Singapore’s moneylending industry has come a long way since its inception in 2008. Modern licensed money lenders 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 to check a money lender’s licence properly, what you can expect from lenders with a valid money lender licence, what some of the licensed money lender new rules are and how these new money lender rules protect you.
Application for a money lender’s licence: Is it instant?
No, an application for a money lender’s licence takes time to be processed and assessed. It is definitely not instant.
In fact, the Ministry of Law’s Registry of Moneylenders would require approximately four weeks to process your application for a money lender’s licence, even if all necessary documents are in place.
As a side note, no new money lender’s licence is being issued at the moment. The Registry of Moneylenders has not indicated when the granting of new money lenders’ licences will resume.
Requirements for obtaining a money lender’s licence in Singapore
Things you need to do to apply for a money lender’s licence
Other than preparing the fees and documents required for getting a money lending licence, there is preparatory work you need to do in order to apply for a money lending licence.
Here’s a quick look at what you need to do before you can even apply for a money lending licence:
- Choose someone (or yourself) to be your money lending business’s Test-Qualified Manager
- Said person must pass the mandatory Money Lender’s Test
- Fulfil any other prerequisite as stated in the various documents — (i) Moneylenders Act (Cap.188); (ii) Moneylenders Rules 2009; (iii) Moneylenders (Prevention of Money Laundering and Financing of Terrorism) Rules 2009
Fees for getting a money lending licence
- Non-refundable application fee: $600
- Compulsory Money Lender’s Test: $130 each attempt
- Money lender’s licence fee: $1,500
- Security deposit: $20,000
Documents required for getting a money lending licence
- Clearly documented paperwork showing your money lending business’s funding availability and sources
- Your chosen Test-Qualified Manager’s education qualification certs
- Front and back scanned NRIC copies of everyone involved in your money lending business, including employees
- Duly filled Annex form
How to check a money lender’s licence for legitimacy?
Cross-check their details against the official authorised money lenders’ list
A quick way to verify and check if a money lender’s licence is legitimate is to check the name of the business, its contact details, and the listed address against the official list of licensed lenders maintained by the Ministry of Law.
However, this isn’t a foolproof method. Illegitimate 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). Ask to take a look and check the money lender’s licence in person!
Do the following checks apart from checking the money lender’s licence
#1 Pay attention to how they advertise
Another good indicator of whether a money lender is legitimate is to observe how they advertise. Singapore law restricts authorised lenders to only advertising on their websites, placing advertisements on their office premises, and in business or consumer directories. All other advertising methods are prohibited.
If you receive phone calls, WhatsApp messages, SMSes, social media messages, or emails from someone claiming to be a licensed lender, you should verify their identity before proceeding.
Unfortunately, some authorised lenders 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.
#2 Scrutinise your loan contract
The third sign of an authorised 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 (i.e. tenure or repayment period), as well as other relevant terms, including penalties and charges.
What can you expect from an authorised lender with a legitimate money lender’s licence?
The Singapore law sets limits on the interest rates, 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 interest of 4% per month on the remaining amount owed (not the original principal amount). This is for both secured and unsecured loans, excluding business 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 not yet due).
- 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. That’s not all. 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 moneylending licence in Singapore have to abide by relevant legal statutes, in particular, the Moneylenders Act 2008 and Moneylenders Rules 2009.
Taking out a loan from licensed lenders versus unlicensed lenders: What are the differences?
There’s a difference between licensed and unlicensed lenders. For the latter, unlicensed 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 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 — Legalised 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 — Legalised lenders are allowed to give provisional loan approval before a face-to-face meeting, but can only finalise the loan approval 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. 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 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. These 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 loan 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 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. (Note: This does not include online loan applications with licensed money lenders as their websites are available online all day.)
What are some of the licensed money lender new rules you should know about?
#1 Combined loan caps on unsecured loans
A new money lender rule was introduced to limit the total amount borrowers can take via unsecured loans across all licensed lenders at any one point in time. Previously, the loan caps applied to individual lenders.
| Yearly income | Singaporeans and PRs | Foreigners living and working in Singapore |
| Lower than $10,000 | $3,000 | $500 |
| $10,000 or more but shy of $20,000 | $3,000 | |
| Upwards of $20,000 | 6X a borrower’s monthly income | |
How this licensed money lender new rule protects you: This protects you from overborrowing and chalking up insurmountable debts.
#2 Borrower’s Loan Information Report must be obtained and assessed before the granting of any loan
All licensed lenders are required to obtain borrowers’ Loan Information Report from the Moneylenders Credit Bureau (MLCB) and fairly assess borrowers’ existing balance, active loans and repayment status with licensed lenders, etc before they can approve any new loans.
Additionally, licensed lenders have to comply and submit timely, accurate details to the MLCB each time a borrower repays his or her loan.
How this licensed money lender new rule protects you: This safeguards you from borrowing too much and allows you to be fairly assessed.
What happens if you default on a loan?
In the unfortunate event that you are unable to repay a loan, legal 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 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, as ordered by the court.
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).
Ready to apply for a loan from a lender with a valid money lending licence?
Check out this step-by-step loan application guide before applying with a licensed lender.
Regardless of how large or small an amount you need to borrow, always ensure that you are dealing with a registered money lender.
Synergy Credit is a leading money lender with a valid money lending licence in Singapore. Whether it’s for a fast cash loan or business loan, we offer fast approval alongside transparent interest rates and charges to help you meet your financial needs. Contact us today!
