Are you in debt and unsure of how to settle your licensed money lender?

Borrowing can be a burden – not only to the borrower, but also to his or her loved ones. The situation is even worse if you find it challenging to repay the debt.

However, you can manage the situation properly and avoid sinking into depression.

The Singapore financial industry provides different ways to repay your debt even in a financial crisis. You can also get assistance when you are unable to pay your money lender in Singapore.

How do you go about it? Find out how to settle debt with a licensed money lender and where to get help in times of crisis in this blog post.

What Are Licensed Money Lenders?

Legal money lenders are financial institutions that are allowed to lend money to borrowers in Singapore.

To be a licensed money lender, you must be registered under the Ministry of Law in Singapore. The authority provides an updated list of all licensed money lenders every month.

Any legal money lender in Singapore must abide by the government’s rules and regulations.

Licensed money lenders are not allowed to charge the borrowers a higher interest rate, late interest rate, late payment fee, or administrative fee than the agreed one.

If they do, the Ministry of Law has the power to block them from providing loans to Singaporeans.

On the other hand, loan sharks, or illegal money lenders, in the country don’t have a money lending license from the government.

They are not regulated, which is why they take advantage of borrowers with high interest rates and other unlawful acts.

What Types Of Loans Can You Borrow From A Licensed Money Lender?

Licensed money lenders provide various loans to borrowers. These include:

Secured Loans

A secured loan is acquired by providing collateral. This can be your car, house, jewellery, or any valuable item you owe.

If you cannot settle the debt, your lender can repossess the collateral in place of the debt you owe them.

Here are some items that are used for secured loans:

  • Car loans
  • Home equity loans
  • Personal asset secured loans

Unsecured Loans

You can also take out an unsecured loan from a licensed money lender. This means that you do not have to provide collateral to get the loan.

Here are the types of unsecured loans you can get in Singapore:

  • Personal loans
  • Business loans
  • Payday loans
  • Renovation loans
  • Wedding loans
  • Medical loans
  • Debt consolidation loans
  • Study loans
  • Vacation loans
  • Bridging loans
  • Grab/ Gojek/ Taxi loans

Pros And Cons Of Borrowing From A Licensed Money Lender

Taking a loan from a licensed lender that is a member of the Moneylender Association of Singapore (MLAS) has its advantages and disadvantages.


  1. Faster approval time: Licensed money lenders in Singapore provide loans within the quickest time possible. You can access a loan within 30 minutes if you have all the required documents. This is a good option if you have an emergency.
  2. They aren’t concerned about your credit score: Unlike banks, a legal money lender may not look at your credit report from the Moneylenders Credit Bureau. So you may still qualify for credit when your rating is bad.
  3. They offer a flexible loan repayment plan: When you meet your money lender, have a one-on-one conversation on how you will repay your debt, depending on your repayment ability. This is to help you have a flexible plan on how to settle your money lender without fuss.
  4. They provide alternatives if you have other loans: You can borrow any amount of secured loans in Singapore and as much as six times your monthly income for unsecured loans. You may have multiple loans, which can be challenging to settle. However, you can seek a debt consolidation plan from a money lender to help you restructure your debts. As a result, you get a loan from one lender at a time, easing your repayment burden.
  5. They are regulated: Another huge plus of borrowing from legal money lenders is that the Registry of Moneylenders in Singapore regulates them. Hence, they don’t overcharge borrowers because they must adhere to the set interest rates and loan fees set by the registry.


  1. Shorter loan terms: Usually, loans from legal money lenders have shorter repayment periods of up to 12 months, unlike banks, where you can repay your loan up to three years.
  2. Penalties on defaulting: If you miss your monthly repayment as agreed, your lender can charge you a late payment fee of not more than $60 and a late interest rate of no more than 4% per month.
  3. Loan amount depends on your annual income: In Singapore, the loan amount you can secure from a money lender depends on what you earn per year. For example, if you are a Singaporean citizen earning less than $20,000 per year, you can only qualify for unsecured loans worth $3,000.
  4. Affects your credit score in case of late payments: When you take out a loan and fail to pay on time, your money lender can report it to the credit bureau. This can significantly lower your credit ratings. As a result, you may not qualify for additional credit in the future.

How You Are Protected By Law When Borrowing From A Licensed Money Lender

Any time you sign up for a loan with a legal money lender in Singapore, you are protected by the Moneylenders Act.

The Act explains the regulation of money lending, the control that the Moneylenders Credit Bureau has, and the usage and disclosure of your information as a borrower by money lenders.

According to the Act, money lenders should charge their loans as follows:

  • An interest rate of not more than 4% per month
  • A late interest rate of not more than 4% per month
  • A late fee of note more than $60 per month
  • An administrative fee of not more than 10% of the principal loan granted

The Act also covers how licensed money lenders should advertise their products and services.

