CHAPTER 1: INTRODUCTION TO LICENSED MONEYLENDERS IN SINGAPORE
According to the Moneylenders Act, an approved money lender in Singapore carries out the businesses of money lending under certain ministry regulations and laws.
Even though these licensed money lenders work independently and are not tied to public financial institutions, all licensed money lenders have to be registered with a licence number under the Registry of Moneylenders and are regulated by the Ministry of Law. They must also adhere to the laws and rules in the Moneylenders Act or risk losing their licence.
Authorised money lenders in Singapore tend to offer similar loans to local banks at varying rates and are usually the preferred choice for borrowers who are looking for fast loans that require less stringent credit checks.
How to tell the difference between a licensed money lender and an illegal money lender in Singapore?
While licensed money lenders conduct their business under the Ministry of Law, illegal lenders like loan sharks may pose as authorised institutions, resulting in the increase of money lender scams in Singapore.
To avoid falling into scams, it is important to differentiate between licensed money lenders and unauthorised ones.
Here’s how to tell the difference between a licensed and illegal money lender in Singapore:
The first way to identify an illegal money lender is by looking through the authorised list of Moneylenders. Ensure they have a physical office, an approved landline, approved website as stated in the list and they display their license certificate in the office.
If the money lender you are approaching is not in this list, it is likely that they are illegal. You should also always check the money lender licence number of a money lender and enquire with the authorities if you have any doubts.
This could save you a lot of problems and will protect you as illegal money lenders are known to inflict physical and emotional harm and are highly likely to land you in a huge debt.
Licensed money lenders have commercial and marketing rules that they have to abide by. While they are allowed to advertise their firms, they are also limited to certain locations. Under the guidelines, authorised money lenders can advertise their services through online and print mediums on their official websites and in their physical office premises respectively.
Unauthorised modes of advertising are usually done through unsolicited emails, SMS, calls, social media ads and door-to-door flyers. If you receive advertisement materials through any of these means, the money lender is unauthorised and should be reported.
While licensed money lender loans can be applied online, legal money lenders will require a face-to-face verification in their office before disbursing the loan. Illegal moneylenders, on the other hand, usually push for entirely online transactions. If a money lender promises quick loan payouts without meeting in a registered business address, be wary and report them to the authorities.
Loan sharks are known for their violent and incessant debt collection methods that can affect the lives of borrowers and their families.
To avoid unlicensed money lender harassment, have the due diligence of reviewing your money lender’s licence. While authorised money lenders have their own rules and regulations of debt collection, they are prohibited from harassing their borrowers with threats and violence.
CHAPTER 2: WHAT TO KNOW BEFORE BORROWING FROM A LICENSED MONEYLENDER
While banks and licensed money lenders provide similar loans, they differ in many ways. For example, private money lenders’ interest rates are known for being much higher than banks but it is also much easier to get a loan approved with a private money lender in Singapore.
They both have their pros and cons, so here’s a breakdown of the differences between banks and money lenders.
|Bank||Licensed money lender|
|Average interest rate||3.5 – 11% per annum||1 – 4% per month|
|Borrowing sum||Up to 10 times monthly income||Up to 6 times monthly income|
|Loan approval timeline||Less than 10 days||Same day approval|
|Credit assessment||Requires good credit score||Does not require good credit score|
|Minimum income requirement (unsecured loan)||At least $20,000/year||Possible to get a loan with income of less than $10,000 a year|
|Repayment period (personal loan)||Up to 5 years||Up to 12 months|
If you’ve decided to go ahead with a licensed money lender, there are a few things you should look out for before diving in. It’s a good habit to shop around and compare money lenders to find the best bang for your buck.
You also want to make sure you have a good experience with your money lender so here are some enquiries you should make before sealing the deal.
When you’re shopping around, you definitely want to find money lenders with low interest rates.
Don’t settle for the first money lender you approach as you can negotiate and reduce your fees if you search well enough. While the rate will not be as attractive as a bank loan, always make sure you’re not being overcharged and the best way to do that is by enquiring with as many money lenders as possible.
However, it’s helpful to note that low interest rates may not always suit every borrower. Loans with low interest rates and a short loan tenure would require a larger monthly repayment. This may not be suitable for all borrowers depending on their financial capability.
For some borrowers with a tight monthly budget, a longer loan tenure with smaller monthly repayment (despite more interest paid in total) may be more suitable for them.
When you receive your loan contract to sign, it’s extremely important to go through it thoroughly to ensure you don’t experience any penalties and land yourself in bigger debt.
