Introduced in 2008, the Moneylenders Act Singapore serves to protect the legitimate rights of borrowers and moneylenders in Singapore. It accomplishes this through a legal framework that clearly defines permitted business activities, borrowing limits, and avenues for recourse.
In this article, we explain the Act in simple terms and highlight how it impacts borrowers seeking loans from licensed moneylenders on the island.
One of the most important functions of the Moneylenders Act Singapore is to define the parties allowed to conduct money lending activities in the country.
According to the Act, entities who wish to legally lend money must belong to one of the following groups:
- Exempt money lenders: those who have been granted an exemption from holding a licence
- Excluded money lenders: those who are authorised to lend money under another law (e.g., pawnbrokers under the Pawnbrokers Act, credit societies under the Co‑operative Societies Act, etc)
- Licensed money lenders: those who have been granted a licence by the Registrar under the Moneylenders Act Singapore.
For this article, we will be focusing on the third group – licensed moneylenders in Singapore.
With the establishment of the Moneylenders Act Singapore, borrowers can seek loans from licensed moneylenders that are regulated by the authorities.
This offers a safe and legal alternative for those who may not qualify for bank loans, helping them to stay away from illegal lenders such as loan sharks, who are known to use predatory tactics and harassment.
The Ministry of Law maintains a list of businesses that have been granted a licence to operate as legal moneylenders. This creates an additional layer of assurance for borrowers, as they can easily verify if the lender they are dealing with is a regulated entity before signing up for a loan.
You can view the list of licensed moneylenders in Singapore over at the Ministry of Law’s website.
Notwithstanding their licensed status, be wary if a moneylender:
- Use abusive language, or behave in a threatening manner towards you.
- Ask for your SingPass user ID and/or password.
- Retain your NRIC card or any other personal ID documents (e.g. driver’s licence, passport, work permit, employment pass, or ATM card).
- Ask you to sign on a blank or incomplete Note of Contract for the loan.
- Grant you a loan without giving you a copy of the Note of Contract for the loan and/or without properly explaining to you all the terms and conditions.
- Grant you a loan without exercising due diligence (e.g. approving a loan over the phone, SMS, or email before even receiving your loan application form and supporting documents, such as the income tax assessment and payslips).
- Withhold any part of your principal loan amount for any reason.
One of the purposes of the Moneylenders Act Singapore is to help ensure the population manages their debt obligations.
To that end, the Act spells out specific limits regarding how much you can borrow from a licensed moneylender.
Your borrowing limits are pegged to your income level, as shown in the table below. Note that these are the total maximum amount that you may borrow at any time across all moneylenders in Singapore.
How much can you borrow from licensed moneylenders in Singapore?
|Annual income||How much can you borrow?|
|Less than S$10,000||Citizens and PRs: S$3,000
Foreigners residing in Singapore: S$500
|S$10,000 to less than S$20,000||Citizens and PRs: S$3,000
Foreigners residing in Singapore: S$3,000
|At least S$20,000||All: Up to six times your monthly income|
Source: Ministry of Law
Moneylenders cannot overcharge you in fees and interest
Licensed moneylenders are also prevented from overcharging their customers by imposing high fees and interest charges, helping to ensure that borrowers do not inadvertently fall prey to predatory or unfair tactics.
Here’s how much licensed moneylenders are allowed to charge for their services.
- Loan interest rate: Up to 4% per month, charged on the remaining principal
- Late interest: Up to 4% per month on the amount due, for each month of late payment
- Late payment fee: Up to S$60
- Admin fee: Up to 10% of the principal
Note that in total, late fees, admin fees, interest, and late interest charged by your moneylender cannot exceed your loan’s principal amount.
For example, if your loan amount is S$5,000, the interest, late interest, 10% admin fee, and S$60 late fee cannot exceed S$5,000 in all.
Legal moneylenders are also allowed to recover legal costs in the event of a successful claim for the recovery of a loan.
Other than these, moneylenders are not allowed to impose any other fees or charges.
If you have been overcharged by a licensed moneylender in Singapore, or have been subject to other illegal or unfair practices, you may seek assistance by calling 1800 2255 529.
Under the Moneylenders Act Singapore, moneylenders are limited in which channels they can use to advertise their services.
Specifically, they can only advertise through:
- business or consumer directories (print or online)
- their websites
- advertisements at their business premises
As such, offers for loans from flyers, SMSes, emails, or phone calls are highly likely to be from unlicensed moneylenders, even if they try to pass themselves off as having the proper licences.
Therefore, you should ignore unsolicited moneylending advertisements coming from these channels. Better yet, report them by calling 1800 2255 529, or using the feedback form on the Ministry of Law’s website.
The authorities have implemented a robust legal framework to protect borrowers like you, so be sure to approach only licensed moneylenders for your financial needs.
Elite Investment and Credit is a fully licensed legal moneylender in Singapore, and we are committed to serving your financial needs with integrity and professionalism. Find out about our low-interest loans today!