Are Legal Online Licensed Money Lenders in Singapore For You?

Are Online Licensed Money Lenders in Singapore Legitimate?
Are Online Licensed Money Lenders in Singapore Legitimate?
toc-icon

Table of Contents

Table of Contents

Private legal money lenders are important players in Singapore’s finance industry, impacting and helping a diverse group of people – from the Average Joe to business owners.

Equally compelling and fascinating is the history of reliable money lenders in Singapore, which is said to have begun in the 1820s. Singapore’s first financiers were the Chettiars, a subgroup of the Tamil community who hailed from Chettinad in Tamil Nadu, India.

At that time, they peddled their business mainly in the quaint shophouses of Market Street. However, in the 1970s, these pioneers slowly lost ground to banks, and the entire Chettiar settlement was gone by 1977.

Over the years, the legal money lending industry in Singapore has experienced significant growth. Borrowing from licensed money lenders is the norm in today’s day and age; authorised licensed money lenders in Singapore can be found across neighbourhoods and they continue to provide legal and fair money lending services to those in need.

But what exactly are authorised money lenders ?

A man holding a question mark on paper ready to explain how licensed money lenders work

Authorised licensed money lenders in Singapore provide loans to Singapore Citizens, Permanent Residents (PRs), and Foreigners residing in Singapore with valid Work Passes. They are legitimate registered money lenders approved by the Ministry of Law. These legalised private money lenders in Singapore are required to follow the rules and regulations dictated by the Ministry, as well as operate their money lending business in accordance with the Moneylenders Act.

Why should I borrow from licensed money lenders in Singapore?

There are many reasons to take up a loan from private legal money lenders in Singapore. To understand them, let’s first take a look at the differences between banks and legitimate money lenders.

Firstly, registered money lenders have more lenient requirements than banks. For instance, banks are highly likely to deny your loan application if you have a subpar credit history or a yearly income lower than S$20,000.

A lady in need of urgent cash figuring out how to borrow from a licensed money lender in singapore
A lady in need of urgent cash figuring out how to borrow from a licensed money lender in singapore

On the other hand, most private legal money lenders in Singapore only require you to have a regular source of income and not have a history of defaulting on repayments to other local licensed money lenders.

Furthermore, most of them are quick money lenders that have a much faster approval process than banks, which is crucial if your need for cash is urgent. For example, an investment or business that needs additional funding as soon as possible or medical emergencies.

How do I check if a money lender is licensed and not an illegal money lender in Singapore?

Before you start taking up loans from seemingly reliable money lenders in Singapore, make sure that they are truly legitimate. Illegal money lenders in Singapore exhibit several telltale signs that they are not legitimate nor reliable.

Here’s a useful checklist to determine if the company you are looking at is a legalised money lender in Singapore:

1.    Check the official list of legal money lenders in Singapore

1.   Check the official list of legal money lenders in Singapore

A smiling lady engages a reliable money lender after checking against the list of legal money lenders in Singapore

The first thing you should do is to ensure that the instant money lender you’re checking out is registered with the Ministry of Law. To do this, check your money lender against the complete list of authorised lenders on the Ministry of Law’s official website.

Make sure that the names of the companies, addresses, license numbers, websites, and phone numbers are tally with the information you’ve gathered to ensure you’re dealing with a trusted money lender in Singapore.

2.    Does the lender advertise illegally?

2.   Does the lender advertise illegally?

A megaphone held in one’s hand signifying how one should check if a lender advertises legally

Illegal money lenders might put up illegal advertisements as well. Legitimate registered money lenders are not permitted to solicit loans by calling or texting, or through any social media outlets. This includes instant messaging services like WhatsApp and Telegram.

Licensed money lenders in Singapore are only allowed to advertise through business or consumer directories or place advertisements in the interior or exterior of their registered place of business. Additionally, they can advertise through their official website as well.

