It’s not always emergencies that call for loans. You might also want to learn how to apply for loans to chart new paths in your life – like starting a new business, renovating a new home, or taking an epic holiday and striking a dream vacation off of your bucket list!
As we explore our options, some of us might first think of getting a loan from a bank or a licensed money lender in Singapore, depending on our needs and urgency). Just so you know, loans from money lenders can come in real handy — quick money lenders can provide much faster loans than banks.
If you are planning to take out a loan with a licensed private money lender in Singapore, here’s your ultimate go-to guide on everything to do with legal money lenders in Singapore, from interest rates to how to tell whether you can trust a local money lender.
In general, the types of loans offered by licensed money lenders in Singapore span two categories: personal loans and business loans.
An authorised legal money lender in Singapore offers loans for just about any purpose.
This could include education or study loans, renovation loans, surgery or medical loans, investment loans, holiday loans, credit card and debt consolidation loans, wedding loans, property bridging loans, or even freelancer loans like Gojek and Grab loans.
Business loans are typically offered to small and medium enterprises (SMEs) that need a capital injection. Such short-term financial boosts could allow you to guide your business to achieve its potential by helping you to attain resources and scale your business accordingly.
Both loan types have different implications for you, the borrower.
Secured loans require you to peg collateral to your loan. For instance, if you’re taking a car loan, this collateral might be your car. If you default on your loan payments, your registered money lender can seize and sell your collateral to recuperate losses.
This is also often the case with property loans, where a property can be seized if payments are defaulted on.
Unsecured loans, on the other hand, don’t require you to peg collateral to your loan. But that means that even the most reliable money lenders in Singapore are undertaking a higher amount of risk when lending to you. Therefore, unsecured loans typically come with steeper interest rates!
In general, banks are significantly stricter with the loan application process. An authorised money lender in Singapore is a good option in such instances, especially if you’re looking for a short-term loan.
In case you didn’t already know, most licensed private money lenders in Singapore are instant money lenders. As fast money lenders, they provide speedy loan assessment, approval and disbursement altogether.
There are numerous situations where a lender can help you.
| Comparison point | Borrowing from a bank | Borrowing from a licensed money lender |
|---|---|---|
| Internal policy | If you have a bad credit history, unstable income, or income of less than $20,000 a year, you’ll get rejected | No credit discrimination, even with a poor credit history |
| Maximum loan amount | Borrow up to 10 times your monthly income | Borrow up to six times your monthly income |
| Repayment period | Up to seven years | Up to 24 months, though 12 months is more typical |
| Loan approval time | Approximately two weeks for approval | Instant approval, mostly under 30 minutes. Instant fund disbursement upon contract signing |
| Interest rates | From 3.5% to 6.5% yearly | From 1% to 4% monthly |
| Processing fees | 6.5% to 20% of the principal loan sum yearly | Up to 10% of the principal loan sum |
Ultimately, you should evaluate all of the above-listed factors and decide if borrowing from a money lender or bank is a more suitable option for you.
A bank may be a preferred choice for you if you’re looking for a long-term loan and have a good credit history.
On the other hand, a loan from an online licensed money lender in Singapore might be perfect if you’re looking for a loan that you can clear within 12 months. Not to mention, trusted online licensed money lenders in Singapore don’t practise credit discrimination, so you don’t have to stress over any bad credit history, but instead focus on rebuilding it with healthy credit habits!
If you’ve decided that you’ll be borrowing from a licensed money lender, make sure to compare legitimate money lenders to get the best rates and find the best loan terms for your needs.
At Cash Direct, we’re a fast money lender with competitive rates and excellent loan terms.
Loan terms can make or break your decision to take a loan from money lenders because they have a direct impact on your financial circumstances.
The maximum amount that you can borrow from a bank or legalised money lender in Singapore varies based on your nationality and income. This applies whether you’re applying for a loan from the bank or licensed money lender online or in person.
