Comprehensive Guide to Licensed Money Lender in Singapore 2023

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Comprehensive Guide to Licensed Money Lender in Singapore 2023

Introduction: What is a Licensed Money Lender?

A licensed moneylender operates as a regulated financial institution approved by the relevant authorities to provide loans to individuals and businesses. Unlike traditional banks, licensed moneylenders often offer more flexible terms and quicker approval processes, making them suitable for those who need fast access to funds. Licensed money lenders adhere to strict rules and guidelines, ensuring the protection of borrowers and preventing illegal lending activities.

In this comprehensive guide, we will explore the various aspects of legal money lenders in Singapore, including loan types, application processes, repayment terms, and more.

Benefits of Using a Licensed Money Lender

Using a licensed money lender in Singapore offers numerous benefits. Firstly, the approval process is easy and fast, allowing individuals to access funds quickly when needed. Licensed money lenders have a streamlined application process, unlike traditional banks that may have stringent approval procedures.

Secondly, licensed money lenders offer flexible loan repayments. Borrowers can discuss and negotiate repayment terms that suit their financial situation. This flexibility ensures that borrowers can repay the loan comfortably and minimize the risk of late repayment fees.

Furthermore, licensed money lenders have a lower annual income eligibility requirement compared to banks. This means that individuals with lower monthly incomes can still qualify for a loan. The lower income threshold provides greater access to funds for individuals facing financial difficulties.

Lastly, licensed money lenders allow borrowers to borrow up to 6 times their monthly income. This borrowing limit is significantly higher than what traditional banks can offer. Individuals can secure larger loans to meet their financial needs, whether it's for personal expenses or business requirements.

Common Types of Loans Offered by Licensed Money Lenders

Licensed money lenders in Singapore offer a wide range of loan options to cater to different financial needs. Below is the diverse range of loan options offered by licensed money lenders in Singapore.

Business Loans

Licensed money lenders in Singapore offer various types of business loans to cater to the unique financial needs of businesses. These loans provide businesses with the necessary capital to support their growth and operations.

One type of business loan available is the term loan. This loan is suitable for businesses that require a large sum of money to fund long-term investments or expansion plans. The eligibility criteria for a term loan may vary depending on the licensed money lender, but generally, businesses are required to have a certain number of years in operation and a minimum annual income.

Loan amounts can range up to six times of your income (minimum SGD 2,000) with interest rates from 1-4% per annum. Repayment periods can extend up to 24 months, providing businesses with ample time to repay the loan.

While there is no maximum limit on the late interest and late fees that licenced moneylenders can charge for business loans, unlike banks, they cannot apply early redemption penalties.

To avoid unforeseen costs that might harm your company's financial health, properly study and comprehend the loan terms and conditions before signing any loan contracts.

Documents Required:

  • Company's Business Profile (BizFile)
  • Latest Six months' Bank Statements
  • Latest 2 years Financial Statements (if applicable)
  • NRICs of directors and shareholders
  • Latest 2 years Income tax assessment of the companys' Directors and Shareholders
  • Latest Credit Bureau Report of Directors and Shareholders 
  • Latest MLCB Report of Directors and Shareholders

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Personal Loans

Licensed money lenders in Singapore also offer various types of personal loans to cater to individuals' financial needs.

One common type of personal loan is the payday loan, which is suitable for individuals who need immediate cash before their next payday. Borrowers are required to have a minimum monthly income of SGD 2,000 and be at least 21 years old. Loan amounts can start from SGD 500, with interest rates starting from 1% and up to 4% per month. Repayment periods typically span a year depending to the loan agreement made with the money lender.

Read also: Should You Get a Personal Loan to Finance Your Business?

Payday Loans

Payday loans in Singapore are designed to provide immediate financial relief to individuals facing unexpected expenses before their next payday. These short-term loans are particularly useful for covering emergency bills, medical expenses, or other urgent cash needs.

To qualify for a payday loan, borrowers must meet certain eligibility criteria set by licensed money lenders. Individuals need to have a minimum monthly income of SGD 2,000 as well and should be employed for at least three months. The loan amount limits for payday loans typically are the same as your monthly income.

Repayment terms for payday loans are usually short, spanning a month or until the borrower's next payday. Interest rates for these loans are also 1-4% per month. However, it's important to note that payday loans in Singapore often carry higher interest rates compared to other types of loan due to their short repayment periods.

Late repayment can result in additional fees and charges, which can escalate the borrower's financial difficulties. It is advisable to explore other loan options and consider financial counseling before opting for a payday loan.

