The cost of living in Singapore is high. With the housing, transportation, and health costs increasing month on month, it can be tough to live a comfortable life in this country. Add to this the cost of nice-to-haves like a luxury vacation, a swanky car, or the latest smartphones and iPads. In fact, 2017 data reveals that at least 20 percent of Singaporeans are earning less than their monthly expenditure. No wonder, most Singaporeans run short on cash and apply for personal loans.
It isn’t a bad decision to borrow money when in need. However, when you are in a crisis, the only thing on your mind is to get money, causing you to make erratic decisions that you may regret later. Several unlicensed moneylenders (UML) and loan sharks present themselves as reputable lenders who are willing to lend money without the hassle of a lengthy loan application process. In a cash-crunch situation, this may sound like the best option, causing you to sign the agreement without even realizing the aftermath.
UML and ah longs are on a constant lookout for gullible individuals who are financially broke or need cash urgently. But borrowing from them is an open invitation to bigger debts, heavy interest rates, harassment, and undue stress.
Read on to know why you should avoid dealing with such unauthorized lenders even if you are in the middle of a financial crisis.
1. Your Debt Will Never Be Repaid
UML and loan sharks charge sky-high interest rates that can compound to a large sum of money, making it next to impossible for borrowers to fully pay the debt. Most borrowers desperate for financial help often fall for the deceitful promotion tactics used by these unauthorized lenders. Since these lenders are not bound by law, they never communicate the precise interest rate and hidden costs and keep changing the terms and conditions to suit their pockets.
Unlicensed moneylenders and ah longs will never share the detailed terms and conditions in the loan agreement. They tactfully get you to sign the agreement (mostly a black document) by saying that the late fees are minimal. So, when you miss a payment they suddenly quote unreasonable penalty interest rates and surcharges that are way higher than what licensed lenders would charge.
Lastly, unauthorized lenders rarely allow you to make a full settlement of the debt as the exorbitant interest rates and penalties add to their profits. Instead, they may pressurize you to take another loan to fully pay off the previous one, thereby trapping you in larger debts, with higher interest rates.
Thus, with these hidden costs and changing conditions, the burden of your debt will grow exponentially, forcing you to give up your personal belongings and assets to pay for a debt that will never be settled.
2. They Can Harass You for Repayment
Unlike licensed moneylenders, the unauthorized ones are not bound by the Ministry of Law, Singapore. So, they often employ illegal methods, such as harassment, threats, blackmails, and public and social media shaming to recover their money. They often harass the borrower’s family, friends, and neighbors to force them to make the payments. What’s worse, they may resort to violence, vandalism, and crimes like assault and arson to get their money back.
Thus, it is best not to deal with an unauthorized lender. When you are in need of a personal loan, look for authorized moneylenders with a valid license from the Ministry of Law, Singapore.
3. You Can Lose Personal Possessions Given as Collateral
Unscrupulous moneylenders often ask for personal belongings and assets as security to ensure that you continue making the payments regularly. They illegally claim your personal identification documents, namely the passport, NRIC, work permits, driver’s license, or ATM cards that hold sensitive information.
These documents deserve to be protected at all costs to prevent cases of identity theft. If you trade these for a loan, the unlicensed lender may misuse your personal details in the future. Further, if you fail to repay the debt the lender may never return them to you.
4. It’s Illegal to Borrow from Unlicensed Moneylenders
UML operate illegally. So, they hardly care about breaking the law when using illicit means to recover debts. Moreover, in several cases, the Singapore law authorities have observed that borrowers who are unable to repay the loan to UML have offered to assist them in illegal activities. These borrowers become a runner or harass other borrowers for recovery, thereby acting on behalf of these illicit lenders. A few others have given their bank account details to assist these illicit lenders in their transactions.
Under the Moneylenders’ Act, people borrowing from UML, offering their bank account or ATM card, distributing pamphlets, acting as a lookout, being a runner, or acting as a harasser for loan sharks are presumed to be supporting the business of unlicensed moneylending. Such individuals face serious consequences, such as a massive fine, rigorous imprisonment, and even caning.
Check out this case where a borrower was acting on behalf of the UML, issuing loans to foreign workers and foreign domestic workers (FDW). The alleged person was charged for assisting in the illegal lending business and harassing other borrowers.
