Borrowing From Licensed Money Lenders in Singapore? Here’s Your Ultimate Loan Guide 2023
Borrowing From Licensed Money Lenders in Singapore? Here’s Your Ultimate Loan Guide 2023
Table of Contents
Taking a loan from a licensed money lender can be an intimidating process. Apart from getting the best interest rates and finding a lender you can trust, there is a lot of other information and fine print to be aware of so you know exactly what you are getting into.
Wondering what are the interest rates, hidden fees or borrowing processes you need to take note of? Also, what are the differences between taking a loan from a bank and a licensed money lender?
In this ultimate loan guide, we address these questions and more, so read on!
What is a licensed money lender?
Licensed money lenders are registered loan companies that are legally allowed to lend money.
These approved money lenders in Singapore are registered with the Ministry of Law’s registry and are obliged to follow MinLaw’s guidelines. These guidelines are updated regularly, under the Moneylenders Act. You can find more information on the licensed money lenders’ regulations here.
Here is a list of licensed moneylenders in Singapore.
Differences between borrowing from private money lenders and banks
There are differences when you try to take a loan from a bank and a licensed money lender.
These vary, from differing regulations to interest rates.
Loan limits & income requirements
When it comes to unsecured loans, banks generally allow you to borrow a maximum of 12 times your monthly income. With that said, if you earn less than $20,000 a year, a bank will reject your loan application.
The amount of money you can borrow from money lenders may vary, but even the top licensed money lender will have to adhere to Singapore’s legal regulations.
The maximum amount of money you can borrow through an unsecured loan is as follows, across all licensed money lenders in Singapore.
If your annual income is less than $10,000
- A maximum of $3,000 if you’re Singaporean/PR
- A maximum of $500 if you’re a foreigner residing in Singapore
If your annual income is at least $10,000 and under $20,000
- A maximum of $3,000 whether you’re Singaporean/PR, or a foreigner residing in Singapore
If your annual income is at least $20,000
- Up to 6 times your monthly income whether you’re Singaporean/PR, or a foreigner residing in Singapore
If you have a bad credit history or an unstable income, a bank will likely reject your loan application.
Licensed money lenders, on the other hand, offer more leeway, and you can still get your loan approved even with bad credit history, though usually at a higher interest rate.
While banks generally give you up to 5 years to repay your loan, a licensed money lender in Singapore would usually give a maximum repayment period of 24 months.
Other loan terms may vary based on the legal money lender, but most lenders offer a repayment period of one to twelve months. A good licensed money lender may offer you a repayment period of up to 24 months.
Speed of loan approval
If you’re in search of a fast cash loan or an instant loan, you might have a better bet with a licensed money lender. A licensed money lender can offer nearly instant approval with funds disbursed to you within 30 minutes, while banks can take up to two weeks to approve a loan application.
Interest rates and fees
Banks’ interest rates on a loan can vary from 3.5% to 11% per annum, while a licensed money lender’s interest rates vary from 1-4% monthly.
Any licensed money lender in Singapore can only charge you a maximum of 4% in interest, monthly. They can also only charge a maximum late interest of 4% a month, for each month that your loan is repaid late.
Money lenders who charge you a higher interest than this are usually unlicensed.
For a bank, the total amount in processing fees and interest can add up to a maximum of 6.5% to 20% of your principal loan amount. Moneylenders’ processing fees, on the other hand, can add up to a maximum of 10% of your principal loan amount.
Interested to apply for a loan with the best online money lender?
Interested to apply for a loan
with the best online money lender?
How do I tell an illegal money lender in Singapore apart from one with a money lender license?
There are a few methods of verification you can use to make sure the companies you’re speaking to are reliable money lenders. That’s because sometimes unlicensed lenders may pretend to be licensed. Here’s what you can do:
First, call the office landline of the licensed money lender to verify that it’s a legitimate number. You should obtain this number from the Ministry of Law’s list of licensed money lenders.
You should also ensure that the money lender has a physical office. Licensed money lenders are legally not allowed to complete processing a loan application entirely online without face-to-face verification or interview. This step has to be done before disbursing the loan amount to you. This is also a good opportunity for you to make sure they are a legitimate business and check their money lender license.
You can also look for reviews of the licensed money lender on Google, social media, and online forums by searching for terms such as “money lender singapore review”. This will give you a sense of how reliable and professional the lender is.
