What Is A Moneylender And What Should You Take Note Of?

Dexter Lee August 24, 2022

What Is A Moneylender And What Should You Take Note Of?

When you need money urgently, it’s not always possible to borrow money from a bank.

When you do not qualify for a bank loan, you may have to meet your financial needs through money lenders. But are moneylenders safe and reliable?

This guide will help you understand what is a money lender and the necessary precautions to take before borrowing from a money lender.

Learn how to lodge complaints against unlicensed money lenders and all other details regarding the process of borrowing from a money lender in Singapore.

What Is A Money Lender?

A money lender is an individual or a group that lends money to people who do not have access to banking services or can’t afford a bank loan.

Money lenders charge higher interest rates than banks, which is justified considering the risk involved. After all, they provide loans with flexible collateral terms and conditions compared to banks.

There are usually two categories of money lenders, namely, licensed and unlicensed money lenders.

Borrowers must be aware of the latter as they often exploit vulnerable people in need of money with their unscrupulous methods.

Licensed Money Lenders

They are registered money lenders in Singapore that operate within the Moneylenders Act.

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    You can find their names and details on the Ministry of Law website in Singapore’s list of licensed money lenders. The list is updated monthly and has the contact details of every licensed money lender in Singapore.

    Licensed money lenders charge reasonable interest rates as decided by the Registry of Moneylenders, have a physical address, and do not engage in unethical advertising.

    If a borrower defaults on a loan, licensed money lenders use the legal path for loan repayment and are not allowed to harass their customers.

    Unlicensed Money Lenders

    These are unregistered moneylending entities and often lure customers in the name of collateral-free or unsecured loans.

    These lenders are often loan sharks or scammers and charge unreasonable interest rates.

    They operate online without proper documentation or a physical address, and often confiscate a borrower’s passport and personal ID documents.

    With the rising number of moneylending scams, you should be aware of unlicensed money lenders to avoid financial troubles.

    What To Consider Before Taking Up A loan

    If you require a loan, always approach a legal money lender in Singapore.

    Loans can be financially strenuous when you cannot repay the amount and interest rates that come with them.

    Hence, carefully consider other borrowing options and the necessity of a loan before you go to a money lender.

              1. Check For Alternatives to Money Lenders

    If you cannot meet the eligibility criteria of a bank loan, you can consider other possibilities such as the financial assistance scheme offered by Singapore government agencies.

    You can check the official websites of a government agency for financial help. If there are no other loan options, reach out to a licensed money lender like CreditMaster.

              2. Only Consider Licensed Money Lenders And Avoid Unlicensed Lenders

    Licensed money lenders are listed in the Singapore government Registry of Moneylenders. They charge reasonable interest rates and are regulated by the registry.

    Warning: Unlicensed money lenders might disguise as fake registered lenders and own a dummy website to cheat borrowers. Always confirm the lender’s identity before considering a loan.

    Here are some ways to identify unlicensed money lenders:

    • Most often, they do not have a physical address.
    • Their information is not available in the licensed money lender database of Singapore that is provided by the Ministry of Law.
    • They advertise through calls, SMSes or emails, which is not permitted for licensed money lenders.
    • They do not grant a contract copy before providing a loan or might ask you to sign a blank contract copy

    Beware of unlicensed loan sharks, and always verify the identity of a money lender before borrowing money.

              3. Determine The Type Of Loan

    There are many loan products in the market, and they incur different interest rates.

    Whether you want a personal loan, a wedding loan, a quick cash loan, a short-term loan or a small business loan, check the terms and interest rates for each loan product before deciding on the one you need.

    Maybe you need a personal loan, but if a quick cash loan can meet your personal loan needs at cost-effective rates, you can save yourself from the burden of a personal loan.

              4. Meet A Money Lender At Its Physical Address

    Legal money lenders in Singapore are required to have a physical address.

    Check the lender’s information in the Registry of Moneylenders and go to its office to discuss loan requirements and contractual terms face to face for clarity regarding the loan.

    The Moneylender’s Act requires licensed money lenders to explain all the loan terms to a borrower in a language they understand.

    They must also provide you with a copy of the loan contract. Hence, ask your money lender to explain the terms of the contract before you consider taking a loan.

              5. Compare Money Lenders

    Meet at least a minimum of five to six money lenders or more before finalising a loan. Do not limit yourself to only a few options.

    Different money lenders offer different loan products and loan repayment options. Compare moneylender offers, explore various options and choose what is favourable to your financial requirements.

              6. Study Contract Terms Thoroughly

    Contract terms clearly state the terms and conditions by which a borrower and money lender must abide.

    Examples include interest rates, collateral, repayment schedule and late fees, as well as what happens if a borrower defaults, among other agreements between a lender and a borrower.

    As a borrower, read the contract carefully at least twice and raise your doubts with the money lender if you have any.