Your loan contract should include the principal amount you’re borrowing as well as the monthly or annual interest rate discussed. You should also take note of the repayment terms especially if the money lender requires instalment payment on specific dates. Be familiar with the penalty fees for late repayment as well.
The best way to find out if your money lender is reputable is to search for a money lender Singapore review. These reviews can be found on Google and you’ll be able to gauge your future experience with the money lender through other borrowers’ past experiences. If a money lender has disproportionately larger one and two-star reviews, it’s best to stay away from them.
Elite Credit is a professional legal money lender offering loans with generous repayment terms.
CHAPTER 3: TYPES OF LOANS THAT MONEYLENDERS OFFER
Licensed money lenders offer both secured and unsecured loans to their borrowers but what are the differences between the two? In general, unsecured loans are a lot riskier for money lenders and therefore, come with a higher interest rate while secured loans are cheaper but require collateral. Collateral can be in the form of assets such as a car or property. If you are unable to repay your loan, your money lender has every right to seize your collateral as payment.
|DIFFERENCES BETWEEN SECURED AND UNSECURED LOANS|
|Secured loans||Unsecured loans|
|Requires collateral||Does not require collateral|
|Example of secured loans: vehicle loan, property loan||Example of unsecured loans: personal loans, credit card, student loan|
|If unable to repay, collateral will be seized||If unable to repay, credit score may be affected and borrower may not be able to apply for loans in the future|
Unsecured loan limits are determined by your citizenship and annual income.
|BORROWING LIMIT FOR UNSECURED LOANS|
|Borrower’s yearly income||Singaporeans & PRs||Foreigners|
|Less than $10,000||$3000||$500|
|Between $10,000 to less than $20,000||$3000|
|$20,000 and above||Up to 6 times monthly income|
Secured loan limits are generally determined by the borrower’s financial capacity as well as the type of loan (property, car loan).
|BORROWING LIMIT FOR SECURED LOANS|
|Total Debt Servicing Ratio (TDSR)
Property & Car Loan:
TDSR calculates the percentage of a borrower’s monthly income that goes towards paying off their loans
|Capped at ≤ 55%|
LTV calculates the loan amount as a percentage to the vehicle value.
|Capped at 60-70% (depending on the open market value of the vehicle)|
|Mortgage Servicing Ratio (MSR)
HDB & EC Loan:
MSR calculates the percentage of a borrower’s monthly income that goes towards paying off all HDB flats and Executive Condominium property loans.
|Capped at 30%|
If you’re deciding between applying for an unsecured or secured loan with a money lender, here’s a breakdown of both their pros and cons.
|PROS & CONS OF SECURED AND UNSECURED LOANS|
|Secured loan||✓ Can take up a bigger loan
✓ Lower interest rates and fees
✓ Easier to obtain even with a bad credit history
✓ Longer loan repayment tenure
|✗ Risk of losing assets
✗ Loans must be used for a fixed purpose (vehicle, home, etc)
✗ Obtaining loan may take a few days or weeks
|Unsecured loan||✓ No risk of losing collateral
✓ Has more flexible loan terms
✓ Quick loan disbursal
|✗ Small loan amount
✗ High-interest rates
✗ May require a good borrowing history
✗ Shorter loan tenure
These are some examples of loans offered by Elite Credit:
- Private car hire & taxi loan
- Bad credit history loan
- Freelance and casual worker loan
- Payday loan
- Debt consolidation loan
- SME working capital loan
Keen to apply for a personal or business loan?
CHAPTER 4: HOW DO LICENSED MONEYLENDERS CHARGE?
When applying for a loan with quick money lenders, it’s important to know the possible fees you could be charged. Money lenders don’t only charge interest fees but their services also come with administrative fees.
However, under the regulation of the Ministry of Law, money lenders have a cap on the fees they can charge.
|MAXIMUM FEES MONEY LENDERS CAN CHARGE|
|Chargeable Fees||Capped Amount|
|Interest rate||4% per month|
|Late interest||4% per month for each month of late repayment|
|Late repayment fee||$60 for each month of late repayment|
|Processing fee||10% of the principal loan amount|
|Legal fee (for recovery of the loan if borrowers default)||Decided by court|
If you’re deciding between the best loan tenure and interest rates, you should do your research by calculating your monthly instalments. Licensed money lenders use a reducing balance method to calculate interest, where the interest is calculated based on the outstanding loan amount for every instalment.
For example, if you have paid off $2,000 from a $14,000 loan, your interest for the next instalment is calculated based on the remaining $12,000
You can use a loan charge calculator to get an accurate amount. The 4% monthly cap on interest rates is applicable regardless of the borrower’s income and loan type.
