Everything To Know:
Legal Licensed Money
Lenders in Singapore

Everything To Know: Legal Licensed
Money Lenders in Singapore

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.

Different kinds of loans that you can take from a legal money lender in Singapore

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.

Secured loan vs unsecured loan: What are the differences?

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!

But, why take a loan from a licensed private money lender in Singapore instead of a bank?

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.

What are the differences between taking a loan from a reliable money lender in Singapore and a bank?

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 you need to know before borrowing from licensed online money lenders in Singapore

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.

How much money can I borrow from a licensed money lender online?

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:

Not more than 55% of your Total Debt Servicing Ratio (TDSR is the fraction of your gross monthly income that is used for repaying your monthly debts, including the loan you’re applying for)
Not more than 30% of your Mortgage Servicing Ratio (MSR is the fraction of your gross monthly income that is used for repaying all property loans, including the loan you’re applying for for the purchase of an HDB or EC)
At most 60-70% of a vehicle’s open market value

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.

How much must I pay in interest?

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 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?

What other fees might I be charged by private local money lenders?

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.

What if I’m unable to pay my money lender in Singapore?

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.

Always maintain a good credit score for attractive interest rates with a licensed money lender in Singapore

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.

How to apply for a loan with an instant money lender

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:

NRIC

If you’re employed:

Latest three months of payslips
CPF statements

If you’re self-employed:

IRAS Notice of Assessment
Evidence of income (Latest three months’ bank statements, commission statements, etc)

If you’re a foreigner, this includes:

Work pass
Passport
Proof of your residential address (phone bill, tenancy agreement, etc)
Latest three months of bank statements that show salary credited

After that, you can start the loan application process with an online money lender in Singapore:

Apply for the loan on the licensed money lender’s website or walk in to apply.

If you have applied online, wait for a loan executive to call you and schedule an appointment with you

Go to the money lender’s office for a short interview and document verification.

Your loan application is approved in less than 30 minutes.

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.

Sign the loan contract. Your funds will be disbursed to you immediately either in cash or through bank transfer.

What to do if I get rejected by licensed money lenders in Singapore?

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.

How to make sure I’m not dealing with an illegitimate money lender in Singapore?

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.

How to tell if a money lender is legit?

Tips for safely borrowing money from llegalised money lenders in Singapore

Check the money lenders’ licence to ensure they are legal

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.

Understand the guidelines for borrowing

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.

Ensure face-to-face verification and a physical office

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.

Read reviews and news on licensed money lenders in Singapore

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.

Watch out for licensed money lender harassment and unlawful debt collection practices

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.

Find a reliable money lender in Singapore that understands your needs

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.