Are you having a hard time getting a loan from the bank? Maybe you have a low credit history or don’t have the collateral they are asking for.
What if friends and family can’t help you with a loan when you need it?
Well, there is another way to get a loan easily and quickly if you’re in Singapore — from money lenders. But dealing with money lenders can be tricky if you don’t know if they are licensed or just scammers.
In this article, we’ll guide you on how you can identify a licensed money lender in Singapore, choose one, and show what to do after the loan has been granted.
Let’s get started.
Which Are The Licensed Money Lenders In Singapore?
Licensed money lenders in Singapore have been granted a moneylending license by the Ministry of Law.
They provide loans to Singapore citizens and permanent residents. They can also provide loans to foreigners who are working legally in Singapore.
The process of obtaining loans from a licensed money lender isn’t as stringent as banks.
And in some instances, you might not need collateral if you’re applying for unsecured loans.
This makes it easy for you to quickly get a loan if you are in an urgent situation, and need the cash to settle bills.
However, not every money lender operating in Singapore is legal. Some of them are actually loan scammers deceiving innocent people.
Keep reading to find out how you can check if a money lender is legal.
How To Check If A Money Lender Is Licensed
Because it’s possible for loan scammers, loan sharks or illegal lenders to identify as licensed money lenders, the Ministry of Law created a list of licensed money lenders in Singapore.
You can access the list by clicking here.
As of Aug 2022, this list contains 154 money lenders including U Credit, that are licensed to operate in Singapore.
Whenever you are considering taking a loan from a money lender, or someone reaches out to you claiming to be a money lender, the first thing you should do is to check that list to find out if the money lender is licensed.
The list also includes a list of money lenders at the bottom that have been suspended. Although as of Aug 2022 there are no suspended money lenders, this is something to keep in mind.
You don’t want to obtain a loan from a licensed money lender that has been suspended.
It has already gone against the Ministry of Law, and obtaining loans from such a lender might make you an accessory to that crime.
Are Licensed Money Lenders Allowed To Advertise?
Licensed money lenders are allowed to advertise, but in the manner specified by the Ministry of Law.
As of 11 Nov 2011, money lenders are only allowed to advertise via three channels:
- On websites belonging to the money lender
- In business and/or consumer directories
- Using advertisements placed within or outside the money lender’s business premises (e.g. on the side of the wall, on the window, etc)
A licensed money lender that is following the above directives won’t call you, text you via SMS, send you emails, or grant you a loan over such mediums.
In addition, you are advised to not solely rely on a money lender’s advertisement before signing up for a loan.
Understand the terms of the loan contract, and be clear about what’s permitted by the Ministry of Law when it comes to borrowing from money lenders.
Unacceptable Behaviours From Licensed Money Lenders
Although money lenders can be licensed, they can be behaving in certain ways that are not allowed by the Ministry of Law.
When you notice such behaviours from a money lender, if you haven’t taken the loan yet, stop the process immediately and report it.
If you have, and you’re being harassed, file a complaint to the Registry of Moneylenders and get help.
These unacceptable behaviours include:
- Use of abusive language or threatening you in any manner
- Asking you for your Singpass ID or password
- Withholding your personal identity documents (for example, your passport, driver’s license, or NRIC)
- Granting you a loan over the phone, SMS or email before giving you the relevant documents (loan application form, income tax assessment, copy of a signed loan contract etc)
- Asking you to sign a blank or an incomplete Note of Contract for the loan
- Withholding a part of the principal loan amount
Fees And Rates Charged By Licensed Money Lenders
Before we look at the fees and rates money lenders in Singapore are permitted to charge, it’s important to consider how much can be borrowed from money lenders.
Money lenders can give out two types of loans, secured loans and unsecured loans.
Secured loans require a form of collateral before you’re granted the loan. There is no threshold for the amount of secured loan you can borrow.
For unsecured loans, however, there is a threshold on the amount that can be borrowed, and they differ based on income, and whether the borrower is a Singapore citizen or not.
|Annual Income of borrower
|Citizens and Permanent Residents
|Less than $10,000
|$10,000, but less than $20,000
|At least $20,000
|Up to 6x their monthly income
|Up to 6x their monthly income
Now that you have an idea of how much you can borrow, how much can you be charged for borrowing?
According to the Ministry of Law, lenders with a money lender’s license can charge:
- An interest rate not more than 4% per month
- A late payment fee not more than 4% per month and capped at $60 per month
- An administrative fee that should not exceed 10% of the principal loan amount granted
- Legal fees that may be permitted by the court for a money lender’s recovery of the loan
Note that the interest rate fee is charged on the loan amount that has not been paid yet. So, if you took out a loan of $10,000, and you have $5,000 unpaid, the interest rate of 4% is charged on the $5,000 for that given month.