With so many unauthorised lenders out there, it’s important to do your research and choose an authorised money lender in Singapore.
What are the pros and cons of taking a loan from a private money lender?
There are numerous pros to taking a loan from a licensed money lender.
- As quick money lenders, they can provide instant approval for your loan application in as fast as 30 minutes.
- Easier loan applications with minimal documents required.
- Funds will be disbursed by cash or bank transfer immediately after the loan contract is signed
- No credit score discrimination, you can still get a loan even if you have a bad credit history
- Loans offered by licensed money lenders can be up to 6 times your monthly income
- With a maximum repayment of 12 months (though some lenders may extend up to 24 months), this makes a licensed moneylender loan an ideal choice if you’re looking for a fast small loan that you can repay fast
On the flip end, there are also cons to borrowing from licensed money lenders.
- High interest rates of up to 4% a month or 48% per annum
- High late interest rates of up to 4% a month or 48% per annum
- Late interest fees of up to $60 a month (for each month of late repayment)
There are also legal limits on late fees and charges that a Singapore money lender might charge. If you encounter otherwise, you may be dealing with an illegal money lender or a loan shark. You should report the lender to the police and refrain from dealing with them.
The total charges and fees from a licensed money lender, including interest, late interest, upfront fees, and late fees should not exceed the principal loan amount that you are borrowing from the licensed money lender. For example, if you are borrowing $5,000 from a licensed money lender, the total amount of your late fees, processing fees, interest, late interest, and any other charges should never add up to more than $5,000.
If you default on your loan and discontinue payments, a licensed money lender may take legal action. If they are able to make a successful claim from you in court, you may also need to repay the money lender’s legal costs as ordered by the court.
With that said, a reasonable money lender is unlikely to take negotiations on your loan to court, as long as you communicate your struggles with them and work out a new payment schedule.
How do I know if a Singapore money lender is right for me?
You might have found the best licensed money lender in Singapore, but that doesn’t mean they are the best option for you.
Determine whether a money lender is a right fit by checking loan contract terms and conditions, ensuring they are what you have agreed to. If there’s anything you are not sure of, make sure to clarify and get the answers you need.
You should also ensure that your licensed money lender communicates clearly with you. They should be polite and responsive.
Keep an eye out for any bad press around the money lender you’re working with. Any misconduct tends to make headlines, and they are good indications that you should steer clear of these and consider other options.
Synergy Credit is an established licensed money lender since 2009, and we are highly trusted by more than 1,900 customers.
Synergy Credit is an established
licensed money lender since
2009, and we are highly trusted
by more than 1,900 customers.
Navigating interest rates, fees, and loan terms by a legal money lender in Singapore
What types of loans can I take from money lenders?
Licensed money lenders offer many types of loans that cater to a variety of needs. Personal loans are one such offering, and this can mean many things – from study loans, wedding loans, vacation loans, medical loans, renovation loans, credit card debt consolidation loans, and property bridging loans.
If you are a Singaporean and are employed or self-employed, you will most likely qualify for a personal loan. And if you’re a foreigner in Singapore, you can also take a loan if you’re living and working in Singapore.
Some licensed money lenders also offer business and working capital loans that can help you grow your business and attain the resources that you need.
Cannot find the loan you need? We can customise a loan to cater to your needs.
Cannot find a loan you need?
We can customise loans that cater
to your needs.
Secured vs unsecured loans – What are the differences?
Secured loans are loans pegged to a collateral or asset. For example, a home loan may be pegged to the home that you are purchasing. If you default on secured loan payments, a lender can repossess your collateral. In the case of a home loan, the lender may seize your home.
When it comes to secured loans, you can only borrow according to the following limits:
A maximum of 55% of your Total Debt Servicing Ratio (TDSR – portion of your gross monthly income that goes toward repaying your loans)
For HDB and EC loans – a maximum of 30% of your Borrower’s Mortgage Servicing Ratio (MSR – portion of your gross monthly income that goes toward repaying any property loans)
For car loans – a maximum of 60-70% of the market value of the vehicle, including taxes and COE price of the vehicle
Unsecured loans, on the other hand, do not require any collateral to be pledged. While this may contribute to a less stressful loan journey for you, it also means that there is higher risk undertaken on the lender’s end when they are lending you money. And so, unsecured loans tend to have higher interest rates to account for that increased risk.