    Deliberate whether you can agree to the contractual terms considering your financial obligations.

    Be careful because unreasonable terms may burden you and your family financially.

    You should only take a loan when you are fully satisfied with all the contractual terms. Also, look for any caveats in the contract regarding your collateral or any other asset and legal action involved.

              7. Check Your Documents

    A legitimate money lender will always ask for your documents to confirm your identity, and makes it clear it might not be possible to offer a loan without proper documentation.

    Ensure you have all these documents:

    • An identification card and Employment Pass (EP)
    • Proof of Income: Your last month’s computerised salary slip, past 12 months’ history of CPF contribution and latest income tax notice of assessment if you have any
    • Residency proof
    • Any other documentation required to assess your loan eligibility

    Prepare all documents in advance before considering a loan. You can apply for a quick and easy loan at CreditMaster if you have your documents ready.

    How Much You Can Borrow

    The maximum amount you can borrow depends on your annual income and assets.

    Money lenders offer secured and unsecured loans. Generally, there is no cap on secured loans as you need collateral for them, but there is a limit on unsecured loans.

    Secured Loans: These loans charge low interest rates due to less risk, and you need collateral to get a secured loans.

    Unsecured Loans: You do not need collateral for an unsecured loan, but the interest rates are high due to the risk of higher loan default.

    The maximum limit for unsecured loans is as follows:

    For Singapore Citizens/Permanent Residents (PRs): 

    • If a borrower is a Singapore citizen or has a PR status and an annual income of less than $10,000, they are eligible for a loan of up to $3,000.
    • Singaporean borrowers are eligible for a loan of up to six times their monthly salary with an annual income of at least $20,000 from a money lender.

    For Foreigners In Singapore: 

    • Foreigners with an annual income of less than $10,000 can get loans from money lenders for up to $500.
    • If the annual income is at least $10,000 but less than $20,000, foreigners are eligible for loans up to $3,000.
    • With an annual income of at least $20,000 or above, foreigners can borrow six times their monthly income from money lenders

    Interest Rates Charged By Money Lenders

    A money lender in Singapore can charge a maximum interest rate of 4% per month regardless of a borrower’s income or whether the loan is secured or unsecured.

    If you are late for your loan repayment, a money lender is allowed to charge a late interest rate of up to 4% each month the loan is repaid late.

    The late interest rate charged on the loan is calculated after deducting the amount already paid. For example, if you borrow $3,000 from a money lender and you have paid $1,000, then the late interest rate can be charged only on the remaining $2,000, and not on the whole principal amount.

    Also, a money lender can only charge a late interest rate on the monthly loan amount repaid late.

    For instance, if Mr Wong borrowed a loan of $2,000, and if he is late for repayment of his first installment of $200, the money lender can charge the late interest on $200 but not on the remaining amount of $1,800.

    Lodging A Complaint Against A Money Lender

    A licensed money lender in Singapore is not allowed to:

    • Stalk a borrower
    • Damage property or threatening the borrower
    • Cause injury to the borrower
    • Try to contact a borrower’s family or relatives for loan repayment
    • Go against the loan terms

    If you have complaints of being harassed by a licensed money lender or if a money lender charges higher interest rates than the one imposed by the Registry of Moneylenders, you can register your complaint with the Registry of Moneylenders at 1800-2255-529.

    A borrower can also complain online by registering their complaint at Singapore’s Ministry of Law website under the Registry of Moneylenders section.

    Your details remain safe and will not be disclosed to the money lender, but you may have to meet an officer to provide all the details regarding your complaint.

    You can also sue a money lender for exorbitant interest rates and unfair loan transactions at the Small Claims tribunal under the Consumer Protection Act of Singapore.

    A money lender has the right to take you to court and take legal action if you default on your loan repayment, but it cannot harass you.

    What To Do After The Loan Is Granted

    Once your loan is granted by the money lender, you should ensure the following:

    • Make sure you have a copy of all the documents related to contractual terms.
    • Confirm that the money lender has provided you with the correct principal amount after the loan approval. A money lender can deduct a loan approval fee of up to 10% of the principal amount.
    • Retain all receipts of payments and statements of accounts from the money lender as evidence of payment.
    • Check that your name, the date and other information on your loan repayment receipt are correct.
    • Always pay your loan on time to avoid a late fee or late interest charges.


    With the rising cost of living, it might be challenging to meet all your expenses through your salary. You may need a loan for your wedding or to meet a sudden financial obligation.

    However, with the rise in moneylending scams, it is better to be careful and scrutinise a lender before considering a loan.

    First, properly understand what is a money lender, the regulations on money lenders, and their legal obligation towards borrowers before taking any loan from a money lender.

    Connect with a licensed money lender like CreditMaster for all kinds of loan products and quick and easy loans, whether you are a Singapore citizen or an expat living in Singapore.

    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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