3.    Be aware of overly high interest rates

3.   Be aware of overly high interest rates

Blocks of percentages signifying the importance of verifying interest rates offered by legal money lenders

Take note of interest rates that are overly high. Remember that the maximum interest rate for licensed money lenders as dictated by the Ministry of Law is 48% per annum or 4% per month.

This limit applies to both the nominal interest (loan amount) and late interest rates. Take note that the late interest rates can only be applied to the overdue amount and not the outstanding amount not yet due.

4.   Ensure that there is a money lender license displayed

4.  Ensure that there is a money lender license displayed

Smiling businesswoman after verifying the license from a legal money lender

Remember to check for the money lender’s license at their registered place of business to ensure you’re dealing with a reliable money lender in Singapore. When visiting their office, you should see their license certificate displayed clearly. If it is absent, they may not be licensed. Although it’s a supposedly minor detail, it’s a huge red flag and something you should pay attention to.

5.   Does the quick money lender approve loans without checking your income?

5.   Does the quick money lender approve loans without checking your income?

A licensed money lender certifying a borrower’s income to ensure they offer a loan that doesn’t exceed the legal limit

Be wary when the quick money lender offers you a large loan without certifying your income first. There are limits to the loan sum you can get when borrowing from licensed money lenders; legalised private money lenders in Singapore can only allow borrowers to borrow up to six times their monthly income. This limit applies across all lenders at any one point in time.

6.   Does the money lender ask for a fee before approving your loan?

6.  Does the money lender ask for a fee before approving your loan?

A borrower fretting over the upfront fee for a loan from an illegitimate money lender in Singapore

Reliable and fast online money lenders in Singapore will never ask for an upfront fee just to process or hasten your online loan application. Legal money lenders in Singapore can charge a processing fee of up to 10% of the loan principal only after the loan is granted.

Therefore, if a fast money lender asks for an upfront fee, be careful as they could be an illegal business.

7.    Do you get to visit the money lender’s office?

7.   Do you get to visit the money lender’s office?

A borrower visiting a private money lender’s office in person

Borrowing from a licensed money lender online? Take note authorised online money lenders in Singapore need to do compulsory face-to-face verification before they can discuss your loan contract and disburse the loan to you. This means that the money lender must have a legitimate office, and you will be required to visit the lender’s registered place of business for the loan contract signing and collection of funds.

If the local money lender is conducting the entire loan process via email, SMS, or over a phone call without any verification of your documents, it is a scam or illegal money lending. Avoid lenders that insist on meeting you in public places, such as food courts or fast food restaurants – they could be operating illegally.

8.   Are there any dubious terms in the loan contract?

8.  Are there any dubious terms in the loan contract?

A borrower checking the terms from a loan contract with a private money lender in Singapore

Be sure to read the fine print of the loan contract carefully. If they are incomplete or misaligned with what they have promised you verbally to make you get a loan from the money lender, these are red flags. Promises like a 0% interest rate or 100% approval rate are also signs of scams, so if you see that in the contract or otherwise, head the other way.

Looking for a trusted and authorised money lender in Singapore?

Pros and cons of borrowing from licensed money lenders

Taking up a loan from money lenders is a popular choice among borrowers thanks to the advantages that these businesses offer. However, it is important to take into account the other side of the coin too.

Here are the pros and cons of borrowing from registered, authorised money lenders in Singapore:

Pros

Cons

Less demanding minimum income requirement

High interest rates (max. 48% p.a.)

Possible to get a bad credit loan even with poor credit history

Costly late charges
(max. 48% p.a. on overdue principal and/or interest)

Fast loan approval (within 30 minutes)

Expensive processing fees (max. 10% of loan principal amount)

Maximum loan amount of up to six times your monthly income

Shorter time to repay the loan (max. 24 months tenure)

Searching for a reliable money lender in Singapore? UK Credit is a legal money lender in Bedok – it’s just a 5-minute walk from Bedok MRT station.

