Singapore’s money-lending industry has come a long way since its inception in 2008. Modern licensed moneylenders are strictly regulated and bound to uphold professional service standards, but this is something that may not be widely known. In this post, we will explain the requirements and rules for obtaining a money lending licence in Singapore, how you can check if your lender is licensed, and what you can expect from them.
How can you tell if a money lender has a money-lending licence in Singapore?
Check their details against the official licensed money lenders’ list
A quick way to confirm if a money lender is licensed is to check the name of the business, its contact details, and the listed address against the official list of licensed money lenders maintained by the Ministry of Law.
However, this isn’t a foolproof method. Illegal lenders who do not have a money lending licence in Singapore may impersonate accredited lenders by using a name from the official register. The best way to be sure you are dealing with the right business is by paying a visit to their office(s).
Check how they advertise
Another good indicator of whether a money lender is legitimate is to observe how they advertise. Singapore law restricts money lenders to only advertising on their websites, placing advertisements on their office premises, and in business or consumer directories. You can find more details here (under point 6).
If you receive phone calls, WhatsApp messages, SMSes, social media messages, or emails from someone claiming to be a licensed money lender, you should verify their identity before proceeding. Unfortunately, some licensed moneylenders may use these tactics, but it is illegal for them to do so. You may report them to the Ministry of Law by dialling 1800-2255-529.
Check your loan contract
The third sign of a licensed money lender is the loan contract itself. Licensed lenders have to follow the rules set in the Moneylenders Act for every contract. They must include specific information such as the loan principal, interest rates, loan term (period), as well as other relevant terms, including penalties and charges.
What are the rules and regulations for licensed money lenders?
Aside from the licensing requirements, Singapore law sets limits on the fees and penalties a lender can charge, as well as general guidelines on their conduct.
Here are 5 of the most important rules and regulations:
- Interest rate cap – Licensed lenders may only charge a maximum of 4% interest per month on the remaining amount owed (not the original principal amount). This is for both secured and unsecured loans.
- Late interest cap – Lenders may only charge a maximum of 4% interest per month on the amount that is late (Not on the principal amount or remaining balance).
- Caps on other fees
- Loan processing fee – This is capped at 10% of the loan principal
- Late fees – No more than S$60 for each month payment is late
- Legal fees – As ordered by the court for successful claims on loans in default
- Total fees and interest cannot exceed 100% of the loan principal.
- Debt recovery measures – There are strict limits on the methods that a lender can employ to recover debt and harassment of any kind is strictly not allowed. This is explained in greater detail below.
- Adherence to the Moneylenders Act – Money lenders who are granted a money-lending licence in Singapore have to abide by relevant legal statutes, in particular, the Moneylenders Act 2008 and Moneylenders Rules 2009.
Borrowing from licensed money lenders versus unlicensed money lenders: What are the differences?
Unlicensed money lenders, also known as ‘loan sharks’ or ‘Ah Long’, may seem like a convenient option but they are dangerous, unpredictable, and very expensive despite their ‘assurances’. Here are 5 of the main differences:
- Cost regulation – Licensed money lenders are bound by the Moneylenders Act in terms of the fees and interests they charge. Loan sharks can charge whatever they like and change the terms as they please.
- Debt collection – Licensed money lenders are restricted in their methods of pursuing outstanding debts to minimise harassment to the borrower, even when a payment is overdue. Loan sharks often resort to harassment, intimidation, vandalism, and even violence.
- Loan approval – Licensed money lenders are allowed to give provisional loan approval before a face-to-face meeting but can only finalise it in person. This protects the borrower from identity fraud and the money lender from financial fraud. Loan sharks don’t care about the risk to you – so if any money lender does not want to meet you in person, be wary that they may be illegal.
- Loan contract – Before your funds are disbursed to you, a licensed money lender is required to furnish a loan contract and go through it with you, making sure you understand the terms of the loan you are taking. These terms should include the loan principal, applicable interest rates, repayment period, and other fees and charges, and must be clearly and transparently displayed in your loan contract. Both parties must then sign off on the contract. Loan sharks usually do not have a contract that details all these, allowing them to freely change the terms of your loan to squeeze you for more money.
- Office hours – Most licensed money lenders operate roughly within normal business hours, with some closing their shops slightly later. Be wary of a money lender that claims to provide 24-hour services. (This does not include online loan applications with licensed money lenders as the websites are online all day.)
Defaulting on a loan
In the unfortunate event that a borrower is unable to repay a loan, licensed money lenders are open to negotiating the terms of your loan to help you pay it back easier.
However, should a debtor try to shirk their debt obligations, licensed money lenders may attempt these 3 courses of action:
- Send a Letter of Demand (LOD) by post to the debtor’s home or office address.
- Visit the debtor’s home or office themselves or delegate the task to a debt collection agency.
- Take the debtor to court. If the debtor loses the case, they may have to pay the money lender’s legal costs, too.
Disputes and Harassment
The code of conduct and good practices set by MinLaw states that money lenders cannot harass their debtors even if payments are overdue. Harassment includes bullying, using threatening words and actions, as well as acts of violence. This prohibition also covers the behaviour of any external debt collection agency hired by the money lender, acting as a safeguard against thuggish behaviour.
Anyone who is a victim of money lenders’ harassment may:
- Report it to the police
- Lodge an official complaint with the Credit Association of Singapore
- Lodge an official complaint with MinLaw’s Registry of Money Lenders
- Consult with social service agencies on the best course of action (Point #11 here).
How much can you borrow from licensed money lenders?
The total amount you can borrow from a licensed money lender depends on your residency status in Singapore as well as your annual income:
| Annual income | Singapore Citizens and PRs | Foreigners living in Singapore |
| Less than $10,000 | $3,000 | $500 |
| $10,000 or more but less than $20,000 | $3,000 | |
| Over $20,000 | 6 times the monthly income | 6 times the monthly income |
If you are ready to apply for a loan, remember to check out this step-by-step guide.
But regardless of how large or small an amount you need to borrow, always ensure that you are dealing with a licensed money lender.
If you are ready to apply for a loan, Synergy Credit is a leading money lender with a valid money lending licence in Singapore. We offer fast approval and transparent interest rates and charges to help you meet your financial needs. Contact us today!
