Top 10 Questions & Answers: Applying for a Loan from a Licensed Moneylender

Top 10 Questions & Answers: Applying for a Loan from a Licensed Moneylender



A borrower thinking about top questions asked when applying for a loan
A borrower thinking about top questions asked when applying for a loan

When faced with cash flow issues or unforeseen financial crises, you might find yourself needing to take up an urgent loan. We understand it can get quite stressful for first-timers and you might have some questions about applying for a loan from a licensed moneylender.

Over here, we’ve compiled the top frequently asked questions when applying for a loan from a licensed moneylender. Digest all information before committing to a loan!

Q1. What kind of loans can I take from a licensed moneylender?

Answer: There are two kinds of loans you can apply for with a licensed moneylender — Personal Loans and Business Loans.

Personal Loan

A personal loan is a versatile type of loan you can use for various personal needs, such as weddings, funerals, or other occasions when you need a large sum of money to pay off unexpected expenses. They can come in the form of either secured (requiring collaterals) or unsecured loans.

These are the different kinds of personal loans available out there:

  • Payday Loans (or 1-month loans)
  • Urgent Cash Loan
  • Debt Consolidation Loan
  • Wedding Loan
  • Bridging Loan
  • Grab/Gojek Loan
  • Renovation Loan
  • Study Loan

Business Loan

Whereas personal loans are catered to individuals, a business loan is catered to business owners to help with planned or urgent expenses (e.g. capital to start the business or money to purchase inventory).

While established business owners may turn to banks to get their loans, a small business owner might find it difficult to obtain a bank loan depending on how much they need and their financial history.

Q2. What are the loan interest rates?

Answer: All licensed moneylenders in Singapore are registered under the Ministry of Law and are bound by the set rules and regulations.

In Singapore, the loan interest rates for licensed moneylenders start from 1% a month and are capped at a maximum of 4% a month. Interest is also calculated at a reducing rate, which means the monthly interest is calculated based on the outstanding amount instead of the principal loan amount. So as the loan amount decreases every month, the corresponding monthly interest does, too.

Below is an example of the difference between reducing rate and flat rate calculation:

John borrows a total of $5,000 from a licensed moneylender, with a loan tenure of 12 months at 4% interest p.a.

Flat Rate:

The lender includes the interest rate (4%) into the principal loan amount ($5,000) and divides it by 12 months.

Total Flat Rate Interest = $200

# Instalment Amount Interest Payment Principal Payment Balance
1 433.33 16.67 416.67 4,583.33
2 433.33 16.67 416.67 4,166.66
3 433.33 16.67 416.67 3,749.99
4 433.33 16.67 416.67 3,333.32
5 433.33 16.67 416.67 2,916.65
6 433.33 16.67 416.67 2,499.98
7 433.33 16.67 416.67 2,083.31
8 433.33 16.67 416.67 1,666.64
9 433.33 16.67 416.67 1,249.97
10 433.33 16.67 416.67 833.30
11 433.33 16.67 416.67 416.63
12 433.33 16.67 416.67 0.00

Reducing Rate:

As John pays off his debt diligently every month, his interest rate decreases.

EMI = p *((r *(1+r)^n))/((1+r)^n-1))

p = principal amount

r = interest rate payable monthly

n= loan tenure (in months)

Total Reduced Balance Interest = $108.54

# Instalment Amount Interest Payment Principal Payment Balance
1 425.75 16.99 408.76 4,591.24
2 425.75 14.09 411.66 4,179.58
3 425.75 14.20 411.55 3,768.03
4 425.75 12.39 413.36 3,354.66
5 425.75 11.40 414.35 2,940.31
6 425.75 9.67 416.08 2,524.23
7 425.75 8.58 417.17 2,107.05
8 425.75 7.16 418.59 1,688.46
9 425.75 5.55 420.20 1,268.26
10 425.75 4.31 421.44 847.82
11 425.75 2.78 422.97 423.86
12 425.30 1.44 423.86 0.00

Check out this post to learn about how interest works on a loan and how to calculate it.

Q3. How long is the loan repayment period?

Answer: How long can one take to pay off their loan is another most frequent question asked when applying for a loan. The loan repayment period depends on the type of loan and your repayment capabilities.

Payday loans are generally repaid within one month. Licensed moneylenders usually cater to those who require short-term loans with a repayment period of up to 12 months. Some may offer loan tenures of up to 24 months.

Your credit history may affect the loan tenure as well.

Q4. What are the loan installments like?

Answer: Some loans–like payday loans–are one-off payments due on your next payday. Other loans allow you to make weekly, bi-weekly, or monthly installments.

