How To Check If A Singapore Money Lender Is Licensed

Are you in need of a quick loan but don’t know how to spot a legitimate money lender? Or are you worried that you may get scammed by a financial institution? 

The good news is that in Singapore, there are measures in place that dramatically improve the prevention of fraud and monetary instability for money lenders. 

If a money lender has a valid license, you know you can put your trust in them. This knowledge will ease your mind while applying for a loan.

That said, it would help if you made sure a money lender has a license before borrowing from it.

In other words, only borrow from reputable lenders and weigh your options carefully before making a final decision. 

But if you are still unsure about how to proceed, here is how to check a licensed money lender.

Where Can You Find A List Of Licensed Money Lenders?

It’s quite obvious that the number of scammers and unlicensed lenders impersonating legitimate lenders is on the rise in Singapore. 

Well, there are a few notable methods that the Registry of Moneylenders has noted with regard to the tactics used by unlicensed or illegal money lenders, also known as loan sharks. 

Firstly, sending SMS or WhatsApp messages is one such dishonest method they use when purporting to be licensed money lenders. 

As we will explain later, this is prohibited by Singapore law. 

In other instances, criminals may pose as licensed Singapore money lenders on fake websites or social media accounts they’ve created. 

When unsuspecting borrowers submit their personal details on this fake website, their names, email addresses, and phone numbers are stolen and used for illegal purposes. 

Currently, Singapore is home to 154 authorised money lenders. A comprehensive list of all licensed money lenders, along with their contact details, is available on the Ministry of Law website. 

Constant updates are made to the list regularly to incorporate new data.

What Licensed Money Lenders Can And Cannot Do

Money lenders in Singapore with valid licenses can give loans to both individuals and businesses. 

They are under government control and must abide by numerous regulations such as:

• Loans from licensed money lenders can be used for anything from car repairs to education to expanding a business.
• Their loans aren’t the same as those offered by traditional financial institutions such as banks. You can purchase new furniture and electronics with a loan from a legitimate Singapore money lender.
• There is a significant difference in interest rates between loans from a bank and those from a money lender.
• Lenders don’t care if you have bad credit. Most can still be of help.
• To cover their overheads, money lenders in Singapore can charge up to 10% of the loan amount as a fee. This fee reduces the loan amount upon disbursement.
• Money lenders can only offer quick loans in Singapore under the country’s regulations.
• If you default on a loan from a money lender, the lender can sue you to recover its losses, but it cannot harm or threaten you in any way.

On the other hand, here’s what licensed money lenders in Singapore can do:

• They are allowed to post advertisements on the walls and windows in their place of business.

• They can impose interest rates, as a percentage of the outstanding balance each month, which are capped at 4%.
• Licensed money lenders must document their transactions with borrowers using a comprehensive loan agreement. They must also provide borrowers with a copy of the contract.
• Before getting the loan, the borrower and the lender must meet at the lender’s main office for a verification process. 

And here’s what licensed money lenders in Singapore cannot do:

• In the event of late payment, interest charges cannot exceed 4% of the amount due. You could be hit with a $60 monthly fee if you’re late with payments.
• The company cannot add extra charges for prepayment.
• The lender is not permitted to alter loan conditions.
• In Singapore, a licensed money lender should not keep any of your personal documents such as your NRIC or passport. No financial information such as account or card numbers should be acquired as well.
• A legitimate lender cannot employ intimidation or illegal means to collect a loan.

• Licensed money lenders are not allowed to use any form of direct marketing communications to solicit business from you. 
• There are no other acceptable venues for reaching an agreement on the loan. For instance, a licensed money lender should not approve loans via SMS or give you the loan amount in a parking lot.

How Much Can You Borrow From A Licensed Money Lender?

You can acquire a secured loan from any financial institution authorised to make loans. There are no limits to how much you can borrow from a secured loan. 

However, for unsecured loans without collateral, the amount you can get from a licensed money lender in Singapore is tied to your annual income. 

It also depends on your nationality and whether or not you are a Singaporean resident.

You can only qualify for a $3,000 unsecured loan if you are a Singaporean or permanent resident and have an annual income of less than $20,000.

If your annual income is at least $20,000, you may qualify for a loan that is six months of your monthly salary.

In a different scenario, an unsecured $500 loan is available to foreigners in Singapore with annual incomes of less than $10,000.

What Are The Interest Rates And Fees A Licensed Money Lender Can Charge?

The most a lender can charge in terms of interest is 4%. This cap remains the same regardless of the borrower’s income or whether the loan is secured or unsecured. 

Borrowers should expect to spend an additional 4% each month on late fees if they cannot repay their loans on time.

After making all principal payments, the money lender will calculate the interest due on the loan using the remaining amount.

The Ministry of Law approves the following interest rates and levies of law for regulated lenders:

• No more than $60 in overdue fees per month
• Loan servicing costs should not exceed 10% of the total borrowed
• Lender costs shouldn’t be higher than a certain percentage of the loan amount. Included in these prices are interest, administrative fees, late fees, and any additional fees that may be applicable

How To Tell If A Money Lender Is Licensed

To start with, all legal money lenders in Singapore must adhere to the government’s stringent guidelines when operating. 

Any attempt on the contrary is a clear indication of an unlicensed money lender.

As mentioned, you can also check out the list of licensed money lenders in Singapore on the Ministry of Law’s website first.

All Singapore licensed money lenders’ names, locations, and contact details appear in the central Registry list.

You can also call the frequently asked questions hotline at 1800-2255-529 to determine if a particular money lender is licensed.

Remember that if you need to borrow money in Singapore, you should only do so through legal money lenders. This will ensure that you get a reasonable offer and that your borrower rights are respected.

So how can you verify that a Singapore money lender is above board in such a case?

There are several other places to look for lending institutions besides the Ministry of Law’s list. 

Check with the Registry of Moneylenders if you have any doubts or if something doesn’t seem quite right.

What To Do After Your Loan Is Granted

Verify that the principal amount of your loan has been calculated correctly. 

The maximum amount that a lender can charge up front as a loan approval fee is 10% of the total loan amount.

Also, make timely loan payments to avoid additional fees and interest. It will have a positive effect on your total credit score. 

This is important because a poor credit score affect your chances for a loan in the future.

Always get a receipt from your licensed money lender and double-check its accuracy when you pay back a loan (e.g. name, amount, date).

At least twice a year, in January and July, you should receive a statement of account for your loan(s). Inspect the statement for inaccuracies (such as the wrong name, amount, or date) when you receive it. 

You should also save all of your receipts and account statements as evidence that you have made payments.

Lodging A Complaint Against A Licensed Money Lender

You may register a complaint with the Registry of Moneylenders if you believe a money lender with a license has violated any of these guidelines.

Include the lender’s name, contact information, and the dates and specifics of what occurred in your complaint against a money lender.

Loan agreements and lender letters are examples of corroborating papers that may be requested.

As soon as the Registry of Moneylenders receives your complaint, it will investigate your complaint.

The Registry has the power to revoke a money lender’s registration or impose a fine if it determines that the lender has violated the regulations.

You can find more details on the complaint filing process on the registry’s website.

Always Check A Licensed Money Lender Before Getting A Loan

There you have it, everything you need to know on how to check for a licensed money lender. 

If you do need to get an urgent loan, look for a lender with a moneylending license to be safe. That way, you can be sure you are not in the hands of unruly loan sharks. 

If you are looking for a trustworthy licensed money lender in Singapore, visit Katong Credit. 

Contact the team to get valuable advice and tips or apply for a quick loan now.