What happens when you find yourself in emergency situations with an urgent lack of cash? In such circumstances, most people turn to banks for financial assistance. But what if you’re faced with restrictions?
Thankfully, there are other options you can consider like taking a loan from licensed moneylenders. They are a viable alternative since they offer faster approvals. In Singapore, all licensed moneylenders are governed by the Ministry of Law to ensure the safety of both lenders and borrowers.
But before you start taking a loan from licensed moneylenders, here are a few moneylending FAQs you need to know.
- Consider other options before reaching out to a licensed moneylender. For instance, Government agencies also offer financial assistance schemes. You can contact these agencies to learn more about these options.
- You are bound by law to fulfill your debt obligations as stated in the loan contract. That said, carefully read the terms and conditions of the loan agreement.
- Will you be able to fulfill the contractual terms? When taking out a loan, consider your income and financial capacity to repay the debt. That said, borrow only the amount you need and what you can repay. Any late payment will lead to more interest and payment fees, resulting in more financial strain.
- Licensed moneylenders must clearly explain the terms of a loan including the repayment schedule, the interest rate charged, and all the applicable fees. The law requires them to make sure that borrowers understand the loan terms before signing the contract. Lastly, moneylenders must also provide you with a copy of the loan contract.
- Read carefully the terms and conditions of the loan contract. For example, the contract may allow the licensed moneylender to lodge a caveat on the sale proceeds of your real estate property. This means you can’t sell your property without first repaying your debt in full. Additionally, beware if the contract states that upon default of the loan, repayment will be taken from the net proceeds of the property sale. If this is the case, you may not be able to receive your portion of the proceeds.
- Don’t immediately sign a loan contract with the first moneylender you talk to. Get quotes from different moneylenders and compare which one has the most favorable terms. Lastly, ask questions and negotiate until you are satisfied with the terms and conditions.
Please take a look at the table below for the total maximum amount you can borrow at any time from all licensed moneylenders in Singapore:
Borrowers’ annual income
Singapore Citizens and Permanent Residents
Foreigners residing in Singapore
Less than $10,000
At least $10,000
and less than $20,000
At least $20,000
6 times monthly income
6 times monthly income
Note: For secured loans, you can loan any amount.
The maximum interest rate that licensed money lenders can charge is 4% per month effective on October 1, 2015. It doesn’t matter whether you have applied for a secured or unsecured loan – the rate will remain the same.
It is based on the monthly outstanding balance of the principal loan amount after deducting the total repayments made. For example, you took out a $20,000 loan and you have repaid $8000. The 4% rate will be computed for the remaining $12,000.
The maximum rate of late interest licensed money lenders can charge is still at 4% for each month the loan is paid late. For example, you are paying an installment basis of $2,000 per month which you failed to pay on time. The 4% additional late interest charge will only apply to the $2,000, not on the remaining outstanding balance as it is not yet due.
The law allows all licensed moneylenders to impose the following fees and charges:
- A late repayment fee not exceeding $60 per month.
- A one-time, upfront administrative fee not exceeding 10% of the principal loan amount when a loan is granted.
- Legal costs incurred by the licensed moneylenders for the recovery of the loan.
The total charges imposed by the licensed moneylenders must not exceed an amount equivalent to the principal of the loan.
For example, if you take a loan of $20,000, then the interest, late interest, 10% administrative fee, and monthly $60 late fees must not exceed $20,000.
Avoid borrowing from an unlicensed moneylender.
The easiest way to verify if a moneylender is licensed or not is to check the list of licensed moneylenders in Singapore on the Ministry of Law’s website. You can check the list here.
Aside from that, you must also be wary of harassing behaviors:
- Use of abusive language or resort to harassment and threats
- Asks for your SingPass user ID and/or password
- Fail to give you back your NRIC card and other personal ID documents like driver’s license, passport, work permit, ATM card, etc.
- Asks you to sign a blank or incomplete Note of Contract for the loan.
- Immediately grants your loan without providing a copy of the loan contract or without explaining the terms of the loan.
- Approving a loan without exercising due diligence. For example, they grant you a loan over the phone or through text messages before receiving your loan application and other documents.
- Withholds a portion of your principal loan amount for any reason.
