An Essential Guide To Borrowing From Licensed Moneylenders

Monthly Installment Loan Singapore, Monthly Loan Singapore

While monthly instalment loans in Singapore are increasingly popular, before you sign any contract, it’s best to understand the various processes that occur in acquiring a loan and the various institutions that offer such services. One such institution would be licensed moneylenders.

A common misconception many Singaporeans possess is that moneylenders are never legal. However, legal moneylenders do exist in Singapore. When cash-strapped and in urgent need of emergency funds, legal moneylenders may be the best option to tide you over safely.

Under the impression that all moneylenders are unaccredited institutions (otherwise known as loan sharks), many Singaporeans would shy away from the useful services moneylenders offer. As such, it is important to educate yourself and learn about the various options you have when stuck in a sticky financial situation.

So, read on as we explain the difference between legal moneylenders and unaccredited institutions, your rights as a borrower, and how to borrow money from these recognised businesses safely.

What exactly is a legal moneylender?

Legal moneylenders, otherwise known as licensed moneylenders, receive the necessary legal credentials and recognition from Singapore’s legal bodies, specifically the Ministry of Law, to carry out their moneylending services. Licensed moneylenders have to abide by the law and maintain transparency with their borrowers. This means that all transactions have to be legal, consensual, and professional. Licensed moneylenders also offer loans with strict interest rates to align with the legal requirements.

Before borrowing money, it’s crucial to refer to the Ministry of Law’s approved list of moneylenders. If the potential moneylender is not in the directory, opt for other licensed moneylenders instead to ensure your safety and avoid possible legal implications.

But, just because a moneylender is on the list does not mean they are law-abiding; it is better to be safe than sorry. Hence, if a moneylender sends you misleading statements to coerce you into borrowing money or attempts to retain your personal documents (for example, in the form of your NRIC card), do report them to the Ministry of Law. Additionally, many first-time borrows might not know that licensed moneylenders can only advertise on their business website or in legal business directories such as the Yellow Pages.

How do I borrow money from these legal moneylenders?

When borrowing money from a moneylender, you should first prepare all necessary documents before applying for a loan. These documents include a copy of your NRIC and any documents that depict your financial status. Upon signing the contract, ensure a copy of the loan contract is given to you and everything is explained in a language that you understand.

Another tip is to be aware that there are limits to loan amounts and interest rates. For example, both the interest rate and late interest rate should not be more than 4% each, and moneylenders cannot charge an amount more than twice the principal you borrowed. So, ensure that the interest rates and repayment are within your means.

Most importantly, it’s not advisable to immediately commit to the first moneylender you find. Take the time to explore each moneylender’s terms and conditions to find the one that suits your needs and repayment plans.

What happens when I am unable to repay my loan?

Licensed moneylenders need to follow a strict set of rules and regulations that prevent them from harassing, threatening, or using violence against borrowers. However, they do have the legal right to sue borrowers in certain situations. For instance, if an asset was used to secure the loan and the borrower cannot return the required amount in time, the moneylender can act upon attaining the asset.

Suppose you’re no longer able to meet the legal obligations outlined in the contract. In that case, it’s recommended to give the moneylender a call early and renegotiate an extension or request they refinance it. As these come with additional costs and may easily snowball, remember to only borrow within your capacity.


Understandably, managing your finances is a complicated process. It can also be confusing and intimidating without knowing the various ways you can manage your money and acquire safe loans. Consider the assistance of a licensed moneylender when cash-strapped, and protect yourself by learning more about the various processes that constitute a smooth and legal transaction between the moneylender and borrower.

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