Key Takeaways
- Licensed moneylenders in Singapore lend based on the borrower’s annual income and residency status.
- Singapore Citizens and PRs earning at least $20,000 a year can borrow up to 6 times their monthly income.
- Foreigners earning below $10,000 a year can borrow up to $500, while those earning at least $20,000 a year can also borrow up to 6 times their monthly income.
- Interest rates are capped at 4% per month, with additional caps on late fees and admin fees.
As many financial advisors will tell you, it’s best to have at least 6 months’ worth of emergency funds ready. However, no matter how prepared we are, unexpected financial situations can still arise. Sometimes we need extra cash, fast, whether for an urgent bill, a medical expense, or education costs.
When you need to borrow money quickly, the first instinct is often to search online for the best loan in Singapore. You can also use a loan calculator to help determine how much to borrow.
However, it’s important to beware of online loan scams. Are there truly legal money lenders in Singapore? How much can you borrow from a licensed moneylender? Where are legal money lenders located?
A licensed moneylender in Singapore can help you obtain the short-term financial assistance you need. However, before approaching any lender that claims to offer immediate loans, it’s worth doing a background check on them first.
You’ll want to know:
- Your borrowing rights
- How much you can borrow from licensed moneylenders
- How to differentiate a legal lender from a fake one
- Where to borrow
- What interest rates licensed moneylenders can charge
What Should I Consider Before Taking a Loan From a Licensed Moneylender?
When you need financial assistance urgently, you might be tempted to turn to the first lender you find. However, you should always make sure it’s a licensed moneylender. A legal moneylender can offer fast cash with minimal paperwork and often flexible repayment terms, but there are a few important things to consider first.
- Understand the interest rate and fees involved. Licensed moneylenders must disclose this information upfront, so make sure you know the total cost of the loan before agreeing to anything.
- Consider whether you’ll be able to repay the loan on time. Missing a payment can result in late fees and financial strain, so be sure you can afford the monthly repayments before borrowing.
- A loan from a licensed moneylender should generally be used as a last resort, not a first option.
- Never commit to a loan without checking the terms and conditions first. Shop around different lenders to find one that suits your needs.
- Consider carefully before agreeing to any contract term that allows a moneylender to lodge a caveat against your property. This can prevent you from selling your property without repaying the loan in full first, and if repayment comes from the sale proceeds, it could significantly reduce what you’re left with.
- Understand your legal obligations before borrowing. You are legally required to fulfil any loan contract you agree to with a licensed moneylender.
What Are The Interest Rates Licensed Moneylenders Can Charge?
Licensed moneylenders are capped at a maximum interest rate of 4% per month. This cap applies regardless of your income level or whether the loan is unsecured or secured. If a borrower fails to repay on time, the moneylender may charge a maximum late interest rate of 4% per month on the overdue amount.
Interest is calculated based on the outstanding principal, after deducting any payments already made toward the principal.
Loan Example:
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If Sasha takes out a $15,000 loan and repays $8,000, only the remaining $7,000 can be used to calculate interest.
Late interest can only be charged on amounts that are overdue. A licensed moneylender cannot charge interest on amounts that are due but not yet due for repayment. For example, if Sasha takes out a $15,000 loan and misses the first repayment of $5,000, the moneylender may charge late interest on that $5,000, but not on the remaining $10,000, since it isn’t due yet.
What Are The Fees Charged By Licensed Moneylenders?
Licensed moneylenders are only permitted to charge the following fees and expenses:
- A late repayment fee of no more than $60 for each month of late repayment
- An admin fee of no more than 10% of the loan’s principal, charged when the loan is granted
- Legal costs incurred by the moneylender in successfully recovering the loan
The total of all charges combined, interest, late interest, admin fee and late fees, cannot exceed the original principal amount of the loan.
How Do I Know If A Moneylender Is Legal Or Not?
If you’re considering a loan from a moneylender, it’s important to confirm they’re licensed and legal. With loan scams increasingly reaching people through SMS, email and WhatsApp messages, it’s important to stay alert.
Licensed moneylenders in Singapore are regulated by the Ministry of Law. You can check the current list of licensed moneylenders on the official MinLaw registry, which is updated regularly.
Avoid unlicensed moneylenders. They are not regulated by the government, may charge higher interest rates and fees than the law allows, and may use illegal methods such as harassment or intimidation to collect debts. If you borrow from an unlicensed lender, you have no legal protection if things go wrong.
Even licensed moneylenders should raise concern if they:
- Use intimidating language or behave in a threatening manner
- Ask for your Singpass password or user ID
- Retain your personal identification documents, such as your driver’s licence, passport, work pass, or ATM card
- Ask you to sign a blank or incomplete loan contract
How Much Can Singaporeans, PRs & Foreigners Borrow?
Personal loans offered by licensed moneylenders are unsecured, meaning no collateral is required.
The table below shows the maximum total amount you may borrow across all licensed moneylenders in Singapore at any one time:
| Borrower’s annual income | Singapore Citizens and Permanent Residents | Foreigners residing in Singapore |
|---|---|---|
| Less than $10,000 | $3,000 | $500 |
| At least $10,000 and less than $20,000 | $3,000 | $3,000 |
| At least $20,000 and above | 6 times monthly income | 6 times monthly income |
Frequently Asked Questions
I Saw an Advertisement by a Moneylender. How Do I Know if It Is Legal?
Licensed moneylenders are restricted to only three advertising channels: business or consumer directories, their own website, or advertisements displayed within or outside their business premises. All other forms of advertising, including SMS, WhatsApp, emails and calls, are prohibited by law. If you receive an unsolicited loan offer through any of these channels, it’s most likely from an unlicensed lender.
What Supporting Documents Do I Need For My Loan Application?
You will generally need to provide your NRIC or passport for identity verification, bank statements or utility bills as proof of residence, and CPF statements, payslips or income tax statements as proof of income. If you apply using Singpass, some of this information may be retrieved automatically through MyInfo, which can reduce the number of documents you need to upload manually.
What Must A Licensed Moneylender Inform Me Before Approving My Loan?
A licensed moneylender should clearly explain the interest rate, late interest charge, any other applicable fees, and your repayment amount before you agree to the loan.
What Should I Do After Getting My Personal Loan?
Make sure you receive the correct principal amount, licensed moneylenders are only permitted an upfront deduction of up to 10% as an admin fee. Pay your instalments on time to avoid late fees, and make sure you receive a receipt for every repayment. You should also receive a statement of account at least twice a year, once every January and July, and should keep all receipts and statements as proof of payment.
Fast Cash From A Licensed Moneylender
Licensed moneylenders in Singapore can provide the cash you need to get through a difficult financial situation, often with a faster application process than traditional banks.
Need an instant cash loan in Singapore? Lending Bee’s online loan application form helps you apply in just 3 minutes, and our professional loan officers will review and respond within 1 hour.
Related Guides on Loan Applications in Singapore
About Ashley Sim
Calling herself a “professional multi-tasker”, Ashley worked as a relationship manager in a bank for five years. She left her job just before the pandemic happened and became a freelance writer for about a year. Now, she’s making the most of her love for writing and knowledge of the banking and financial industry in her role as a content marketing lead. She hopes to help people make better financial decisions through her content and campaigns.