Q5. What are the administrative fees, late interest, late fees, and any other fees a licensed moneylender can charge?

Answer: Licensed moneylenders are allowed to charge administrative fees not exceeding 10% of the total loan amount.

As for late fees, should you fail to make your payments on time, moneylenders can charge up to $60 in late fees per month, as well as late interest of a maximum of 4% on the overdue amount owed.

Take note that the total combined fees (e.g. administrative, late fees, and late interest) cannot exceed the loan principal amount that has been approved.

These are the guidelines set by the Ministry of Law that all licensed moneylenders in Singapore must adhere to protect their borrowers’ interests. Should you encounter a moneylender charging more than they should, report them to the authorities.

Q6. What is the maximum amount of money I can borrow?

Answer: For secured loans, you can borrow up to any amount that adheres to your Total Debt Servicing Ratio (TDSR) limit for property and car loans – currently a maximum of 55%. For HDB and Executive Condominium (EC) loans, your Mortgage Servicing Ratio (MSR) is capped at 30%. The Loan-to-Value (LTV) for car loans is also a maximum of 60-70% depending on the open market value of the vehicle.

For unsecured loans, the maximum amount you can borrow from a licensed moneylender depends on your income and citizenship:

For Singaporeans and PRs:

  1. Borrower’s annual income: Less than $20,000
    Maximum amount you can borrow: $3,000
  2. Borrower’s annual income: At least $20,000 and above
    Maximum amount you can borrow: Up to 6 times of your monthly salary

For foreigners residing in Singapore:

  1. Borrower’s annual income: Less than $10,000
    Maximum amount you can borrow: $500
  2. Borrower’s annual income: At least $10,000 and less than $20,000
    Maximum amount you can borrow: $3,000
  3. Borrower’s annual income: At least $20,000 and above
    Maximum amount you can borrow: Up to 6 times of your monthly salary

Q7. Who is eligible to apply for a personal loan with a licensed moneylender?


  • Minimum age requirement: 18 years old
  • Employed or has a source of income (e.g. part-time work, freelance, etc)
  • Has not maxed out loan limits with other licensed moneylenders
  • Needs to be a resident of Singapore – loan amounts and minimum income requirements may vary (refer to the above information)

Q8. What are the documents required to apply for a loan?

Answer: While different moneylenders might have slightly different requirements, in general these are the typical documents they would be asking for.

For personal loans:

Singaporeans and PR
For Employed Singaporeans:

  1. NRIC
  2. CPF Contribution Statements
  3. Payslips from the previous three months (if monthly income is more than $6,000)
For Self-Employed Singaporeans:

  1. NRIC
  2. IRAS Notice of Assessment
  3. Proof of income – official income statements, bank statements, invoices


  1. Work Pass (EP, S Pass, Work Permit)
  2. Proof of home address (eg. rental agreement, utility bills, mobile phone bills)
  3. Payslips from the previous three months

For business loans:

  1. Bank statements from the previous six months
  2. Company Constitution (the legal document that lays out the rules for how a business will be run)
  3. Identification documents (NRIC or Passport) of the company’s lead shareholders and directors
  4. Tenancy agreement for the place of business
  5. ACRA Bizfile, Notice of Assessment (NOA) of company’s lead shareholders and directors, and credit report by Credit Bureau Singapore (CBS)

Q9. What is the loan application process like?

Answer: For Prosper Credit, you only need to follow five simple steps to apply for a loan.

  1. Fill up your loan application form here.
  2. Our loan agents will respond within 30 minutes.
  3. Our loan agents will arrange a convenient time for you to drop by our office. Bring all your necessary documents along.
  4. After face-to-face verification and documents check, our loan agents will go through the loan contract with you. This includes the clarification of loan terms such as repayment period, fees, late interests, and processing fees. Ensure you fully understand your loan terms before signing the loan contract.
  5. Once the loan contract has been signed, you can get your loan amount in cash or credited into your bank account immediately.

Q10. How can I compare different loans?

Answer: This is a common question asked before applying for a loan among first-timers.

Prior to deciding on a loan, do compare loan interest rates, fees, and loan tenure between different lenders. While the interest rate is one of the deciding factors when choosing a loan, lower interest is not necessarily better.

Short-term loans usually come with higher interest rates. Long-term loans come with lower interest but may stretch out the time you take to repay the debt.

If the interest rate offered to you is the same for both short and long term-loans, choose a tenure with an instalment amount that is within your budget and repayment capabilities, because extra months mean extra interest paid in total.

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While all reasonable efforts are made to include accurate and up-to-date information on this website, errors or omissions may still occur. We are not liable for any loss or damage caused by the use of this website. The information on this website is for general information only and should not be taken as professional advice.