Thus, by borrowing from a UML you too are breaking the law. Isn’t that a strong reason not to approach them for money?
5. Better Personal Loan Alternatives Exist
Regardless of how cash crunched you are, it is wise to stay away from unlicensed lenders who can trap you in bigger debts and cause excessive stress. Instead, get in touch with a licensed moneylender who can offer you a personal loan at a reasonable interest rate.
Accredited lenders are regulated and designated by the Government of Singapore. Hence, they abide by the regulations and help individuals who have a hard time getting loans.
Also, most banks and financial institutions reject loan applications from people with a poor credit rating. Licensed lenders, on the other hand, offer a separate loan package for such individuals, enabling them to get their hands on fast cash.
Having said that, it is important to spot UML or ah longs who falsely claim of having a valid license. Here are a few warning signs that will tell you that the lender is unauthorized to lend money.
- They do not have a valid license issued by the Ministry of Law, Singapore.
- They work without a written contract. Even if they have one, the terms and conditions are vague and not legitimate.
- They often ask borrowers to sign on blank documents.
- They readily agree to lend a large loan even if you have a modest income.
- They use high-pressure tactics to get you to borrow from them.
- Their interest rates and processing fees are exorbitant.
- They are often rude and aggressive.
- They do not have a registered office or claim to have one but discourage you from visiting them.
- They get in touch with you through SMS, WhatsApp messages, or phone calls.
When you need money to provide for your essentials, the only thing that may concern you is the money in hand, not the aftermath. However, even in a crisis situation, it is important to keep a good head on your shoulders and select a licensed moneylender for a personal loan.
Borrowing money from an unlicensed moneylender or loan shark can lead to dire consequences. So, steer clear of these illegal entities who can ruin your life in more ways than one.
Questions? We have answers
A loan shark is an individual who offers loans at extremely high interest rates, has unfair repayment terms, and operates outside of the law.
When borrowers fail to repay a loan, a loan shark will use the threat of violence to scare them as well as shame them by painting the borrower’s home with paint. The sign “O$P$” which means Owe Money Pay Money and the borrower’s unit number will be painted using red paint.
Loan sharking is illegal in Singapore and the penalties for breaking this law are severe. Loan sharks can face up to 5 years of imprisonment, fined between $5,000 and $50,000, and receive between 3 and 6 strokes of canning.
It is illegal to lend money without a license, however it is not illegal to borrow money from a loan shark. If the money was lent illegally, chances are, you do not have to pay the money back. The loan shark has no legal right to collect the money and they cannot call the police as the loan is illegal.
Nevertheless, the perils of borrowing money from a loan shark far outweigh the potential benefit of receiving “free money”. Loan sharks are dangerous individuals who will use methods that consist of threats and violence to ensure that they get their loans repaid.
Therefore, for your own safety, you should never borrow money from an unlicensed money lender.
Loan sharks usually prey on lower income people who are incapable of obtaining a loan from mainstream banks and lenders. A loan shark would take advantage of the borrower’s desperate situation by offering a loan at an unreasoably high interest rate paired with unfair terms and conditions.
The high interest rate would make it almost impossible for the borrower to repay the loan and hence, would be at the mercy of the loan shark. This often leads to family members getting beaten up and threatened by the loan shark or in extreme cases, may lead to the borrower committing suicide. For those reasons, loan sharking is illegal in Singapore.
On the other hand, borrowing from a bank or a licensed moneylender is legal as these lenders are constantly being audited by the government for fair lending practices. There is even a cap on how much interest a licensed money lender can charge a borrower. Read more on borrowing from licensed money lenders here: https://blog.cashguru.sg/borrowing-from-licensed-moneylenders/
Yes. Loan Sharks still exist in Singapore. In fact, there has been a growing number of harassment cases reported to the police in 2019 as compared to 2018. Loan sharks have moved towards the digital landscape and now use technology to offer loans to unsuspecting borrowers via mobile messaging. This new way of operating allows loan sharks to target a larger number of people at one go.
If you are getting harassed by text messages sent by loan sharks, read our article on how to block text messages from loan sharks here:
You can report loan sharks anonymously by calling the hotline at 1800-X-AH-LONG which translates to 1800-9-24-5664. You can also notify the police online via I-Witness.