The maximum amount of money that you can borrow may also vary depending on whether you’re taking a secured or unsecured loan.
How do licensed money lenders calculate interest?
Licensed money lenders typically use reduced balanced interest rates. This means that your loan’s interest is calculated based on the outstanding loan amount at the end of a specific period, whether monthly or annually. Essentially, the amount of interest you pay reduces as time progresses.
This is different from a flat interest rate, which is calculated once, based on the full principal amount of your loan.
Here’s an example of how a $5,000 loan might look with a repayment period of 6 months and a reducing balance interest rate of 3% a month.
|Month||Outstanding principal amount payable this month||Interest amount payable this amount (3%)||Total amount payable this month||Balance amount remaining on the principal loan|
In this instance with a reduced balance interest rate, you’d only have spent $537.92 on loan interest. On the other hand, with a flat interest rate of 3% monthly on $5,000, you’d have spent a total of $900 on loan interest.
With a reduced balance interest rate in this scenario, you’d only have had to repay $922.99 monthly, whereas a flat rate would have meant you’d repay $983.33 monthly to clear your loan.
Interested to find out what interest rates we can offer you?
Interested to find out what
interest rates we can offer you?
How to apply for a loan with the best money lender in Singapore?
During the loan application period, your money lender may require a variety of documents from you. If you’re working with a Singapore online money lender, having these documents ready might mean you can get your loan application approved almost instantly, and later disbursed.
With Synergy Credit, you can complete a fast and easy online loan application in as little as 5 minutes.
Here are the steps in a loan application process
A loan executive will call you to confirm your loan application. You’ll be invited to head to the money lender’s office for a short interview to understand your financial situation and verify your documents.
If there are no issues, your loan application can be approved within 30 minutes.
The loan executive will share the loan terms with you and explain the loan contract to you.
Once you sign the loan contract, the funds will be disbursed to you instantly.
Interested in applying for a loan with us?
Interested in applying for a loan
How to get your loan approved with the lowest interest rates from the best money lender in Singapore
1. Have the required documentation ready
The documentation you will need may vary based on your employment and citizenship. You can rest assured with peace of mind knowing that licensed money lenders are obliged to comply with the Personal Data Protection Act (PDPA).
Here is what to have on hand:
- If you are employed (Singaporean/PR):
Prepare your IC, CPF contribution statements and your payslips from the last three months (if your monthly salary is more than $6,000).
- If you are self-employed (Singaporean/PR):
Prepare your IC, a Notice of Assessment (NOA) from IRAS, and proof of income (bank statements, commission statements, etc)
- If you’re a foreigner residing and working in Singapore:
Prepare your employment pass, proof of your home address and your payslips from the last three months.
- If you’re looking to take a business loan:
Prepare the latest 6 months’ bank statements, the ICs and NOAs of the major shareholders and directors, a copy of your tenancy agreement and other documents such as Bizfile and credit report with Credit Bureau Singapore (CBS).
2. Maintain a good credit history
To get yourself the most promising interest rates from licensed money lenders, make sure to repay your loan on time and avoid getting too close to your credit limit. Make sure to only apply for the credit that you need.
Check out these other important criteria to get a personal loan in Singapore.
Other things to keep in mind when looking for the best licensed money lender in Singapore
It can be stressful to manage multiple loans, so be careful and stay on top of your financial situation and keep track of outstanding payments to avoid getting caught in a debt cycle.
1. Stay away from illegal money lenders
- Licensed money lenders may let you apply for loans online anytime, but only operate during office hours
- If you encounter unlicensed money lenders, contact the police
2. If you unable to pay a money lender in Singapore
- Reach out to social service agencies
- Do not hesitate to request a payment extension.
3. If you can’t qualify for any loans
- Consider looking toward government assistance schemes for support.
NEED A LOAN? SYNERGY CREDIT IS YOUR TRUSTED FINANCIAL PARTNER
Regardless of your financial situation, Synergy Credit will help you reach your financial goals and find the best solution for your needs. Our application process is simple and fast, and we offer competitive interest rates.
NEED A LOAN?
SYNERGY CREDIT IS
Regardless of your financial
situation, Synergy Credit will
help you reach your financial
goals and find the best
solution for your needs. Our
application process is simple
and fast, and we offer
competitive interest rates.