Sometimes you may face a cash crunch due to unforeseen circumstances.
Maybe you need money for home renovation, car repair or debt consolidation, and your savings might not be enough to meet your expenses.
Quick cash or short-term loans from a licensed money lender in Singapore can financially assist you in such emergencies.
While banks are reliable financial institutions for borrowing, the loan process can be tedious, takes time and is more catered to long-term loans.
Hence, many turn to a licensed money lender in Singapore to meet urgent cash demands that they cannot fulfil through their income or savings.
Licensed money lenders in Singapore are private moneylending individuals or institutions with a legal licence to lend money to borrowers in Singapore.
They are authorised legal lenders and act within the purview of the Moneylenders Act.
This means they are approved by the Ministry of Law, and follow the rules and regulations set up by the Registry of Moneylenders.
You can verify their details in the list of licensed money lenders that is updated by the Ministry of Law every month.
Any moneylending institution that is not listed on the MinLaw website and carrying out loan transactions online or via calls and SMS without the proper documentation is an unlicensed lender.
Such illegal lenders are also known as ‘’Ah Longs’’ in Singapore.
Under the money lenders’ advertising rules, licensed money lenders are only allowed to advertise on three channels for advertisements or promotions:
Any other means of advertisement or promotion is prohibited. Hence, a licensed money lender cannot:
If a licensed money lender engages in any form of restricted advertisement practices, it is violating the law. If you report the lender, it will be investigated by the Registry and risks losing its licence.
Also, borrowers should never rely on the contents of advertisements, even if it’s from a legal money lender. Always seek clarification about your loan from the money lender in person.
A licensed money lender in Singapore must follow the rules for money lenders set by the Ministry of Law.
There is a limitation on the interest rate, late fees and any other fees that borrowers may incur.
Licensed money lenders can impose the following charges:
A lender calculates the late interest rate on the loan amount remaining after the deduction from the original principal amount.
Overall, a lender cannot ask you to pay double the principal amount after imposing an interest rate and all other administrative charges.
For example, if you borrow $15,000, a money lender cannot require you to pay $30,000 even after including late interest rates or fees.
There are increasing cases of loan scams where loan sharks are masquerading as licensed money lenders to deceive innocent civilians facing a cash crunch.
They use deceptive tactics such as offering higher loan amounts without any documents or verification process to scam the public.
Identifying such loan scams is essential to protect yourself from financial troubles and harassment from unlicensed money lenders.
Here’s how to ascertain loan scams:
Save yourself from loan scams and borrow from CreditMaster at some of the lowest interest rates.
There may be instances where you may require urgent cash loans. While financial problems are distressing, you should always be careful when taking a loan.
Here are a few things to check before borrowing from a licensed money lender:
Licensed money lenders in Singapore are required to have a physical address. At their office premises, they must explain the loan’s contractual terms in a language you understand.
Before you take a loan, check the credibility of the lender by:
Establish the credibility of your money lender to lend money before you take a loan. If you find it a hassle to verify everything, you can approach CreditMaster for a quick cash loan.
Once you have decided to take a loan from a licensed money lender, consider if your finances will allow you to repay the loan on time.
A borrower is legally obliged to fulfil the contractual terms of a loan contract once it is signed. Failure to do so might result in financial strain on your family.
While many licensed money lenders may not ask for a credit score for small loans, they might check your creditworthiness to discern your ability to repay the loan for higher principal amounts.
Lenders usually purchase a borrower’s credit history from the Moneylenders Credit Bureau before approving a loan.
You can buy your credit report from the Moneylenders Credit Bureau to check your ability to pay the loan. If it does not look good, you should improve your credit score before taking a loan.
The Moneylenders Credit Bureau is a government agency that has a data repository of borrowers’ loan and repayment records from licensed money lenders.
The cautionary statement is a written document that states the terms and conditions of borrowing from a money lender.
It has details regarding where to complain, methods used by money lenders to get a loan and other warnings that borrowers must be aware of before taking a loan.
The Ministry of Law regulations require licensed money lenders in Singapore to issue a cautionary statement, which must be duly signed by the lender and borrower before a loan is approved.
Remember, this is different from a loan contract, which contains only the terms of loans and interest rates, late fees, and other conditions.
Be careful of any terms in a loan contract that may allow a money lender to sell your property during a loan default.
In such instances, your property proceeds will directly go to the money lender, and it can wipe out all the earnings you get from your real estate.
Borrowers can visit the Ministry of Law website to check if a money lender is legal and reliable. The list is updated monthly.
If you cannot find a money lender on the list, it may be unlicensed.
Apart from this, here are a few things to check if a money lender is licensed:
After the loan approval, the money lender has to transfer the principal amount to you. This is when it may charge an approval fee of up to 10% of the principal amount.
Now, the onus is upon you to repay the loan. As a borrower, you should be aware of the following after the loan is granted:
Suppose a money lender resorts to harassment or any unethical practice for loan recovery. You can contact the Registry of Moneylenders at 1800-2255-529 or file an online complaint here.
Borrowers also have the option to reach out to a Small Claims Tribunal or courts under the Consumer Protection (Fair Trading) Act and pursue a legal case to settle a licensed money lender following unfair loan practices.
However, if you are being harassed by an unlicensed lender or a loan shark, you must reach out to the police to file a complaint.
If you are unable to repay the loan, here are the options that you have:
Bankruptcy comes with a few caveats. You cannot leave the country, might face difficulties finding a job, and cannot obtain a credit of more than $1,000.
Remember, bankruptcy should be your last resort because it will make a massive dent in your credit history.
Visit the Ministry of Law website for advice on legal alternatives to bankruptcy.
As a borrower, be mindful when borrowing and take every precaution to protect yourself.
Always approach licensed money lenders that are on the list of licensed money lenders. However, that does not mean you can borrow from legal lenders without any worry.
Do your research and check your ability to repay before you borrow from a licensed money lender in Singapore.
If you need financial help, CreditMaster offers quick loans at reasonable interest rates.