Licensed money lenders can also charge you late interest fees on top of your negotiated monthly interest rate if you don’t pay your instalments on time. Licensed money lenders in Singapore’s late interest rates are capped at 4%. However, this can only be charged on the amount that was not paid on time and not the remaining loan.
If you do not pay your loan on time, not only can your money lender charge you a late interest fee, they can also charge an additional fee for each late payment. This fee cannot exceed $60 for each month of late repayment.
Money lenders may also have an additional fee when you apply for a loan. This processing fee should not exceed 10% of the principal loan amount. For example, if you have borrowed $1,000 from your lender, your processing fee should not be more than $100.
Under the Moneylender’s Act, the total amount that legal money lenders can charge (including the monthly interest, late interest, late repayment fee and administrative fee) cannot exceed the principal loan amount.
At Elite Credit, we offer attractive interest rates and fees. Are you looking for an urgent cash loan?
CHAPTER 5: WHAT IS REQUIRED WHEN APPLYING FOR A LOAN
|PERSONAL LOAN||BUSINESS LOAN|
|Employed Singaporeans/PRs||Self-employed Singaporean/PRs||Foreigners||Businesses|
|✓ Latest 3 months proof of income (payslip)
✓ CPF contribution statement
|✓ Proof of income for the last 3 months
✓ IRAS Notice of Assessment
|✓ Latest payslips for the preceding 3 months prior to loan application
✓ Work pass
✓ Tenancy agreement or proof of billing address
|✓ NRIC of all directors & partners
✓ Business profile from Accounting & Corporate Regulatory Authority (ACRA)
✓ Latest income tax assessment report (company & personal)
✓ Credit Bureau Singapore (CBS) report of all directors (to show borrowing history)
✓ Latest financial statements
✓ Latest business contracts
✓ Latest bank statements 6 months prior to loan application
✓ Tenancy agreement of physical office/shop
Having a favourable credit score can increase your chances of getting your loan approved. A credit score is a numerical value ranging from 1000 to 2000 that indicates the likelihood of a borrower repaying their loan.
The higher the borrower’s credit score means there is a lower likelihood that the borrower will default on their loan. This score is calculated based on the borrower’s credit repayment trends, default records, bankruptcy records and other financial histories.
Repaying your loans on time will improve your credit score and any future loan applications. Credit scores are vital especially for bank loans but are not always checked by licensed money lenders.
Instead of credit scores, licensed money lenders across Singapore use the Moneylenders Credit Bureau (MLCB) to review borrowers’ loans and repayment records. The MLCB is specifically used for money lenders to assess the borrower’s creditworthiness and make decisions before approving a loan.
Borrowers have a loan limit across all money lenders in Singapore and if that limit is hit, they will not be approved for any more loans. Therefore, it is recommended to repay loans on time and refrain from applying for large loans that could limit any future loans.
Borrowers with multiple existing loans usually have a higher chance of defaulting. Therefore, lenders will usually reject a borrower’s loan application if they have a history of applying for multiple loans.
Licensed money lenders prefer borrowers with a stable income stream as this means they will likely be able to make their payments on time. This income can come from full time employment or part time work, as well as other means such as through property rental, monthly CPF payouts or spousal maintenance.
As long as you are able to prove that you are getting these monthly payouts through bank statements and reports, your application will likely be approved.
- Search for reputable best money lenders online.
- Enquire with the best online money lenders about their loans.
- Compare rates and loan terms of different money lenders and select one that is suitable for you and your budget.
- Once you have decided on a money lender, fill up the online application form for a loan.
- The loan officer will call you up to arrange for a face-to-face interview at the money lender’s office. Bring down the necessary documents. The money lender will require your MLCB report for credit and borrowing history.
- After the interview, if you are assessed to be suitable for a loan and all documents are in check, your application will be approved immediately. This will take around 15-20 minutes.
- The loan officer will go through the loan contract with you. Make sure you understand and agree to all the loan terms before signing the contract.
- Once the loan contract is signed, the loan amount will be disbursed to you immediately via cash or bank transfer.
Once you’ve received your loan, it’s important to take down your repayment dates and follow them religiously using a repayment schedule. Licensed money lenders in Singapore’s late interest rates and late fees are much higher than that of the average bank.
So to ensure you pay on time, budget your monthly expenses, reduce unnecessary purchases and set aside a fixed amount for your repayment. Alternatively, you can opt for a monthly loan from the money lender with a smaller tenure so that the interest incurred remains low and manageable.