A vast majority of Singaporeans rely on alternative sources of finance for their education, leisure, health, wedding, and other expenses. However, in Singapore, taking a loan is often seen in a bad light. In fact, several myths about moneylending prevent the citizens of Singapore from approaching moneylenders, forcing them to opt for alternative routes to provide for their emergency needs. This often lands them in greater debts.
The Monetary Authority of Singapore (MAS) has left little space for unlicensed moneylenders and loan sharks. As a result, moneylending is becoming an effective tool that can support you when you are short on cash.
In this post, we aim at busting the top myths associated with moneylending, enabling you to confidently approach a moneylender for a personal or payday loan.
1. All Moneylenders Are Loan Sharks
That’s not true! In Singapore, moneylending is governed by the Moneylenders Act which effectively tackles the issues of loansharking and related harassment. The Monetary Authority of Singapore’s commitment to such illicit activities has led to a steady decline in loansharking cases since 2009. Thus, the number of loan sharks in Singapore has significantly gone down.
Secondly, you can easily tell a loan shark from a licensed moneylender. Loan sharks will contact you via any media that doesn’t involve face-to-face interactions, namely cold calling, SMS, or Whatsapp. Further, they will offer you lucrative finance options like easy access to money or easy repayment plans without enquiring about your credit-worthiness. They will ask you for your NRIC picture that holds critical information, such as your address and birth date. After you send these details, they will transfer money to your account without a contract to protect you.
Thus, it’s easy to differentiate between loan sharks and licensed moneylenders. Before borrowing cash, it is important to weigh your moneylending options and get some trustworthy online financial advice, enabling you to stay away from the ah longs and count on a licensed moneylender.
2. There’s No Way to Spot an Unlicensed Moneylender
No person is allowed to be a moneylender unless they have a license or are excluded or exempt moneylenders under the Moneylenders Act.
- Excluded Moneylenders are those who are permitted to lend money under any other written law. For instance, a pawnbroker may not be licensed under the Moneylenders Act but maybe holding a license under the Pawnbrokers Act. Such a moneylender may be considered as a licensed moneylender.
- Exempt Moneylenders are those who are specifically exempted from holding a moneylender’s license based on the discretion of the government and subject to the approval of an application for exemption, as provided under the law.
Use the aforementioned information to determine whether or not a moneylender is licensed under the law.
Further, licensed moneylenders are prohibited from soliciting loans through WhatsApp, text messages, or phone calls. They can only promote their business through:
- Business or consumer directories (print or digital)
- Their own internet websites
- Advertisements placed in and around the approved place of business.
Further, all moneylenders need to pass a test conducted by the Registry of Moneylenders to procure a valid license. As of July 2019, Singapore has 158 licensed moneylenders. Go through the list of licensed moneylenders on the Ministry of Law website and check their registration or license number.
Lastly, a licensed moneylender will never ask you to sign blank documents or incomplete contracts, rush you into signing a Note of Contract, or offer dodgy information pertaining to the loan.
3. Moneylenders Only Lend Money to Salaried People
If you are self-employed or work on a contract, you may think that moneylenders may not be interested in lending money to you. However, the fact is, licensed moneylenders are more flexible than you think. If you can provide information, such as your employment details, bank statements, and SingPass details, you qualify for a loan just like a salaried person.
4. Hidden Fees Are Misleading
You will find the fees misleading only if you fail to exercise due diligence before signing the contract.
Besides charging a maximum interest rate of 4 percent per month, licensed moneylenders can impose other fees as provided by the law. Thus, depending on the terms of the contract, they may charge late payment fees, loan approval fees, upfront administrative costs, and legal costs incurred by them to recover the loan amount. However, all these costs put together cannot exceed the principal loan amount.
Make sure all the fees are spelled out aptly in the contract. Also, if you do not understand the contract terms, it is advisable to check with the moneylender or your financial advisor.
5. Only Banks Can Provide Business Loans
Most business owners turn to banks for business loans. However, licensed moneylenders in Singapore can offer business loans with lesser paperwork compared to financial institutions. During the loan application process, a licensed lender may ask you for details, such as the type of industry, the expected business size and annual profits, and a few necessary documents.