Who usually borrows from licensed money lenders online instead of banks?

As banks and licensed private money lenders in Singapore have their unique advantages, borrowers usually take up loans from either one of the two depending on their financial situation and/or needs.

These are generally the types of borrowers who take up loans from banks versus trusted local money lenders in Singapore:

People who borrow from banks

People who borrow from licensed money lenders

Have an excellent credit history

May have a poor credit history

Have a full-time job that provides a stable annual income of S$20,000 and above

Have regular income (but not necessarily from a full-time job)

May not need cash immediately

Need cash urgently

Might need a loan amount higher than six times the borrower’s monthly salary

Need a loan amount that is lower or equal to six times the borrower’s monthly salary

Find out more about the differences between banks and legalised money lenders in Singapore here.

What are the types of loans from legitimate money lenders?

The most popular type of loan that online money lenders in Singapore offer is a personal loan. Personal loans are flexible and can be used for large purchases, whether it’s a wedding banquet or a medical bill. These can be further broken down into various types of cash loans. Borrowers usually repay personal loans through several instalments that come with monthly interest.

Depending on your financial situation, you may apply for an unsecured personal loan from a money lender. When a loan is unsecured, it means that you won’t have to put up any collateral or assets to get the loan. This means that the risk for you as a borrower is lower, but in return, the interest rate may be higher when compared to secured loans.

Here, we present the various kinds of personal loans that are generally offered by licensed money lenders in Singapore online on their website:

Bridging loan

Bridging
loan

Bridging loan

Bridging
loan

The next type of loan that licensed money lenders can offer is a business loan.

If you are an owner of a small and medium-sized enterprise (SME), there will be times when business is difficult, but things will get better. During that stretch, you may require a capital injection to keep the business afloat or simply to pay your employees. A business loan from a trusted money lender in Singapore can help you do just that.

Looking for a loan from a trusted instant money lender in Singapore? Look no further than UK Credit; we offer competitive rates as well as professional, reliable service.

What are the documents required to apply for a personal loan with an online money lender in Singapore?

To get your personal loan application with a licensed money lender online processed, the following documents are required:

For Singaporeans/Permanent Residents:

1

NRIC

2

CPF statements (for full-time employees) or IRAS Notice of Assessment (for self-employed), to be retrieved using Singpass

3

Proof of income such as payslips, bank statements, or invoices (for self-employed individuals) from the last three months

For Foreigners residing in Singapore:

1

Work passes, such as an S-Pass or E-Pass

2

Proof of home address, for example a tenancy agreement, copy of a recent telephone bill, or other documents that include your residential address

3

Payslips from the last three months

UK Credit is a trusted, legalised money lender in Singapore that is both dependable and well-reviewed. As a fast money lender, we provide seamless online loan applications on our website via Singpass. If you have more questions about applying for a loan, our experienced loan officers will be more than happy to assist you.

What is the maximum amount you can borrow?

Your loan limits would differ depending on whether the loan is secured or unsecured, as well as your nationality and income.

SECURED LOANS

For secured loans, we have to take into account the type of loan that you’re thinking of applying for.

Type of loan

Maximum amount

Car and property loans

55% of the borrower’s Total Debt Servicing Ratio (TDSR). TDSR is the portion taken from the borrower’s gross monthly income to make repayment for each one of their loans

HDB or Executive Condominium (EC) loans

30% of the Mortgage Servicing Ratio (MSR). MSR is the portion of the borrower’s gross monthly income that is taken to repay all of their property loans for HDBs and ECs

Car loans

Not more than 60% to 70% of the Loan-To-Value (LTV) ratio. LTV is the ratio derived from the loan amount divided by the purchase price of a vehicle. This figure depends on the vehicle’s open market value (OMV)

UNSECURED LOANS

As for unsecured loans from money lenders, the maximum amount is S$3,000 for borrowers who are Singaporeans and PRs with a yearly income lower than S$20,000.