Lastly, it protects you from harassment or threatening behaviour during debt collection. Lenders are required by law to abide by the code of ethics from the Credit Association of Singapore.

If you come across any money lender breaking the law, such as charging a higher interest rate, you can raise a complaint against it with the registry at 1800-2255-529 or via its official website.

The law charges any legal money lender found guilty a fine of up to $20,000, or jail for up to six months, or both.

What If You Are Unable To Pay Back The Loan?

Sometimes life can be challenging, and paying your loan may become a burden. So if you are unable to pay your money lender in Singapore, is it all lost?

No, you can try these ways to handle the situation:

Request For An Extension

Reach out to your legal money lender and request for an extended period to repay your debt. This allows you to rearrange your moneylender debt repayment plan to suit your financial ability.

Get A Debt Consolidation Plan

Maybe you cannot settle your debts because you have several loans from different money lenders.

You can get a debt consolidation plan from a money lender to ease the burden. This helps you consolidate all your debt, meaning you will deal with one money lender for all your monthly repayments.

Also, you can secure a debt consolidation loan at a lower interest rate.

Seek Help From Social Service Agencies

Another way of how to settle your money lender in a debt crisis is to seek help from social service agencies.

Talk to organisations such as Credit Counselling Singapore, Blessed Grace Social Services, and One Hope Centre.

They can offer assistance in debt management counselling and negotiation of loan repayment plans where applicable.

What Happens If You Default On The Loan?

When you sign a loan contract with a licensed money lender, you should legally abide by it. Therefore, any late payments or defaulting have consequences.

Your money lender can report you to the credit bureau, which will lower your credit score.

As a result, securing a loan in the future may become more challenging because the lower your credit rating, the higher the loan rejection rate by banks and licensed money lenders.

Also, the lender can take you to court and sue you. If you had taken a secured loan, the lender may seize the collateral you pledged to make up for the loan you owe them.

Hence, never think of defaulting on your loan at any point.

Mark your repayment date and ensure you stick to it. It saves you from late payment penalties and improves your credit ratings.

How Credit Counselling Singapore Can Help

The Credit Counselling Singapore (CCS) and Credit Association of Singapore (CAS) announced that they would be helping those who borrowed from licensed money lenders and have repayment problems from 1 Apr 2020.

They will be assisting borrowers with debt restructuring plans, provided they also have loans from the banks.

Therefore, the Moneylenders Debt Management Programme (MDMP) from CSS and CAS helps distressed borrowers in debt with money lenders and banks.

If you are in such a state, you can approach them for help. You will find a holistic solution to address your debt issues.

As a result, you work and live better, and most importantly, repay your creditors. You can achieve all this by:

Enrolling In Online Debt Management Courses

The CSS’s Online Debt Management Course helps you to understand what to do when you have debt problems.

It gives you various options for your needs. You can learn the multiple ways debt collectors use to collect their debts.

Going For Financial Counselling

Another great way CSS can help you is through financial counselling. Sign up for a face-to-face counselling session in Singapore. This will guide you on how to settle your money lender when you have debt problems.

Other Ways To Get Help

Apart from reaching out to CSS, other organisations can help you in Singapore. If you only have debt with money lenders and are unable to settle your debts, reach out to:

  • Adullam Life Counselling
  • Arise2Care Community Services
  • The Silver Lining THK Centre for Family Harmony @ Circuit

You can also try these two options:

Apply For Debt Repayment Scheme

The Debt Repayment Scheme (DRS) is a scheme by the government that allows you to consolidate all your debts into one.

This means you will put all your bank, credit card, hire purchase, and licensed money lenders’ loans into one. The total amount of your loans should not exceed $150,000.

The maximum repayment period for the DRS should not be more than five years. You will be released from your debts after this period. Also, your monthly repayments depend on how much you earn and spend.

However, the DRS is not an easy way to pay your legal money lenders. Besides, not everyone who applies qualifies for it.

It is essential to know that if you are under the DRS, you cannot be able to take out other loans. Money lenders in Singapore will not accept loan applications from you in the future.

File For Bankruptcy

This is the last option to take when you are unable to pay your money lender in Singapore.

You can file for bankruptcy, or your lender can make you bankrupt. However, you have to owe it more than $15,000 and above for the lender to take this action.

If you find yourself in this state, don’t feel like it is the end. You still have a chance to start over.


Getting a loan from a legal money lender in Singapore can take less than 30 minutes.

However, the question of how to settle a debt with a licensed money lender can be a hassle. You should adhere to the contract when it comes to repayment.

However, life may take an unexpected direction, which may land you in debt problems.

If this happens, you can reach out for help from social service agencies, seek a debt consolidation plan from a money lender, or, in the worst-case scenario, apply for the DRS.

For more information on how to settle debt with a licensed money lender, get in touch with U Credit. Our loan advisors will offer advice on how to repay your loan.