They can also help you determine the most suitable type of loan for your business. So, if you need urgent funding for your new or established business, private licensed moneylenders can help.
6. A Person in Multiple Debts Shouldn’t Approach a Moneylender
When you are buried under huge debts, borrowing cash from a moneylender is the last thing on your mind. Further, you may be concerned that applying for additional loans can adversely affect your credit score.
However, the fact is, even if your credit is falling, moneylending can be an effective and easy option for you. Firstly, though moneylenders do a thorough background check before lending money, they do not lay too much emphasis on poor credit rating. As long as you have proof of a decent income, borrowing from a moneylender shouldn’t be a challenge. On the other hand, a bank or credit card company would require proof of income along with a minimum credit bureau score.
Secondly, taking a loan from a licensed moneylender can help you consolidate and pay off all your current debts, thereby improving your credit score and reputation with banks.
Moreover, taking a loan from a licensed moneylender is far more cost-effective than having a credit card. Think about it! Credit card companies charge interest of around 25 percent per year. So, if you have multiple credit card debts, imagine how much money you owe these firms. On the other hand, accepting funds from a moneylender to pay off these debts will free you from the overwhelming interest rates. Further, you will have the benefit of a smaller interest rate and a longer duration for paying off your loan. Doesn’t that sound like a cost-effective option?
Most Singaporeans are hesitant of approaching moneylenders for a loan as their minds are clouded with several moneylending half-truths. However, moneylending is one of the quickest, safest, and easiest ways to procure a loan as it requires less documentation and no collateral and is devoid of restrictions that exist with other types of loans.
We are sure the information shared in this post has helped you get clarity about moneylending. So, the next time you need a personal loan or desire to consolidate your debts, go to a licensed moneylender without any inhibitions. But remember to make timely payments to avoid penalties!
Questions? We have answers
It is legal to lend money in Singapore as long as you are not carrying on the business of money lending. To make money lending your business, you would require a license from the Ministry of Law.
You could also lend money as an “excluded moneylender”. The definition of an excluded moneylender can be found here: https://sso.agc.gov.sg/Act/MA2008?ProvIds=pr2-.
Yes. Foreigners can apply for a loan with any licensed moneylender in Singapore. Compare the rates offered by moneylenders and apply for a loan on the CashGuru platform:
According to the Ministry of Law, the maximum interest that a moneylender is allowed to charge is 4% per month which adds up to 48% per year. Find out more about borrowing from licensed money lenders here: https://blog.cashguru.sg/borrowing-from-licensed-moneylenders/
No. Licensed money lenders are not considered “ah longs”. An Ah Long is someone who lends money illegally.
Moneylenders are commonly stigmatised as “Ah Longs” due to their high interest rates. However, there is a difference between unlicensed moneylenders (Ah Longs) and licensed money lenders. As of 2019, the Ministry of Law in Singapore has provided money lending licenses to 157 businesses. With a license, businesses are allowed to lend money legally.
You will know if a moneylender is licensed by checking if their company is listed on the Ministry of Law’s list of valid money lenders in Singapore. You can find the list here: https://rom.mlaw.gov.sg/information-for-borrowers/list-of-licensed-moneylenders-in-singapore/
A report by The World Population Review reveals that Singapore is among the most expensive countries in the world with a cost-of-living index of about 80.
This high cost of living often forces Singaporeans to spend a large portion of their salary on securing a roof over their heads, leaving little for other priorities like health, emergency situations, education, and recreation.
Consequently, credit cards and personal loans are the most popular methods adopted by Singaporeans to fulfill most of their needs. If you are in need of money, it’s worth considering the pros and cons of these two major lines of credit. This will not only help you make an informed decision in favor of your cashflow but also uphold your credit rating, which determines your creditworthiness.
Read on to learn more about these credit options to choose the most suitable one when you urgently need funds.
Credit Card Loans
Convenience and Safety
In Singapore, credit cards are widely accepted by brick-and-mortar merchants and online stores. As a result, Singaporeans do not have to worry about carrying a wad of cash when they can use a card. Credit cards are not only a convenient mode of payment but also protect people from being victims of robbery and other heinous crimes.
