Licensed money lenders are an important part of the financial ecosystem. They provide you with short-term loans, which you can use to pay off debts or cover emergency expenses such as medical bills.
However, not all money lenders are legitimate. Some rogue lenders such as loan sharks may try to swindle you out of your money with deceptive and cunning tactics.
Find out how to check money lender license and keep yourself safe from scammers in this article.
How To Check Money Lender License In Singapore
In Singapore, no new licenses for money lenders are being issued for now. This is because the Registry of Moneylenders has suspended the process.
However, you can look up a money lender’s licensing status by checking the Ministry of Law’s list of licensed money lenders.
This list includes the names and contact details of all licensed businesses in Singapore. With this list, you can confirm the legitimacy of the lender you’re working with and prevent yourself from getting scammed.
Use the list to check the lender’s business name, license number, contact details, and address against what is included in the list of licensed money lenders in Singapore.
However, there is still some element of risk since an illegal lender may impersonate a licensed money lender and use its business name or replicate its website.
So to verify a lender, try calling its number or visiting its office address. If it has one, its license should be displayed prominently in its office.
You can also check if the money lender has a positive track record by checking online to see if any complaints have been raised against it.
How Money Lenders Apply For Their Licenses
As mentioned, no new moneylending licenses are being issued. However, it is worth noting the various tests and requirements a money lender must pass before the Ministry of Law allows it to be a registered or licensed money lender.
Firstly, a potential lender must pass the Moneylenders’ Test. The Registry of Moneylenders under the Ministry of Law conducts this test, which takes five to 10 minutes.
A non-refundable fee of $130 applies for the test.
Some of the documents that are required include:
- ID of the transferor
- Documentary evidence of funds (e.g. bank statements)
- The moneylending company’s recent financial statement
- Copy of property tax
- Two passport-size photographs
However, passing the test does not guarantee it will be a Test-Qualified Manager, it must also:
- Provide evidence of education qualifications and Certificates for Qualified Manager(s)
- Have a minimum of four GCE ‘O’ Levels passes, including the English
- Provide scanned copies of the front and back of the NRICs of all person(s)
- Be fit, and of sound mind and good character
These tests are important to ensure that the Test-Qualified Manager will follow all moneylending rules in Singapore and deliver high-quality financial services.
Updating Or Renewal Of A Money Lender’s License
In addition, a lender must maintain excellent behaviour for its moneylending licence to be renewed.
It must fill up an online application on the MinLaw website at least 30 days before its license expires. It must also pay the annual fee of $1,500 (in addition to any other fees) required for such renewal and provide a:
- Lease covering at least the first year of operations at the proposed location, starting when the current licence expires
- Copy of the property tax notice or strata title deed proving ownership of the property
- Re-issued $20,000 bank guarantee or insurance promise for the whole licence term
- Correctly filled out GIRO application form
In addition, the proposed location of the business must have clearance from the property owner and, if appropriate, the Management Corporation Strata Title (MCST).
Criteria For Excluded Money Lenders
According to the Moneylenders Act, an excluded money lender lends money to accredited investors, corporations, trustees of real estate investment trusts and business trusts, and limited liability partnerships.
Excluded money lenders generally include:
- Any individual running a business whose primary goal is not to lend money but who still loans money in the course of and for purposes related to that business
- An employer who loans money to an employee for the sake of the employment
What Licensed Money Lenders Cannot Do
Under the Singapore Ministry of Law, a holder of a money lender license is not allowed to:
Offer Loans To Unqualified Borrowers
A licensed money lender cannot offer loans to a borrower who is unemployed and below 21 years of age. To get a loan, you must first meet the eligibility criteria.
This also means that if you are unable to repay your loans or often delay repayments, chances are a licensed money lender will not approve your loan application.
Charge Exorbitant Rates And Fees
Licensed money lenders are allowed by law in Singapore to charge the following rates and fees:
- A fee not exceeding 10% deducted from the principal amount upon loan approval
- Interest rates not exceeding 4% per month
- A late fee not exceeding $60 per month
Legal money lenders in Singapore cannot charge rates and fees exceeding those stated above. In addition, rates and fees charged on loans cannot be greater than the principal amount of the loan.
This means that if you borrow $2,500, the total rates and fees you will repay cannot be more than $2,500.
Make A Full Loan Application Online
These days, you can easily apply for a loan online through the money lender’s official website.
However, the money lender must still meet you in person for a face-to-face verification and to explain the terms of the contract to you before you sign it. This is mandatory by law.
As such, licensed money lenders are prohibited from making the entire loan application process entirely remote.
If you need a personal loan with flexible repayment terms from a licensed money lender you can trust, try CreditMaster.
Deceptive Tactics Used By Unlicensed Money Lenders
The Singapore government is taking measures to protect borrowers from illegal money lenders by enacting policies and creating awareness through campaigns.
However, illegal lenders have taken up new tactics to keep up. Some even go as far as impersonating licensed money lenders.
Other tactics you need to look out for include:
Means Of Advertisement
As mentioned, the Moneylenders Act in Singapore dictates that legal money lenders can only advertise their services in three channels:
- Local business or consumer directories
- Their official websites
- Posters placed inside or outside their offices
Advertising through any other channel is not allowed by law, and you should ignore it.
Illegal money lenders also frequently advertise their services through:
- Phone calls
Illegal lenders don’t just send you a typical SMS asking you to apply for a loan. They will send you messages pretending to be debt recovery agencies that can help you pay off your outstanding loans.
Or they may send you a text with the impression that you had applied for a loan earlier to prompt you to reply.
Lastly, they may also send texts confirming fake loan disbursements. Such texts will then render you responsible for the loan.
All these illegal methods have three things in common. They often direct you to the illegal lender’s website, request you to call the lender, after which it promises to process your loan over the phone.
Fast Loan Approval
In its advertisements, an illegal money lender will often promise fast loan approval.
It will approve and process the loan entirely online. This means you won’t need to go to its office for verification.
It will also not ask you to provide some of the required documentation. In fact, it will easily approve the loan with little details.
Unlike legal money lenders in Singapore, illegal lenders will not explain the contract to you and will send it via email, if at all. This contract may contain exaggerated terms that could lead to more problems.
If you fail to repay the loan, these lenders might result in verbal or physical harassment.
Watch out for such tricks, and don’t fall for them. You can also refer to what we mentioned earlier on how to check money lender license.
Overly High Loan Amounts
Illegal money lenders often advertise high loan amounts to attract you.
Such amounts are often followed by hidden clauses and interest rates that are four times higher than those permitted by law.
In Singapore, how much you can borrow depends on your annual income, as shown below.
|Borrower’s 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
|6x monthly income
|6x monthly income
Always Check A Money Lender License
Learning how to check money lender license is an important skill you should have to ensure your financial well-being.
It’s worth spending the time to verify information offered by a lender before signing up to avoid getting into trouble later down the road.
If you need money urgently, apply for a loan with CreditMaster, a reliable licensed money lender in Singapore.
Just fill in your personal information, and we will get back to you. Contact us now to find out more.