Bridging Loans

These loans are particularly beneficial for individuals or businesses that need immediate access to funds for a property purchase but are yet to receive the proceeds from the sale of their existing property.

To be eligible for a bridging loan from licensed money lenders in Singapore, applicants typically need to provide proof of their intention to sell their current property, proof of purchase for the new property, and evidence of the property's market value. The loans are usually offered for a duration of up to 1 month or until property’s completion date, depending on the lender and the borrower's specific circumstances.

In order to be eligible for bridging loans by money lenders, you must exercise the Option to Purchase (OTP).

Bridging loans from licensed money lenders in Singapore can cover loan amounts up to six times of borrower's income, depending on the borrower's needs and the value of the properties involved. Interest rates for bridging loans are typically competitive, starting from as low as 1% per month.

Mortgage Equity Term Loans

Facing a cash crunch but own a private residential property in Singapore? If your property has sufficiently low outstanding mortgage loans relative to its current value (a low LTV ratio), you may be able to unlock funds quickly through a bridging loan from a licensed moneylender.

Bridging loans allow you to leverage the value of your existing private property to obtain short-term financing, typically for 1-2 years. The loan is secured against your property through a 1st or 2nd charge in favor of the licensed moneylender.

As long as you have enough equity in the property after deducting your outstanding mortgage, licensed moneylenders can advance you a bridging loan up to a few hundred thousand dollars easily. 

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Finding the Right Licensed Money Lender in Singapore 

When it comes to borrowing money, it is crucial to choose a licensed money lender that offers favorable terms and a reliable borrowing experience. In Singapore, there are stringent regulations in place to protect borrowers from illegal money lenders and loan scams.

To find the right licensed money lender in Singapore in 2023, it is important to consider a few key factors.

Traditional Banks vs. Moneylenders

When it comes to borrowing money in Singapore, individuals have the option of approaching traditional banks or licensed moneylenders. While both serve the purpose of providing loans, there are key differences between the two.

Traditional banks usually have higher minimum age requirements for borrowers, typically around 21 years old, while licensed moneylenders generally have a lower minimum age limit of 18 years.

In terms of interest rates, traditional banks tend to offer loans at lower rates compared to licensed moneylenders. This is due to the higher level of regulation and borrowing from licensed moneylenders often comes with higher interest rates.

Repayment periods also differ between the two. Traditional banks usually offer longer repayment periods, allowing borrowers more time to repay their loans (up to 5 years). On the other hand, licensed moneylenders often offer shorter repayment periods, which can be beneficial for borrowers looking to quickly clear their debts.

When it comes to the application approval time, traditional banks typically have a more stringent approval process that may take longer. Licensed moneylenders, on the other hand, often have a quicker and less stringent approval process, making it easier and faster for borrowers to access the funds they need.

The choice between traditional banks and licensed moneylenders depends on the borrower's needs and preferences. If lower interest rates and longer repayment periods are important, traditional banks may be the better option. However, if quick approval and shorter repayment periods are preferred, licensed moneylenders may be more suitable.

Factors to Consider When Choosing the Right Lender for Your Needs

First and foremost, it is crucial to check if the moneylender is licensed and accredited by the relevant governing authorities, for instance, Registry of Moneylenders. This ensures that they operate within the legal framework and adhere to strict guidelines and regulations.

Reviewing the terms and conditions offered by the moneylender is another important step. Pay attention to aspects such as interest rates, repayment periods, and any additional fees or charges that may be applicable. Understanding these terms will help you make an informed decision and avoid any surprises down the line.

Comparing fees is also essential when selecting a licensed moneylender. Some money lenders may charge higher processing or administrative fees, so here are some warning signs to watch out for:

  • The interest rate on the loan amount exceeds 4%.
  • Interest on each late payment exceeds 4%.
  • Late payment fees exceed S$60.
  • A management fee of more than 10% for personal loans.
    Interest rates and fees were not explained.

Considering the reputation of the moneylender is another crucial factor. Look for reviews and testimonials from previous customers to gauge their reputation and level of customer service. A reputable moneylender will have positive feedback and a track record of providing transparent and reliable services.

Lastly, comparing the services offered by different licensed moneylenders is recommended. Some lenders may specialize in certain types of loans, such as personal loans, while others may offer a wider range of financial products. Assess your specific borrowing needs and choose a moneylender that aligns with your requirements.

Regulations and Requirements for Licensed Money Lenders in Singapore 2023

Maximum Interest Rates Allowed by Law

In Singapore 2023, licensed money lenders are bound by strict regulations that ensure fair and responsible lending practices. One of the key aspects of these regulations is the maximum interest rates allowed by law.