Further, the widespread use of NFC technology and apps like Apple Pay, Android Pay, and Samsung Pay are making it easy for people to use their credit cards. For instance, NFC technology allows users to merely tap and pay for goods or services.
Credit Cards Are Accompanied by Perks
Credit card companies offer a variety of perks and rebates, such as restaurant deals, petrol station discounts, airline miles, and cashback points to encourage customers to spend more with their cards. These so-called generous perks often tempt the Singaporeans to use credit cards in bouts of unemployment and for paying for the essentials.
Not a Cost-Effective Option
Firstly, amidst the perks and benefits they offer, customers often fail to pay attention to the high processing fees charged by credit card firms. Secondly, credit cards charge exorbitant interest rates that can range from 25 to 30 percent per annum. So, if you forget or are unable to pay the bill by the last date, you will be charged interest on the outstanding amount and a late payment fee.
Hence, a credit card swipe can prove to be quite expensive for an ardent card user.
Negatively Impacts Your Credit Score
Owning a credit card is more of a responsibility than a privilege. Each month, credit card companies have to report your credit activity to the Credit Bureau Singapore (CBS). For instance, they regularly share information like your credit limit, credit card balance, and payment status and history with the CBS. All these factors affect your credit score.
So, unless you have maintained your credit in good standing and with a low balance, your credit rating is bound to suffer.
Increases the Burden of Debts
Credit card owners are always under the false impression of having ready money available for all their needs. They often take this for granted, causing them to swipe the card without even sparing a thought. This soon becomes a habit, leading to increased credit card debts.
This chart shows how the burden of credit card debts is increasing each month, thereby crushing the Singaporeans who are unable to meet their repayment obligations.
Restrictions Pertaining to Citizenship
Not all credit card companies offer cards to foreigners and those that do offer limited products with exorbitant interest rates. With no credit file to refer to, credit card firms impose strict income requirements on foreigners to offset the risk of lending. Most credit card firms also look at the length of time remaining on the visa, ensuring that the borrower will be present in Singapore to repay the debt.
Lastly, if you are a foreigner in Singapore and your credit card application is rejected, it may negatively affect your credit score.
People with Poor Credit History Don’t Stand a Chance
Good credit history is one of the prime requirements for being eligible for a credit card. Your credit score is determined by the CBS algorithm using factors, namely the utilization pattern, recent credit, late payments, and credit account history among others. Having a poor credit rating can lead to your credit card application getting denied.
Borrowing from Licensed Moneylenders
The Process Is Fast and Cost-Effective
Borrowing money from licensed moneylenders is faster in comparison to credit cards. Moreover, licensed moneylenders are forgiving and lend money even if your credit rating is poor.
Loans from licensed moneylenders are unsecured loans. This means the loans need not be backed by collateral (unlike secured loans). Though they charge a higher interest than secured loans, the rate is still far lower than credit cards. Also, the interest rates on personal loans are fixed, unlike the ones on credit cards that keep wavering as the balance increases.
Lesser Impact on Credit Rating
Each time you owe more money or have multiple debts, your credit score drops. Even small amounts of debts scattered across various credit cards and personal loans can affect your credit rating for the worse. Accepting a loan from a licensed lender can help you consolidate your credit card debts, and manage one account with fixed monthly repayment. Paying off your credit card and other debts will significantly improve your credit rating.
Ideal for Those Who Need Urgent Funds
Borrowing from licensed moneylenders is ideal for those who require money urgently. For instance, you can apply for a loan from a licensed lender for education, paying your healthcare bills, or funding your small business.
Further, licensed moneylenders can offer bigger loans on flexible terms. On the other hand, credit cards have a limit per month that cannot be surpassed and fixed terms.
Licensed moneylenders in Singapore are governed by the Ministry of Law. Hence, before granting a loan, they adhere to the strict ethics of the ministry and verify the borrower’s annual income and repayment capacity. If the borrower’s credit history is poor, a licensed moneylender may offer a separate loan package that’s specifically for people with bad credit.
Increasing Cases of Forgery
Several lenders illegally use the license number of existing licensed moneylenders to trick customers into signing a loan contract. They often use forged documents, such as a blank stamp paper as a means to recover the money at a later stage. So, if you fail to research the moneylenders, you may land into a serious problem.
