What Should You Know About Money Lender Rules?

Dexter Lee June 5, 2024

What Should You Know About Money Lender Rules?

Key Takeaways

Understanding the rules for borrowing from licensed money lenders in Singapore is crucial. Verify the lender’s license through the Registry of Money Lenders. Licensed lenders can charge up to 4% interest per month. Borrowing limits depend on annual income, and repayment terms range from 1 to 60 months. Fees include administrative and late payment charges. Legal action can be taken for non-repayment, affecting credit scores and resulting in wage garnishment or property liens.

Borrowing money is a serious decision, and understanding the rules governing money lenders in Singapore is crucial. It helps you have all the information needed before deciding which money lender you’ll settle on.

This guide provides a comprehensive overview of borrowing from licensed money lenders, including how to identify legitimate lenders, understand interest rates, and manage repayment terms effectively.

How to Identify a Licensed Money lender

Identifying legitimate lenders is critical to ensuring you’re managing a legitimate business. In Singapore, all licensed money lenders are registered with the Registry of Money Lenders, which operates under the Ministry of Law.

Verifying a money lender’s credentials protects you from potential scams and ensures that the lender adheres to legal standards set by the Ministry of Law.

Steps to Verify a Money lender’s License

  1. Check the Registry: Visit the Registry of Money Lender’s website and search for the money lender’s business name. This database is regularly updated to provide the most accurate information.
  2. Verify Contact Information: Ensure that the contact details match what is listed on the Registry’s website. Discrepancies in contact information can be a red flag.
  3. Look for Licensing Details: Licensed money lenders should prominently display their license number in all communications and advertisements. The absence of this information is a warning sign.
  4. Consult Reviews and Feedback: Look for customer feedback on forums and review sites. Consistency or absence of feedback can indicate problematic practices.

Interest Rates for Licensed Money lenders

Understanding the interest rates licensed money lenders charge is essential to avoid unexpected financial strain. The Ministry of Law regulates these rates to protect borrowers.

Licensed money lenders can charge up to 4% interest per month, regardless of whether the loan is secured or unsecured. This rate is significantly lower than the 25-30% annual interest rates typically charged by credit cards in Singapore.

Borrowing Limits

Borrowing limits vary based on several factors, including your annual income and whether the loan is secured or unsecured. Knowing these limits helps you manage your finances and stay within legal borrowing thresholds.

Individuals with an annual income of less than $10,000, Singapore citizens and permanent residents can borrow up to $3,000, while foreigners in Singapore can borrow up to $500.

If your annual income is between $10,000 and $20,000, Singapore citizens/permanent residents and foreigners can borrow up to $3,000. For those earning at least $20,000 annually, the borrowing limit is up to six times their monthly income for Singapore citizens/permanent residents and foreigners.

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    These limits ensure that borrowers do not overextend themselves financially. There’s no set borrowing limit for secured loans, which allows for greater flexibility depending on the collateral provided.

    Understanding borrowing limits is essential to avoid overborrowing and ensure you can comfortably manage repayments. Continually assess your financial situation thoroughly before committing to a loan.

    If you’re considering a loan, look no further than CreditMaster. We offer tailored loan solutions to fit your needs. Apply now through our easy and secure online application. CreditMaster is here to support your financial journey.

    Repayment Terms

    The repayment terms set by licensed money lenders in Singapore are designed to provide flexibility while ensuring timely repayments.

    Short-term loans typically range from one to three months, while long-term loans can help you better manage your cash flow for three to sixty months. Some lenders may require weekly repayments, which can help, while others may give you the flexibility to make monthly payments.

    Before signing a loan agreement, ensure you fully understand the repayment schedule, the amount due each period, and the final due date. These details should be clearly stated in the loan contract. If any detail needs to be clarified, request a written explanation from the money lender.


    Licensed money lenders in Singapore can charge specific fees in addition to interest. Knowing these fees helps you avoid unexpected costs.

    Late payment fees can be charged for each month of late repayment. Administrative costs can be up to 10% of the principal loan amount upon approval.

    For example, if you take a loan of $1,000, the administrative fee could be up to $100, making the total amount received $900. If you miss a monthly repayment, $60 could be added to your outstanding balance.