For all types of loans, licensed money lenders in Singapore are limited to charging a maximum interest rate of 4% per month. This cap helps protect borrowers from exorbitant interest charges that can quickly spiral out of control.

In addition to the maximum interest rate of 4% per month, licensed money lenders are also allowed to charge a maximum late interest rate of 4% per month for each month the loan repayment is delayed. This discourages late loan repayments and encourages borrowers to honor their financial obligations in a timely manner.

Tips for Borrowers when Dealing with Licensed Moneylenders in Singapore 2023

From understanding loan terms to managing repayments responsibly, these tips will help borrowers make the most of their interactions with licensed moneylenders while safeguarding their financial interests.

How to Identify Unlicensed Money Lenders

Unlicensed money lenders, often referred to as loan sharks, are individuals or organizations that engage in illegal money lending activities. These unscrupulous entities often prey on individuals who are in financial distress, offering quick and easy loans with exorbitant interest rates and aggressive repayment terms. To protect yourself from falling into the clutches of these illegal lenders and to avoid the devastating consequences that come with it, it is crucial to be able to identify them.

Here's a step-by-step guide on how to identify unlicensed money lenders:

1. Verify their license: Licensed money lenders in Singapore are regulated by the Ministry of Law. Before engaging with any money lender, check if they are listed on the Ministry's website. Licensed money lenders follow strict guidelines and adhere to specific legal requirements.

2. Suspicious advertising: Unlicensed money lenders often resort to aggressive advertisements, promising no credit checks and guaranteed loans. Be wary of promotional material that seems too good to be true.

3. High-interest rates and hidden charges: As mentioned in the second part of this article previously, unlicensed money lenders typically offer loans with high interest rates, far exceeding the maximum rates set by the Ministry of Law. They may also hide additional charges or impose unreasonable penalties.

4. Unprofessional behavior: Legitimate money lenders conduct their business professionally. If a lender refuses to provide a loan contract or exhibits aggressive and intimidating behavior, it may be a sign that they are unlicensed.

5. Lack of proper documentation: Licensed money lenders are required to provide proper documentation, such as loan agreements and receipts. Unlicensed money lenders often fail to provide these essential documents.


In conclusion, licensed moneylenders in Singapore are regulated by the Ministry of Law and follow strict guidelines and legal requirements. They provide loans with fair interest rates and transparent terms, while loan sharks engage in illegal and unethical practices.

Understanding the regulations and requirements for licensed moneylenders is important for borrowers to protect themselves from falling into the trap of loan sharks. By verifying the license of a moneylender on the Ministry of Law's website and being cautious of suspicious advertising, high-interest rates, hidden charges, and unprofessional behavior, borrowers can ensure they are dealing with a licensed moneylender.

The maximum interest rates set by the Ministry of Law should be taken into consideration when borrowing from licensed moneylenders. Borrowers should also take into account their own financial situation and repayment capabilities before taking on a loan.

In Singapore, it is essential for borrowers to be well-informed about licensed moneylenders and the regulations in place to protect them. By following these guidelines and tips, borrowers can make informed decisions and avoid falling prey to illegal moneylenders and loan sharks.

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Frequently Asked Questions

How can I differentiate between a licensed money lender and a loan shark?

Loan sharks often engage in illegal activities such as aggressive loan techniques, intimidation, and harassment. On the other hand, licensed money lenders operate legally and are registered with the Ministry of Law. To verify if a money lender is licensed, check the Ministry of Law's website or use their online verification system.

What should I look for in a loan contract?

When reviewing a loan contract, pay attention to the loan terms and conditions, interest rates, repayment schedule, and any additional fees or charges. Ensure that all the terms are reasonable and clearly stated. If there are any discrepancies or unclear clauses, consult with the money lender or seek legal advice.

Can I negotiate the repayment schedule with a licensed money lender?

Licensed money lenders may offer some flexibility in repayment terms, but it ultimately depends on their policies. It is advisable to discuss your repayment needs with the money lender before agreeing to a loan. If there are any changes to the repayment schedule, ensure they are formally documented in the loan contract.

What are the red flags that indicate an unprofessional money lender?

Unprofessional money lenders may exhibit red flags such as aggressive and unsolicited offers, high-pressure tactics, unclear terms, or the absence of a proper loan contract. Be cautious of money lenders who do not verify your financial capacity, do not ask for relevant documentation, or refuse to provide information about their license.

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Read also: Should You Get a Personal Loan to Finance Your Business?
Read also: What Will Happen When You Fail To Pay Money Lender In Singapore?
Read also: Receiving a Letter of Demand: Everything You Need to Know


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UPDATED AS OF 15 Jun 2024
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