Before signing a contract, make sure you agree to all the terms stated by your licensed moneylender. In the contract, take note of the amount borrowed, the interest rate, repayment schedule and the details that verify your money lender as legitimate and legal. This information should correspond with what you have discussed with your money lender. Make sure to keep a copy of the contract or your loan could be considered fraudulent.
If you’re struggling to get your loan approved, you can consider getting a guarantor for a higher chance of loan approval. Guarantors are legally obliged to pay off any loans if the main borrower is not able to do so. Your guarantor should be someone you trust and they should also be aware of the risks involved if you are unable to pay off the loan.
Do you need an urgent cash loan with a reliable money lender?
CHAPTER 6: REPAYING LOANS & DEBT COLLECTION
Borrowers need to have discipline when paying off their loans as one default payment can incur a larger debt. Many may also plan on paying off their loans as fast as they can but be wary of any possible early repayment penalties from your money lender.
To pay off your loans on time and diligently, here are some tips:
Try to pay off loans with the highest interest rates as early as possible. You can do this by increasing the payment amount but remember to strike a balance if you have other loans to pay off. Do also remember to check if there’s any early repayment penalty from your money lender.
Taking on loans comes with the responsibility of being organised. Whenever you make a payment to your money lender, keep the transaction receipt as proof. Your money lender should also issue you a receipt within 7 days of your payment, which will state your outstanding loan amount. Keep track of this figure until you pay it off fully.
The best way to stay in control of repayment is to reduce any unnecessary expenses. By cutting down on luxury or unnecessary purchases, you can save on cash and put it into your repayment amount. Start by creating a budget of your monthly expenses and make more informed choices in your day-to-day spending.
If you ever find yourself struggling to pay off your loan, it’s not recommended to use your credit card as a solution. Credit card loans are known for its high interest rates, which will increase your debts to an exorbitant amount.
Here are some other options you can consider if you are unable to pay your money lender.
Most licensed moneylenders are open to flexible terms where you can negotiate for an extension or refinance your repayment. If you choose a refinancing plan, you can opt to change your loan tenure or consider a debt consolidation plan with money lenders to organise multiple loans. However, it’s important to note that any negotiations after the initial signing of the contract may incur some fees.
For loan repayment advice, social service agencies provide credit counselling and assistance for loan repayments to those who are struggling.
If you are not able to pay off your loan, approach any of these agencies for financial aid and assistance.
Credit Counselling Singapore (only if you have bank loans as well)
Number: 6225 5227
Address: 51 Cuppage Road, #07-06, Singapore 229469
Blessed Grace Social Services
Number: 8428 6377
Address: 16 Arumugam Road, #04-02B, LTC Building D, Singapore 409961
If you have exhausted all your options and are planning to file for bankruptcy, look into the Debt Repayment Scheme (DRS).
The DRS gives you the opportunity to repay your loans as all your ongoing interest charges will be frozen and your money lender will not be able to file for litigation against you. However, the scheme is by initiation and you will only be eligible for DRS if you file for bankruptcy or if a bankruptcy application is made against you.
Your total debts owed should also be between $15,000 to $150,000 to be approved for the scheme. If eligible, you will be able to make monthly payments on your loans for a maximum of 5 years.
Once you declare bankruptcy, it will be reflected in your credit report in Credit Bureau Singapore (CBS) or when creditors do a litigation search on you.
While legal money lenders have the authority to retrieve your loan through legal means, they are also regulated under strict laws if they resort to licensed money lender harassment.
Here is a list of illegal behaviours you should be aware of if your lender is attempting to retrieve your loan.
|What licensed moneylenders CAN do||What licensed moneylenders CAN’T do|
|Send Letter of Demand to the borrower’s place of residence or employment in an enclosed envelope||Openly display Letter of Demand at borrower’s residence or on social media|
|Send text messages and make phone calls to the borrower within specific hours
Mon-Fri: 8am – 10pm
Sat & Sun: 9am – 9pm
|Stalking and pestering the borrower at their place of residence or employment|
|Hire assigned debt collectors to retrieve loan through legal means||Making anonymous calls to contact the borrower|
|File for litigation against you||Using threatening language and aggression towards the borrower|
|Harassing borrower with calls during unusual hours at the expense of their family and colleagues|
Elite Credit is a reliable money lender in Geylang, so if you stay around the area, we are just a short walk away from Paya Lebar MRT station.
If you’d like to know the best loan for your financial situation, send in an enquiry and we’ll get back to you with the best recommendations.