It may seem tough to identify these ah longs who pose as licensed lenders; however, being mindful of certain warning signs can help you know whether or not the moneylender holds an authentic license.
When we gauge the pros and cons of each of the competing options shared in this post, borrowing from an authorized lender emerges as a cost-effective option in Singapore. Hence, instead of dealing with the towering credit card interest rates, consider approaching a licensed private moneylender for a personal loan.
Use the information shared above to weigh your options and choose a comfortable source of loan for yourself.
Questions? We have answers
Interest rates are usually lower when you borrow from a bank. However, banks must perform stringent checks on loan applicants that can take a long time. Additionally, if you have a bad credit score or are affected by TDSR, it might be difficult to borrow from a bank.
Licensed money lenders can charge up to 4% per month in Singapore, which is very high. However, they can also dispense the money on the same day and do not require you to have a good credit score.
Read our blog on whether you should borrow from a bank or a licensed moneylender here.
Licensed money lenders in Singapore charge between 1-4% per month excluding additional administrative fees.
According to the Ministry of Law, the maximum interest that a moneylender is allowed to charge is 4% per month and the administrative fee is capped at 10% of the loan amount.
The short answer is yes, high interest loans are legal in Singapore. Financial Institutions such as banks can charge up to 25% per annum for interest on their credit cards and licensed moneylenders can charge an interest of up to 48% per annum.
If you earn $10,000 per month and you are a Singaporean/PR, you will be eligible to borrow up to $60,000.
Here are the loan caps provided by the Ministry of Law:
& Permanent Residents
|Less than SGD 10,000||SGD 3,000||SGD 500|
|At least $10,000 and
less than $20,000
|SGD 3,000||SGD 3,000|
|SGD 20,000 or more||6 X monthly income||6 X monthly income|
Most licensed money lenders in Singapore do not require a minimum credit score to provide a personal loan. Each loan is reviewed on a case by case basis and depends on various criterions set by the moneylender.
Read more on credit scores and how you can purchase a credit report here:
Borrowing from a private moneylender in Singapore can be a stressful experience. Despite the efforts of the authorities, the cases of loansharking and unlicensed moneylending (UML) harassment are increasing year on year. In fact, a recent news report published in the South China Morning Post shares that in 2018, the cases of harassment in Singapore increased by 17.5 percent against the previous year. Moreover, the modern digital landscape is making it easy for ah longs and illicit moneylenders to entice needy borrowers and later harass them through messaging and social media.
Accepting a loan from private moneylenders is easy and quick. However, you need to exercise caution before approaching a lender who boasts of speedy service. Before signing the contract, it’s important to check their authenticity and reputation in the market, protecting you from greater debts and UML harassment.
No matter how cash-strapped you are, make sure you consider the below-mentioned factors before borrowing from a moneylender.
Credibility and Reputation
Though the Monetary Authority of Singapore has enforced stringent policies to curb illegal money lending, unlicensed moneylending amounts to nearly 9 percent of the country’s GDP. More often than not, unlicensed moneylenders masquerade as authentic ones by displaying fictitious registration numbers that can easily misguide you, if you aren’t cautious.
You definitely don’t want to land up being duped or harassed by these unauthorized moneylenders or loan sharks. Hence, it is important to determine the credibility and reputation of the lender before borrowing funds.
First things first, do a background check of the potential lenders and review whether they have a valid license to operate in this segment. You will find the complete list of licensed moneylenders in Singapore on the Ministry of Law website. Scroll through this list to confirm their authenticity. Further, the list offers information on moneylenders whose license has been suspended. Avoid approaching these lenders.
Confirm the lender’s license details with the Ministry of Law to make sure that the address, name, and license number match up. Sign the loan contract in person only at the registered office address.
Get in touch with the lender or the money-lending firm to get an idea of their standing in the market, experience, expertise, and responsiveness to customer concerns and queries. The lender’s website can offer valuable information on their reputation, clientele, and post-lending services. Read past their client testimonials and reviews to determine whether or not the lender is worth your time.