If you’re looking at an unsecured loan from money lenders, here are the limits you’ll encounter:
| Annual Income | The loan amount you can borrow from a bank | The loan amount you can borrow from a legal money lender |
|---|---|---|
| I earn below $10,000 yearly | You’ll get rejected | Up to $3,000 if you’re Singaporean/PR Up to $500 if you’re a foreigner living in Singapore |
| I earn at least $10,000 and not more than $20,000 yearly | You’ll get rejected | Up to $3,000 regardless if you’re Singaporean, PR, or a foreigner living in Singapore |
| I earn a minimum of $20,000 yearly | Up to 12 times your monthly income | Up to 6 months your monthly income regardless if you’re Singaporean, PR, or a foreigner living in Singapore |
In general, the maximum amount that you can borrow from a legitimate money lender or bank for a secured loan is:
However, despite the maximum loan amount a registered money lender or bank is legally allowed to give you, it doesn’t mean that they necessarily will loan you that maximum amount.
Registered money lenders will review your other financial information such as your credit history and they will vary your loan amount and interest rates based on how much they trust you to make a full repayment.
Although the above is the official loan limit, it is common for trusted money lenders in Singapore to offer up to 3 times your monthly income as a loan amount, with processing fees of approximately 8-10% of your loan amount.
Many instant and legitimate money lenders offer a repayment period of up to 12 months. A small number of lenders would extend the loan tenure up to 24 months.
If you encounter fast local money lenders who offer to lend you much more than the commonly stipulated amounts, you might have encountered illegal money lenders.
In such a situation, report the money lenders to the police.
There’s a maximum interest rate that legalised money lenders in Singapore can charge you, and that’s 4% monthly or 48% per annum.
Licensed money lenders utilise the reducing balance method to calculate the interest charges on your loan sum. This means that your monthly interest amount is calculated based on your outstanding principal loan amount at the end of every month.
Say you were to take a $5,000 loan with a 6-month repayment period, and a monthly reducing balance interest rate of 2%.
Here’s an example of how much you would have to pay in interest:
| Month | Principal payable this month | Interest payable this month (2%) | Instalment amount this month | Outstanding principal |
|---|---|---|---|---|
| 1 | $792.63 | $100.00 | $892.63 | $4,207.37 |
| 2 | $808.48 | $84.15 | $892.63 | $3,398.89 |
| 3 | $824.65 | $67.98 | $892.63 | $2,574.24 |
| 4 | $841.15 | $51.48 | $892.63 | $1,733.09 |
| 5 | $857.97 | $34.66 | $892.63 | $875.12 |
| 6 | $875.12 | $17.50 | $892.62 | $0.00 |
With a reducing balance interest rate, you would have spent a total of $355.77 on interest for your $5,000 loan. If this were a flat interest rate, you would have spent a total of $600 on loan interest.
When comparing interest rates among different legal money lenders in Singapore, you may find that some offer interest-free loans. Do be careful as there is no free lunch in the world. You might end up paying high fees even with 0% interest rates.
Searching for a licensed money lender online with low interest rates?
A trusted money lender in Singapore also has legal limits to processing fees.
You may also be charged processing fees when your loan is granted to you, not exceeding 10% of your principal loan amount.
If you’re late on your payments, you may be charged a late repayment fee not exceeding $60 monthly.
You will also be charged a maximum of 4% a month in late interest on the overdue loan instalment, for each month that the loan is repaid late.
No matter what, the total of your interest fees, processing fees, late interest fees, late repayment fees, and other fees cannot legally exceed the principal amount of your loan.
Licensed money lenders with charges that exceed the legally permitted amount may be engaging in misconduct, or be unlicensed.
If you’re unable to repay your loan, an authorised money lender in Singapore may take legal action against you. If their course of action is successful, you may also have to reimburse the money lenders for the legal fees they have incurred.
With that being said, this is unlikely to occur as long as you speak with your trusted money lender in Singapore about your financial situation and work out a new repayment plan. This, however, may incur additional fees.
If you find yourself caught in a debt cycle you can’t get out of, seek help from a social service agency in Singapore. And if your debt has amounted to at least $15,000 and you can’t repay your loan even with extensions, you might want to consider filing for bankruptcy. Your loan interest accumulation will stop, and even quick money lenders will be unable to carry out legal proceedings against you.
However, this has severe consequences. Filing for bankruptcy might involve the seizing of your assets to repay loans. It may also leave a mark on your professional and financial future, so it should be your last resort.