    Handling Late Payments and Settlements

    Managing your loan repayments is crucial, but sometimes unforeseen circumstances can make this challenging. Knowing how to handle late payments and seek settlements can help you avoid severe penalties. Many money lenders offer flexible plans when consulted on late payments.

    Negotiating Payment Plans

    If you anticipate difficulties making a payment, contact your money lender immediately to discuss alternative payment arrangements.

    Credit Counselling Singapore (CCS) offers free counselling and can help negotiate repayment plans with your money lender. The Singapore Mediation Centre provides services to help resolve disputes, including debt repayment issues.

    Filing Complaints

    If negotiations fail or you experience unfair treatment, you can complain to the Registry of money lenders. This regulatory body oversees all licensed money lenders and ensures compliance with legal standards.

    Handling late payments can prevent escalation into more severe financial issues and help maintain a good credit standing.

    Penalties for Non-Repayment

    Failing to repay a loan can result in significant penalties, which can have long-lasting effects on your financial health and personal life. Understanding these penalties helps you avoid severe consequences and motivates you to manage your repayments diligently.

    Legal Action

    If you fail to repay your loan, the money lender has the right to file a civil lawsuit against you. This legal action aims to recover the outstanding loan amount, plus any accrued interest and additional fees.

    If the court rules in favour of the money lender, a judgement will be issued against you, including additional court costs and legal fees you will be responsible for paying.

    Furthermore, once a money lender wins a lawsuit, they can obtain a court order to garnish your wages, automatically deducting a portion of your salary to the money lender until the debt is fully repaid.

    In severe cases, money lenders may place a lien on your property. This legal claim prevents you from selling or refinancing your property until the debt is repaid. If you attempt to sell your property, the proceeds will first go toward paying off the lien.

    Credit Score Impact

    Non-repayment of loans can severely damage your credit score. Money lenders report missed payments and defaults to credit bureaus, lowering your credit rating. A low credit score can affect your ability to secure future loans, obtain favourable interest rates, and even impact your eligibility for specific jobs that require credit checks.

    Increased Debt

    Failure to repay your loan on time results in additional late fees and interest, increasing the total amount you owe. Loans can create a debt spiral where the accumulating fees make it even harder to catch up on repayments, leading to more financial stress and hardship.

    Debt Collection Efforts

    Money lenders may employ debt collection agencies to recover the outstanding amounts. These agencies can be persistent and aggressive, using various methods to contact you, including phone calls, emails, and home visits. The stress and inconvenience caused by constant debt collection efforts can significantly affect your quality of life.

    Legal Penalties for Unfair Practices

    If you believe a money lender is engaging in unfair practices, such as harassment or illegal collection methods, you can file a complaint with the Registry of Money Lenders. However, this does not exempt you of your repayment obligations. Legal penalties for money lenders do not negate your responsibility to repay the borrowed amount.

    Loan Application Requirements

    When applying for a loan, knowing the required documentation can expedite the process and ensure you meet all criteria set by licensed money lenders.

    Common Documentation Needed

    To apply for a loan, you typically need to provide personal identification:

    • NRIC or passport
    • Proof of income: recent payslips, income tax statements, and bank statements
    • Proof of residence: utility bills or tenancy agreements.

    Foreigners may need to provide additional documents, such as a work visa or employment pass and proof of employment in Singapore. Ensuring you have all necessary documentation ready can streamline the loan application process and increase the likelihood of approval.

    Before and After Loan Approval

    Ensure all required documents are complete and accurate before submitting them to the money lender. Carefully read and understand the loan contract before signing, ensuring all terms, including the repayment schedule, interest rate, and fees, are clearly stated.

    Once the contract is signed, the borrowed amount will be disbursed. Verify the amount received matches the agreed terms. Adhere to the repayment schedule to avoid late fees and maintain a good relationship with the money lender.

    Know The Rules

    Understanding the rules and regulations for borrowing from licensed money lenders in Singapore is essential for making informed financial decisions. From verifying a money lender’s licence to managing repayment terms and understanding penalties for non-repayment, each aspect plays a crucial role in responsible borrowing.

    Looking for a reliable loan solution? CreditMaster offers personalised loan options to suit your needs. Apply now and experience our hassle-free process. CreditMaster is committed to helping individuals with their financial needs.


    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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