Adherence to Policies
Licensed moneylenders in Singapore are accredited by the Moneylenders’ Registrar which requires them to adhere to the established lending guidelines. A licensed moneylender will never solicit for loans through SMS, WhatsApp messages, phone calls, or social media platforms.
Unlicensed moneylenders often use websites, social media, printed flyers, and cold calling to advertise their services. They also post misleading ads with fictitious registration codes, claiming that they are a registered firm. Most of them use the business names of licensed moneylenders without their knowledge or approval. Beware of such moneylenders.
Further, watch out for private lenders who create additional clauses or caveats in the fine print. Trustworthy and licensed lenders will never do such a thing. In fact, according to the Registry of Moneylenders, lenders are required to mention all charges and terms upfront. The maximum interest rate that licensed moneylenders can charge is 4 percent per month. This cap applies regardless of the borrower’s income and the nature of the loan.
Other fees that they can charge include, the primary service charge (must not be over 10 percent of total loan), upfront administrative costs, legal fees, and late repayment fees. However, the total of these fees can never exceed the principal loan amount.
Look for a moneylender who plays by the rules, whether it is charging the right interest or promoting their business in the right way.
Most moneylenders can provide you the amount you require. But what’s the use of borrowing from them if their payment terms are non-negotiable? Overlooking this minor detail may land you in grave debts.
Therefore, it is wise to choose a lender who offers flexible policies and loan repayment schedules. Before getting into a contract, inquire about the lender’s repayment terms, interest rates, loan eligibility, and other factors that may affect your loan package.
Further, certified and reputable moneylenders conduct an extensive background check, yet approve loan applications even when the borrower has a low credit rating. Make sure you go through the application procedures and requirements on their website to choose a lender with less stringent policies.
Licensed moneylenders take pride in what they do and will never operate in secret joints like the ah longs. They invite you to visit their registered office and are transparent about the loan terms. Their staff is courteous and professional and takes the time to explain the terms of the loan you are seeking. They are patient enough to answer your loan queries and offer free loan consultation.
Watch out for the giveaway signals like abusive and pushy conduct or an intimidating body language to rule out illicit moneylenders.
Scope of Services
Once you have determined the above-mentioned factors, research on the lender’s scope of services. Does the firm offer other loan packages? Do they offer advice on loan consolidation? If yes, it’s better to choose such a lender, saving you the stress of approaching a new person for any other type of loan you may require in the future.
For instance, if a licensed moneylender offers a wide range of loan packages, namely personal loans, payday loans, foreigner loans, and business loans, you need not look any further for multiple loan requirements.
Every person encounters financial issues at some point in time. Private moneylenders prove to be a quick and easy fix to effectively manage such situations. However, finding the most appropriate private money lender can be tough.
Fortunately, you can easily tell a reputable and licensed moneylender from a loan shark or an illicit lender. The information shared in this post will help you spot a suitable moneylender, enabling you to procure the loan you need. You can never go wrong, as long as you are careful to choose a private moneylender based on the aforementioned factors.
Questions? We have answers
Make sure to check your moneylender’s license number and address against the list from Ministry of Law here.
Moneylenders are prohibited from sending you promotional advertisements so if you have received such messages, it is likely from an unlicensed moneylender and you should ignore it. You may also search the moneylender’s name on google to check if there have been negative reviews online.
Yes, moneylending is legal in Singapore. However, moneylenders need to be licensed by the Ministry of Law before lending money to individuals. Find out more about borrowing from licensed money lenders here: https://blog.cashguru.sg/borrowing-from-licensed-moneylenders/
Foreigners residing in Singapore may also borrow from licensed moneylenders in Singapore but may be required to submit their proof of residency. Effective November 2019, Foreigners earning less than S$10,000 annually are allowed to borrow up to S$500 from all licensed moneylenders combined.
A licensed moneylender in Singapore should be able to provide you with a loan even though your credit score is not great. However, do expect a higher interest rate when you borrow from them.
The amount you are allowed to borrow depends on your annual salary. The table below shows the requirements in annual income:
& Permanent Residents
|Less than SGD 10,000||SGD 3,000||SGD 500|
|At least $10,000 and
less than $20,000
|SGD 3,000||SGD 3,000|
|SGD 20,000 or more||6 X monthly income||6 X monthly income|