Borrowing From Legal Licensed Money Lenders in Singapore 101

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 money lenders and banks?

In this ultimate loan guide, we address these questions and more, so read on!

What is a licensed money lender?

Licensed money lenders are authorised, legal money lenders in Singapore. They are registered loan companies that are legally allowed to lend money.

These quick and reliable 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 regulations for licensed money lenders here.

Differences between borrowing from private money lenders and banks in Singapore

There are differences when you try to take a loan from money lenders and traditional banks in Singapore. 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 legal money lenders in Singapore may vary, but all licensed money lenders will have to adhere to Singapore’s legal regulations.

The maximum amount of money you’re able to borrow through an unsecured loan is as follows, across all licensed money lenders in Singapore, at any one point in time.

If your annual income is below $10,000

A maximum of $3,000 if you’re Singaporean/PR
A maximum of $500 if you’re a living in Singapore as a foreigner

If your annual income is at least $10,000 and under $20,000

A maximum of $3,000 regardless of whether you’re Singaporean/PR, or a foreigner living in Singapore

If your annual income is $20,000 or more

Up to 6 times your monthly income no matter if you’re Singaporean/PR, or a foreigner living in Singapore

Credit history

If you have a bad credit history or an unstable income, a bank will likely reject your loan application.

Most authorised private licensed money lenders in Singapore, on the other hand, offer more leeway; you can get your loan approved even with bad credit history, though usually at a higher interest rate.

Repayment period

While banks generally give you up to 5 years to repay your loan, trusted licensed money lenders in Singapore would usually offer a repayment period of 12 months.

Other loan terms may vary based on the legal money lender, but a reliable licensed money lender may offer you a repayment period of up to 24 months on a case-by-case basis.

Speed of loan approval

If you’re in search of a fast cash loan or an instant loan online, you might stand a better chance with legal fast money lenders in Singapore. Quick money lenders can offer nearly instant approval with funds disbursed to you within 30 minutes, while banks can take up to a week or two to approve a loan application.

Interest rates and fees

Banks’ interest rates on a loan can vary from 3.3% to 6% per annum, while a licensed money lender’s interest rates vary from 1-4% monthly.

Any legal 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 every month that your loan instalment 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. Money lenders’ processing fees, on the other hand, can add up to a maximum of 10% of your principal loan amount.

How do I tell an illegitimate money lender in Singapore apart from one with a money lender license?

Before engaging instant online money lenders in Singapore, you should know how to differentiate between a registered and illegal lender. There are a few methods of verification you can use to make sure the companies you’re speaking to are indeed 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 registered money lender has a physical office. Private money lenders in Singapore are legally not allowed to complete processing a loan application entirely online without identity verification in-person or interview. This step has to be done before paying out 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 licence.

You can also look for reviews of the licensed money lender online 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 a reliable and authorised money lender in Singapore.

What are the benefits and drawbacks of getting loans from private money lenders in Singapore?

There are numerous benefits to taking a loan from money lenders in Singapore.

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 given in cash or bank transfer immediately after the loan contract is signed.
No credit score discrimination – you can still take out a loan even if your credit history is subpar.
Loans offered by legalised money lenders in Singapore can be up to 6 times one’s monthly income.
With a maximum repayment of 12 months (though some lenders may extend up to 24 months), this makes a licensed instant money lender loan an ideal choice if you’re looking for a fast small loan that you can repay fast.

On the flip side, there are also drawbacks to borrowing from licensed money lenders.

Hefty 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 fees of up to $60 a month (every time late repayment is made each month).

Just in case you didn’t know, there are legal limits on late fees and charges that a legitimate money lender in Singapore can charge. If you encounter otherwise, you may be dealing with an illegitimate money lender or a loan shark. You should report the lender to the police and refrain from dealing with them.

The total fees from a registered 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 instance, in the event that 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, an authorised money lender in Singapore 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, reasonable and trusted money lenders in Singapore are 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 legalised money lender in Singapore is right for me?

You might have found a reliable money lender in Singapore, but that doesn’t mean they are the best option for you.

Determine whether a legalised money lender in Singapore is a right fit by checking your loan contract’s terms and conditions (T&Cs), 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 has been a private money lender in Singapore 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 legal money lenders in Singapore

What types of loans can I take from local money lenders?

