Borrowing From A Licensed Money Lender – How Much Can I Borrow?

Dexter Lee August 30, 2022

Borrowing From A Licensed Money Lender – How Much Can I Borrow?

Before borrowing money from licensed money lenders in Singapore, you may find yourself wondering “how much can I borrow from a money lender?”

The answer to this is fairly straightforward.

Licensed money lenders in Singapore will assess your financial situation, including your income, housing, and debt, before deciding which type of loan they will offer you.

The type of loan they offer also depends on the amount of loan you are eligible for. That’s why you must know how much loan or credit you can get from lenders so that there will be no complications during your loan application.

This blog will discuss the various aspects to consider before applying for a personal loan with a licensed money lender in Singapore and how much you can borrow.

What To Consider Before Taking Up a Loan

When you need a loan, it can be tempting to just borrow from family or friends. But this may not be the best idea.

Sometimes, borrowing from family or friends can cause more problems than it solves. If you must borrow from family or friends, you should only do so when no other options are available.

Before taking out any loan from a money lender, there are a few things that you should consider:

  • The interest rate: It’s essential to consider the loan’s interest rate before accepting it. The interest rate should be reasonable for your financial situation.
  • Repayment period: When considering the repayment period of a loan, ensure that it fits in with your budget and lifestyle so that you don’t get into financial trouble later on down the line as a result of late payments or defaulting on payments altogether.
  • Credit history: If you have a bad credit history (e.g. bankruptcy), getting a loan from a bank or licensed money lender may be difficult. They might not trust that you’ll pay back what you owe them once the term of the loan ends if they check your status from the Moneylenders Credit Bureau.

Differences Between Licensed and Unlicensed Money Lenders

There are many unlicensed money lenders in Singapore that borrowers can turn to. However, it is likely to cause problems in the long run.

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    This is why it is vital to understand the difference between licensed and unlicensed money lenders.

    Licensed Money Lenders
    Licensed money lenders fall under the jurisdiction of the Moneylenders Act. The regulations surrounding them are stringent. There are also penalties if they do not follow the law.

    Borrowing from a licensed money lender is an excellent way to get a loan because it can save you money in the long run.

    Here are some of the reasons why:

    Licensed money lenders tend to charge lower interest rates than unlicensed ones. As the Singapore government regulates them, they must follow certain rules and regulations.

    Their interest rates remain at a certain level set by the authorities, and they also have to adhere to strict guidelines when lending money.

    If you default on your payments, legal money lenders can track you down easily compared to unlicensed ones operating in an unregulated environment.

    You can borrow from licensed money lenders any time, so long as it has an office where you can visit in person or call for assistance over the phone.

    However, licensed money lenders do not operate 24/7. Any lender that claims to do so is most probably unlicensed or illegal.

    Unlicensed Money Lenders
    Unlicensed money lenders are those who provide unsecured loans without a license.

    As such, they do not have any legal obligation to refrain from harassment tactics if their customers default on their payments or fail to pay their debts back on time.

    In fact, unlicensed money lenders will lend to anyone (including those without jobs), but they may charge higher interest rates, and there is no protection for you if things go wrong.

    Moneylenders Act And Rules Singapore

    The Moneylenders Act and Rules entail a set of principles that require money lenders to be fair, responsible, and honest.

    The Moneylenders Act (Act 126) governs the lending business in Singapore. Its main purpose is to protect borrowers from unscrupulous money lenders and ensure that the industry prospers within a competitive environment.

    The Moneylenders’ Rules regulate the activities of all money lenders operating in Singapore and require them to have a license before they can lend money.

    It also outlines the maximum interest rate they can charge and their legal collection practices.

    The regulations under the Moneylenders Act set out rules for all licensed money lenders to follow in conducting their business. They cover matters such as:

    • A lender’s maximum interest rate
    • How collection agents must conduct their business
    • How loans must be repaid
    • Certain aspects of licensing requirements such as capital requirements, auditing and accounting standards, etc

    Differences Between Borrowing From A Licensed Money Lender and Bank

    If you are looking for a loan, you have probably considered going to a bank.

    However, if the amount of money you need exceeds the limit banks will give, you may want to consider borrowing from a licensed money lender.

    The following are differences between borrowing from licensed money lenders and taking a loan from a bank.

    1. Licensed Money Lenders Can Give You More Money
    Banks usually limit their loans to a certain amount to protect themselves if borrowers default on the loan.

    Licensed money lenders have a higher risk appetite than banks and usually only consider your income instead of your credit score.

    If you are earning at least $20,000 per year, you can borrow six times of your monthly income.

    For unsecured loans, they also do not ask for collateral or co-signers when giving out loans, so people with bad credit scores can still apply for loans.

    2. Licensed Money Lenders Can Provide Loans More Quickly
    Banks often take several weeks or even months before giving out loans because they need time to process your application and verify your identity.

