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|