Also, the late payment fee is only charged on the installment that is due for payment.
For example, let’s say you repay your loan in a $2,000 installment every month, and for a given month you delay payment. The 4% is charged on the $2,000 only – and not the rest of the unpaid balance.
How To Know If It’s A Loan Scam
How do you differentiate a loan scammer from a legal money lender?
Most people have fallen victim to loan scams, losing lots of money in the process. This should not be you. The following can help you identify if a money lender is a scammer or licensed:
- Granting you a loan remotely
- Unacceptable advertising methods
- Unacceptable fees and rates
- No physical address
- They aren’t on the list of licensed money lenders
Granting You A Loan Remotely
Licensed money lenders are not allowed to grant you a loan over a call or text without a face-to-face meet-up at their offices or loan contact.
It is mandated that you and the money lender meet at their approved place of business, so you can be verified before being granted a loan.
If the money lender is unwilling to do this, this is a huge red flag that they are loan sharks or scammers.
Another huge red flag is when they ask you to pay an upfront fee to process your loans.
The processing fee is taken out of the loan amount and capped at 10%.
Unacceptable Advertising Methods
We have discussed the advertising methods for licensed money lenders above.
Any advertisement that deviates from what the Ministry of Law specifies instantly makes that person a loan scammer.
Advertisements on social media, over SMS, email or phone, are unacceptable.
Keep in mind that these scammers might go as far as creating websites and social media accounts that mimic those of licensed money lenders. Don’t fall for it.
To confirm if a website is accurate, compare the URL to that which is listed for the money lender in the licensed money lender list.
Unacceptable Fees And Rates
Any money lender that charges above the stipulated rates we looked at above is most likely a loan scammer.
Don’t be negligent enough to assume that the interest rate and late payment rate do not exceed 4%. Ask about the rates, and read the loan contract carefully.
Licensed money lenders are open about their rates, and will not charge higher than the specified rates.
No Physical Address
If a money lender has a website, but doesn’t have an approved physical address for business, it is likely a scammer.
A licensed money lender will have a physical address, where it meets clients face to face for verification and granting of loans.
Do not agree to meet in a place that is different from the lender’s registered place of business.
It Is Not On The List Of Licensed Money Lenders
This is your best bet to differentiate loan scammers from licensed money lenders.
If the money lender is not on the list, just forget about doing business with them, as they are likely scammers.
What To Do Before Taking A Loan
Before you take a loan from a money lender, here are a few things you should keep in mind.
Determine The Type Of Loan You Want
The first step is to determine what type of loan, and the amount of loan you want.
Loans from money lenders can be secured or unsecured. Your eligibility status determines the amount of money you can borrow.
Get All Your Documents Ready
Depending on the type of loan you are soliciting, and whether you’re a citizen or foreigner, the document you’ll need for the application process may vary.
However, the common ones include:
- Proof of income and/or employment
- Proof of residency
- Credit score history and previous CPF statements
Other documents such as your tenancy agreement, employment letter, income tax statements or bank statement (for foreigners)
Understand The Terms Of The Contract
Before you sign the contract to be granted the loan if your application is successful, you need to understand the terms of the loan contract.
What fees are they charging for interest rates and late repayment? What is the admin fee? Are there any caveats such as liquidating your property to settle the licensed money lender?
Carefully read through the terms, and ask questions to get a thorough understanding.
What To Do After The Loan Is Granted
Once a loan has been granted by the money lender, you should:
- Ensure the money lender gives you the correct principal of the loan excluding the agreed administrative cost.
- Keep all relevant documents including the loan contracts, and receipts from payments made to service the loan.
- Get a statement of account at least twice a year (January and July) to ensure that everything is accurate and up to date.
- Pay your installments on time to avoid late payment fees, and incurring more debt.
Where To Get Help
You may need to get some form of help at any point in time during the moneylending process, and after the loan has been granted if:
You Are Being Harassed By A Money Lender
Harassment or threat from a money lender harassment or threat is not acceptable.
If you’re facing that situation, contact the Registry of Moneylenders to get help. You can call them at 1800-2255-529 or visit its website to file a complaint.
You Can’t Repay Your Loan
If you are having a hard time paying off your loan, and have exceeded the due date or extension period to repay the loan, you can:
- File for bankruptcy
- Consider the Debt Repayment Scheme
- Get help to negotiate the loan
The Registry of Moneylenders does not help borrowers negotiate their loans.
If you need help renegotiating your loan, you can find some recommended creditors by the Registry of Moneylenders at the bottom of this page.
Do you need expert information on the process involved when borrowing from a money lender?