Legitimate money lenders offer many types of loans that offer immediate cash and cater to all kinds 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/Permanent Resident and are employed or self-employed, you will most likely qualify for a personal loan. If you’re a foreigner in Singapore, you can also take a loan if you’re living and working in Singapore. For both parties, it’s possible to take out a loan without a high income from legalised, reliable money lenders in Singapore.

Some reliable money lenders in Singapore 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. To illustrate, 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, the following limits apply:

A Total Debt Servicing Ratio of 55%. TDSR is the portion of gross income per month from a borrower which is used to repay all loans. Note: TDSR is taken into consideration when one is applying for a home loan.

A Mortgage Servicing Ratio of 30% for HDB and EC loans. MSR is the portion of gross income per month from a borrower which is used to repay every kind of property loan. Note: it only applies to home loans for the purpose of buying an HDB flat or an EC still in the midst of fulfilling its minimum occupation period.

60-70% of the open market value (OMV) of one’s vehicle, including taxes and COE price of the vehicle. This limit applies to vehicle loans in Singapore.

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 from licensed money lenders may also vary depending on whether you’re taking a secured or unsecured loan.

How do legal money lenders calculate interest?

Legitimate local money lenders typically use reduced balanced interest rates. This means that your loan’s interest is calculated according to the remaining 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 loan amount of $5,000 might look if it had a 6-month repayment term and a reducing balance interest rate of 3% monthly.

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
#1 (January)	$772.99	$150	922.99	$4,227.01
#2 (February)	$796.18	$126.81	922.99	$3,430.83
#3 (March)	$820.07	$102.92	922.99	$2,610.77
#4 (April)	$844.67	$78.32	922.99	$1,766.10
#5 (May)	$870.01	$52.98	922.99	$896.09
#6 (June)	$896.09	$26.88	922.99	$0.00

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, your spendings on interest payment would have summed up to $900.

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?

What does it take to get a loan with legitimate instant money lenders in Singapore?

During the loan application process, your money lender may require a number of documents from you. If you’re working with an online money lender in Singapore, having these documents ready might mean you can get your loan application approved almost instantly, and later disbursed.

As quick money lenders, Synergy Credit is able to complete a fast and easy online loan application in as little as 5 minutes. In case you didn’t already know, we are one of the top instant local money lenders in the western region of Singapore.

Follow these steps to apply for your fast money lender loan:

Apply for the loan online

A loan executive will drop you a call to confirm your loan application. You’ll be invited to head to the licensed money lender’s office for a short interview to understand your financial circumstances 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 go through the loan contract thoroughly with you

Once you sign the loan contract, the funds will be paid out to you instantly

Here’s some considerations to make before a loan application.

Interested in getting a loan with us?

How to get your loan approved with the lowest interest rates from an authorised 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 knowing that licensed online money lenders in Singapore are obliged to comply with the Personal Data Protection Act (PDPA).

Here is what to have on hand:

Given that you are employed (Singaporean/PR):
Prepare your IC, CPF contribution statements, and your latest three months’ payslips (if your monthly salary is more than $6,000).
Given that you are self-employed (Singaporean/PR):
Prepare your IC, a Notice of Assessment (NOA) from IRAS, and income proof (commission statements, bank statements, and so on).
Given that you’re a foreigner residing and working in Singapore:
Prepare your employment pass, evidence of your house address, and your latest three months’ payslips.
Given that 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).

Read more about taking a fast unsecured business loan.

2. Maintain a good credit history

To get yourself the most promising interest rates from legalised money lenders in Singapore, make sure to repay your loan promptly 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 a licensed money lender in Singapore

It can be stressful to manage multiple loans, so be careful, stay on top of your financial circumstances and keep track of outstanding payments to avoid getting caught in a debt cycle.

1. Stay away from illegitimate money lenders

Licensed money lenders may let you apply for loans online any time, but only operate during office hours
If you encounter unlicensed money lenders, get in touch with 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 government assistance schemes for support

Looking for 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. As one of the established instant money lenders, it is only natural our application process is simple and fast. Plus, we offer competitive interest rates.