Having a good credit score is the best way to get the lowest interest rates. You can achieve this by repaying your bills on a timely basis and minimising the frequency at which you take loans.
More importantly, you have to know what goes into a credit report and how to get it from Credit Bureau Singapore (CBS).
When you apply for a loan, a money lender will check your borrowing history with other money lenders with the Money Lender Credit Bureau (MLCB), which is also operated by CBS.
The loan application process is a simple and seamless one with fast money lenders.
Before you proceed, make sure to have the relevant documents ready:
If you are a Singaporean or PR, this includes:
If you’re employed:
If you’re self-employed:
If you’re a foreigner, this includes:
After that, you can start the loan application process with an online money lender in Singapore:
1
Apply for the loan on the licensed money lender’s website or walk in to apply.
2
If you have applied online, wait for a loan executive to call you and schedule an appointment with you
3
Go to the money lender’s office for a short interview and document verification.
4
Your loan application is approved in less than 30 minutes.
5
The loan executive will go through the loan terms in the loan contract with you. Make sure you understand them before signing the loan contract.
6
Sign the loan contract. Your funds will be disbursed to you immediately either in cash or through bank transfer.
There may be many reasons that might get you rejected by authorised money lenders in Singapore. This might include not having a Singapore home address, being bankrupt, unemployed, or even having applied for too many loans recently.
If you encounter this and are desperately in need of financial assistance, consider government financial assistance schemes like ComCare and SupportGoWhere.
Sometimes, you may encounter illegitimate money lenders or loan sharks masquerading as licensed instant money lenders. While they may have attractive terms such as low interest rates on the surface, their loan structures are built to extort money out of you. Many victims end up struggling to cope with repaying illegal money lenders.
Be vigilant and don’t fall prey to money lender scams. If a deal is too good to be true, it probably is.
Tips for safely borrowing money from llegalised money lenders in Singapore
Licensed money lenders are registered loan companies that lend money legally in Singapore. It’s important to verify that your money lender is on the list of licensed money lenders maintained by the Ministry of Law. You can do this by visiting their website or by calling the office landline of the money lender to ensure that you have been communicating with the right party. When you visit a money lender’s office, also check if they prominently display their money lender licence.
Registered money lenders are required to adhere to the guidelines specified by MinLaw, as part of the Moneylenders Act. These guidelines are designed to protect borrowers from unfair lending practices. Make sure you understand the guidelines on borrowing from licensed money lenders, which are updated regularly.
Licensed private money lenders in Singapore cannot lend money to you without face-to-face verification. Always ensure they have a physical office by visiting their official business address indicated in the Ministry of Law’s list. If they don’t invite you to their office, it means that they’re not abiding by a legal process.
It’s important to check the reviews of licensed money lenders before determining if they’re reliable money lenders in Singapore and borrowing money from them. You can find reviews on Google, forums, and social media pages to learn from others’ experiences and determine if your money lender is the right fit for you. Try searching for “licensed money lender Singapore review” to get a sense of what previous borrowers have to say about various online money lenders in Singapore.
It’s essential to keep a lookout for any reviews or news that report on illegal debt collection tactics done by licensed money lenders. If the lender has been notorious for harassing its borrowers when borrowers are late in repayment, avoid them, as they are not supposed to do so during debt collection. Debt collectors have to adhere to a set of debt collection guidelines and a code of conduct as well.
Cash Direct is a well-loved licensed money lender in Jurong East with more than 2,000 5-star Google reviews.
Applying for a loan for the first time can be stressful, which is why online money lenders in Singapore can help ease the process with simple loan applications in minutes. At Cash Direct, we prioritise your needs and ensure that you are always comfortable.
Recognised as one of the trusted quick money lenders in Singapore, whether you need an instant loan or simply some advice on the best options for you to consider, we are here for you.
Get your loan approval in less than 30 minutes.
Vision Exchange, 2 Venture Drive #01-21
Jurong East Central 5 mins walk from Jurong
East MRT Station (Exit B) Singapore 608526
Monday – Saturday 11am to 7.30pm
Sunday 12pm to 5pm
Closed on Public Holidays