    Licensed money lenders can process your application much more quickly.

    This is because they don’t have as many customers as banks do, so it’s easier for them to handle a large volume of applications simultaneously.

    3. Interest Rates are Higher Than Those Offered By Banks
    The interest rate charged by a licensed money lender in Singapore is higher than those of banks.

    That’s because they face higher risks when lending out their money at lower returns than what they can earn from other investments such as stocks and bonds.

    These have higher risk profiles than secured loans like those offered by licensed money lenders.

    This means that borrowers should be ready for the interest rate of a licensed money lender to be higher if they borrow from these lenders, especially if they opt for longer repayment periods.

    Is Your Money Lender Licensed?

    Borrowing from a licensed money lender is a good option for many. This is because you can get your loan quickly and easily without going through any red tape.

    However, it’s important to remember that not all money lenders are equal. Some may be running illegal operations or even taking advantage of their customers.

    Here are some ways you can tell if a money lender has a license:

    • Check The Money Lender’s Business License – Even if you’re looking at getting a loan from the best licensed money lender in Singapore, it’s always best to check its business license first.
    • This is especially important if they’re offering higher interest rates than what you’re used to seeing at banks and other places.

    If the lender is not licensed, it legally can’t lend out money at high interest rates. If it is not registered with the government, it could be running an illegal loan operation or even steal your identity using the personal details you provided.

    • Look For Its Contact Information On Its Website Or Storefront – Most legitimate licensed money lenders ensure that their contact information is clearly displayed on their websites or in the Registry of Moneylenders.
    • Check Online – Look for the list of licensed money lenders in Singapore on Ministry of law’s website.

    If the lender is licensed, there should be a link on its website that goes directly to its license number. You can also call them and ask for it if that would be easier for you.

    Can You Borrow From Multiple Money Lenders?

    Yes. It is possible to borrow from multiple money lenders and still get the best rate.

    This is because each money lender will give you a different rate depending on the credit assessment they did for you.

    If one is offering you an attractive rate, but the others are not, you can try to get another loan from the other lenders.

    But beware of borrowing more than you can repay.

    What Is the Maximum Loan You Can Take?

    The maximum loan borrowers can take depends on their income, the amount they need to borrow, and the lender.

    It is important to note that there is no limit to how borrowers can get for secured loans with collateral.

    For unsecured loans, loan amounts will vary depending on several factors:

    • The borrower’s income: The higher your income, the more likely you can borrow more. Lenders will also look at your expenses, so if you have any significant expenses (e.g. car payments), this may lower how much they can lend you.
    • How much you need: The more money you want to borrow, the less likely you will get approved for a large amount. This is because lenders want to ensure that they are making enough money from their loans to continue operating their businesses in the long term.
    • The lender: Different licensed money lenders have different policies about how much they allow borrowers to borrow.

    Some may not allow borrowers to take out loans over $1,000, while others will allow up to $10,000 or more per loan application. But you can borrow $3,000 if you earn at least $10,000 per year.

    What To Do Once Your Loan Is Approved

    Once approved for a loan, you will need to get the money in your hand. A licensed money lender will offer many different ways to receive your cash. Some may include:

    • Direct Deposit

    The most common method of receiving your loan is by direct deposit. The loan company will send your money directly to your bank account, and you can access it immediately.

    • Cash Pickup

    Sometimes, a licensed money lender will allow you to pick up your loan at its business location. The lender may even meet you there to give you the cash in person.

    If this option is available, it takes little time and effort on your part, but sometimes there may be extra fees associated with this method of payment.

    What Happens If You Fail to Pay Back the Loan?

    Unlike a bank loan or credit card, which have safeguards to prevent you from defaulting on your payments, there are no such protections with unsecured loans from licensed money lenders.

    If you fail to repay the loan according to the agreed terms (e.g. monthly instalments), your lender can ask you to pay back the full amount immediately.

    If you don’t have enough cash, the lender may even sue you in court to recover the losses incurred due to non-payment of debt.


    Ultimately, it comes down to your credit score, maturity level, and access to savings.

    For those with lesser-than-stellar credit scores, a simple inquiry is all needed to get an idea of the maximum amount you can borrow.

    For more information regarding how much you can borrow, contact CreditMaster. We will be happy to assist you.

    Dexter Lee

    Born with a pen in one hand and a keyboard in the other, Dexter's been crafting words into beautiful prose since he was old enough to scribble on his walls (much to his mother's chagrin). He's a self-proclaimed pun master, often leaving his coworkers in stitches with his clever wordplay. He's been known to strike up conversations with strangers and turn their stories into captivating content that keeps readers coming back for more. Despite his unconventional approach to life and work, Dexter takes his job as a content manager very seriously. He knows that every piece of content he produces has the power to make a difference in someone's life, and he's committed to using his words for good.

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