These practices are illegal. If you encounter such behavior, immediately report the unlicensed moneylenders to the Registry. Provide all the necessary information including the moneylender’s name, license, and contact number.
How Can I Tell Whether an Advertisement Is from a Licensed Moneylender or an Unlicensed Moneylender?
Under the advertising rules, licensed moneylenders are permitted to advertise only through:
- Business or consumer directories – both in print and online media.
- The licensed moneylender’s website
- Advertisements placed within or on the exterior of the moneylender’s place of business such as the side of the wall, gate, or window.
Licensed moneylenders are prohibited from:
- Sending flyers, emails, and SMS messages about their services.
- Advertise in newspapers or social media platforms.
- Make false or misleading statements.
- Invite you to take a loan or immediately grant you a loan without providing a loan application.
If a lender uses these advertising tactics, chances are they are a loan shark. Or they are a licensed moneylender operating in violation of the rules. That said, it’s best to avoid such lending agencies.
Immediately report the advertisements to the Registry at 1800-2255-529 or via MinLaw’s website.
You’ll need to complete an application form and submit it to a licensed moneylender. You’ll need to provide personal information such as:
- Full name
- Date of birth
- Personal identification number
- Residential address
- Email address
- Contact number
- Amount of loan applied for
- At least 18+ years old
- Minimum salary of $1500 for Singaporean or Permanent Resident
- Minimum salary of $2000 for Foreigners
Additional document requirements for local and permanent residents:
- Identity card
- Proof of residence such as utility bill, a letter addressed to you, and/or tenancy agreement
- Proof of employment – Certificate of Employment or recent 3 months’ payslip
- SingPass to log into CPF, HDB, IRAS website
Additional document requirements for foreigners:
- Work permit
- Proof of residence
- Proof of income and employment
- SingPass to log into IRAS website
- Make sure you receive the correct principal loan amount. Moneylenders are only permitted to deduct an upfront approval fee of 10% from the principal amount.
- Obtain a copy of the loan agreement
- You are legally obligated to pay the loan installments on time to avoid incurring late interest and late payment fees.
- Make sure you receive a receipt every time payment is made. Check the correctness including the name, amount, and payment date.
- The licensed moneylenders must provide a statement of account for all your loans at least once every January and July. The statement must include a list of payments made and the outstanding balance. Check the correctness of the statement including the name, amount, and date.
- Keep all the receipts and statements of accounts. This is for documentation and will serve as your evidence of payments.
Harassment and threats during debt collection are considered unfair practices. If you experience any of these practices, immediately contact the Registry at 1800-2255-529 and lodge a complaint.
You can also submit a complaint online through their feedback form or make a police report as the police force takes harassment seriously.
Upon filing a complaint, include the following information:
- The moneylender’s business name
- License details
- Contact numbers
Don’t let yourself be intimidated by unlawful debt collection practices. Rest assured that the Registry will keep your personal details private. For the Registry to properly investigate your complaint, you may need to:
- Attend an interview with the Registry’s officers
- Provide all the relevant information and documents related to your loan transaction
- Provide detailed accounts of your dealings with the moneylender.
Additionally, you can also pursue the matter through the Small Claims Tribunal or the Court under the Consumer Protection (Fair Trading) Act.
The Court has the power to set aside loan transactions that are unfair and illegal.
I Am Facing Financial Difficulties and Unable to Repay the Licensed Moneylenders. Can the Registry of Moneylenders Help to Negotiate With the Licensed Moneylenders?
Unfortunately, the Registry of Moneylenders cannot assist you in negotiating with moneylenders. This is a matter of private contract between the borrower and licensed moneylender
However, you can approach social service agencies that can help borrowers recover from serious debt problems. These agencies can provide:
- General credit management information
- Credit counseling if applicable
- Assistance in negotiating a debt repayment plan with creditors
There might be instances where you find yourself strapped for cash. And one of the most feasible solutions is to take a loan and pay it back on time. While some people turn to banks for financial assistance, some turn to moneylenders for faster cash disbursement. That said, it is advisable to first do your due diligence.
Ask questions, understand the terms of the loan, and determine your capacity to repay the loan. To safeguard yourself from loan sharks, be sure to engage only with a licensed moneylender.
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