For Foreigners living in Singapore, the maximum amount is S$500 if their yearly income is less than S$10,000, and S$3,000 if their income is at a minimum of S$10,000 but less than S$20,000.

The maximum amount is further increased to six times their monthly income for Singaporeans, PRs, and Foreigners if they have a yearly income of more than S$20,000.

What is the loan application process like?

1

Loan application submission

Go to the money lender’s website and fill out the loan application form or apply via Singpass. You can also walk into the money lender’s office to apply for a loan.

2

Face-to-face verification

Wait for a call from the company’s loan officer. You will be informed to visit their office for identity verification and a short interview. Bring all required documents with you. If all your documents pass muster, your loan should be approved in around 10-20 minutes.

3

Understand the loan contract terms

The loan officer will then go through the loan terms and contract with you. Make sure you understand the terms and clarify anything that you’re unsure of before signing the loan contract.

4

Immediate loan disbursement

After you sign the loan contract, your funds will be deposited into your bank account or disbursed to you in cash.

Provided all your documents are in order, the whole process can be completed in less than 30 minutes.

Need a fast cash loan? UK Credit is one of the most trusted instant money lenders in Singapore.

What are licensed money lenders’ interest rates in Singapore?

Private money lenders’ interest rates are regulated by the Ministry of Law, as mentioned above.

The maximum interest rate for monthly loans that local money lenders can charge is no higher than 4% per month or 48% per annum. Another important thing to note is that money lenders’ interest rates are calculated using a reducing interest rate formula, which means that interest is only calculated based on the outstanding loan amount.

Here’a an example: You’ve borrowed S$1,000 to be paid back over five months, with a monthly interest rate of 4%. The first month’s interest will be 4% of the S$1000 owed, which is S$40. The second month’s interest will be 4% of the outstanding amount, which is S$32.61, and so on.

Take a look at the table below for a better illustration of how reducing interest rate formula works:

Month

Payment (S$)

Interest (S$)

Principal (S$)

Balance (S$)

1

224.63

40.00

184.63

815.37

2

224.63

32.61

192.02

623.35

3

224.63

24.93

199.70

423.66

4

224.63

16.95

207.68

215.98

5

224.61

8.64

215.98

0.00

This means that you will pay less in the absolute amount of interest every month, as compared to a loan with a flat interest rate.

What are the types of fees that you need to pay to licensed private money lenders in Singapore?

Be sure to get acquainted with the types of fees that you would need to pay to licensed money lenders, on top of the monthly interest. A processing fee needs to be paid only after the loan is granted, which is capped at 10% of the loan principal amount. Late fees should never exceed S$60 a month.

Lastly, if there is a legal dispute to recover the loan (if you default on repaying the loan) and the money lender manages to make a successful claim, you will need to bear legal costs as determined by the court.

What should you do after your loan is approved?

1

Keep all relevant proof of payments

A smiling man after borrowing from a licensed money lender in Singapore successfully within minutes

Keep all receipts as they are proof of payments. Also, they indicate how much of the loan is outstanding, and that can help you plan your finances.

2

Options if you can’t repay your loan

A couple discussing with a legal money lender for an extended repayment loan period

If you are unable to repay a loan, speak to your loan officer. Explain your situation honestly so that a feasible extended repayment plan can be drafted. Do make sure that this new deadline can be met.

You can also seek help from welfare services that are approved by the Ministry of Law.

The last resort is to file for bankruptcy should your debt exceed S$15,000. Take note that this comes with serious consequences. Your assets will be sold to repay the debt and you will not be able to apply for another loan until you’re discharged from bankruptcy.

Looking for a loan from a trusted licensed money lender in Singapore?

One of the established, fast money lenders in the eastern part of Singapore, UK Credit has more than 2,100 5-star reviews on Google and has served more than 11,000 borrowers to date. As a trusted money lender in Singapore, our customers love us for our honest financial advice as well as professional and efficient service.

Related Posts