is due, and when it was overdue.

2

Visit you in person at your home or office. The message from the LOD can also be delivered to the debtor in person.

3

Initiate legal proceedings. Can money lenders file a case in court? Yes, and the law will side with them if you have indeed defaulted on your loan.

What can you do?

If you are struggling to meet your obligations, do not simply stop paying and default. It is still possible to salvage the situation.

Extend the repayment deadlines

First, contact your money lender and ask to extend the payment deadline. If you are just barely missing repayments, some extra time could help you get back on track. Many money lenders may waive additional penalties if you approach them early.

Do debt consolidation

If that doesn’t work, consider debt consolidation. This is advisable if you have multiple loans and are struggling to manage them all. Debt consolidation merges all your debts, resulting in a single interest rate and repayment date.

File for bankruptcy

The last course of action is to file for bankruptcy. Bankruptcy is an option if you owe more than $15,000. While it stops debt from accumulating, there are serious consequences, including the forced sale of your assets and possessions.

Resolving disputes

Sometimes, misunderstandings may occur between the money lender and the borrower, such as whether the money lender is asking for the right amount of money to be paid. If that is the case, use this approach:

Communicate: Most misunderstandings by either party can be resolved with rational discussions and calm communication.

Negotiate: If you are behind in your payments, negotiate a compromise for repayment. This can be smaller repayment amounts or deferred payment deadlines.

Delegate: If you fear you may be too emotional during the negotiation, get a trusted friend or a family member to mediate and handle the communication instead.

If all these steps fail and your discussion ends up being a very heated one, contact the police before the situation gets out of hand.

Dealing with licensed money lender harassment

Unlicensed money lender harassment is constantly in the news, but licensed money lenders have also been found intimidating debtors. In some instances, it could be a case of mistaken identity.

Among the tactics used for harassment are:

Abusive calls and messages

Threatening messages left at the borrower’s home or office

Use of red paint–splashed across doors and vehicles

Vandalism, such as breaking windows or starting fires

A licensed money lender is obliged to follow strict rules when pursuing outstanding debts. They are legally prohibited from using abuse, threats of violence, and intimidation. If you encounter such behaviour, you can:

Make a complaint against the money lender via MinLaw’s Registry of Moneylenders’ hotline at 1800-2255-529 or their website

Report their actions to the police

We hope this guide has given you a much better understanding of taking up a loan with licensed money lenders in Singapore.

Prosper Credit is a licensed and trusted money lender in Singapore. Our professional loan officers will be happy to explain to you the details of taking up a loan.

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