How To Check A Money Lender License

In the last few years, the moneylending industry has undergone many changes with digitalisation. For instance, applying for loans online is fairly common today. 

Although it is convenient to apply online, it is crucial to know how to check money lender license for your preferred money lender.

It’s worth doing so because applying for a loan from licensed money lenders in Singapore has many advantages. One big plus is the speed and convenience they can offer compared to banks. 

In this guide, you’ll learn how to check money lender license in Singapore and what a legal money lender is legally allowed or not allowed to do.

How To Check Money Lender License

There is no effective tactic for verifying if a money lender is licensed in Singapore without conducting proper research. Working blindly with any lender without checking if it is licensed is setting yourself up for eventual fraud. 

There are a few tell-tale signs for illegal lenders. 

The first thing to note is that unlicensed money lenders often promote their services through emails, text messages or WhatsApp. Licensed money lenders are not allowed to do so.

Secondly, unlicensed money lenders or loan sharks may demand you pay loan processing fees in advance. Licensed money lenders never ask for payments upfront before the loan has been approved. 

Thirdly, licensed money lenders will always request to meet up in person for identity verification. Loan sharks never have offices. 

Nonetheless, there’s only one way of checking a money lender’s license. 

You can verify a money lender’s license and authenticity by visiting the Ministry of Law’s website and downloading the list of licensed money lenders in Singapore. Click here to access the list of licensed money lenders in Singapore.

Check if your money lender is on the list and if its contact details and license number match what is stated on the list. 

If it’s not on the list or the details are different, do not work with the money lender. 

Another way for how to check money lender license would be to visit the money lender’s office premises. If it is a licensed lender, its moneylending license should be displayed prominently in its office.

Licensed money lenders like Katong Credit show their license numbers at their offices and on their websites. 

Thus, if you’re having trouble determining if a money lender is licensed or not, more often than not, it isn’t.  

How Do Money Lenders Apply For Their Licenses?

Although the Registry of Moneylenders in Singapore has closed applications for moneylending licenses until further notice, the process involves the following steps:

Register As A Business Entity

To get a money lender’s license, a lender must register with the Accounting and Corporate Regulatory Authority (ACRA) and add its services as a legally certified company. 

Take The Money Lender’s Test

To obtain the license, the money lender needs to take and pass the money lender’s test. The Ministry of Law’s Registry of Moneylenders conducts this test with the utmost professionalism. 

The registration and result-checking procedure take about five to 10 minutes each. A non-refundable fee of $130 applies for the test.

Anyone intending to gain certification as a licensed money lender is free to apply for the test.

A money lender’s license in Singapore remains valid for precisely a year. Once it expires, the money lender must renew it.

Apply For The License Online

Once the applicant passes the test, the money lender must apply for the license online. The applicant can log in for the application through Singpass. 

Next, the applicant must submit the required documents on the online portal. The documents needed to register for the money lender’s test are:

• NRIC of the transferor
• Two passport-size photographs
• Moneylending company’s recent financial statement
• Copy of property tax paid

Lastly, the person seeking the money lender’s license has to pay a non-refundable fee of $400 via a debit or credit card to complete the application.

Updating Or Renewal Of The Money Lender’s License

An effective renewal of a money lender’s license is primarily based on its conduct. License holders should have the below-mentioned documents and send them to the Registry of Moneylenders after notification and at least a month before its license expires. 

• Agreement of tenancy for the intended place of business encompassing at least one year from the license’s expiry date
• Valid copy of the proof of ownership of the property in the form of taxation documents or strata title deeds
• Approval from the landlord and the Management Corporation Strata Title (MCST) for the proposed business premise for the intended license period
• Insurance guarantee or a bank’s guarantee for a total of $20,000 covering the whole validity period
• For those without GIRO, a filled GIRO application form and a $1,500 license fee for the Registry (if needed)

Note that the renewal for approved additional business premises runs concurrently with the renewal of a money lender’s license for the primary place of business. 

As mentioned above, the license fee for an additional area of business is $1,500 annually for each property.

Furthermore, approvals for all additional places of business terminate automatically when the money lender’s license expires.

What Licensed Money Lenders Cannot Do

Unlike an unlicensed money lender, a licensed lender can’t carry out unlawful activities and charge unaccounted fees from the borrowers. 

A list of what licensed money lenders cannot do is mentioned below.

Harass The Borrower

If the borrower isn’t able to pay the monthly installment on time, the lender is legally not allowed to harass, harm or intimidate the borrower or his or her family.

If the money lender resorts to retrieving money by taking up the services of a debt collector, it is required to follow the guidelines laid down by the Registry of Moneylenders.

Moreover, the money lender and the debt collector aren’t allowed to seize the borrower’s property without a valid writ of seizure and sale.

Unlawfully Collaborate With The Debt Collector

The money lender isn’t allowed to engage with criminals or unlawful organisations such as mobs to extort money from borrowers. 

Also, it is not allowed to react violently or angrily towards borrowers during the debt collection process.

Send SMS And Emails To Promote Their Services

If a licensed money lender uses emails and SMS to advertise its services, it is violating the law. 

A licensed money lender is only eligible for promoting their services via print or online consumer and business directories, its office, and website.

Deception Tactics Used By Unlicensed Money Lenders

When unlicensed money lenders use deception tactics to dupe borrowers, such behaviour falls under predatory lending. 

Predatory lending is explicitly aimed at benefiting the money lender. More often than not, it also hinders a borrower’s ability to repay the loan. 

Needless to say, borrowers who lack financial knowledge and awareness tend to fall prey to such deceptive tactics.

Some of the most common deception tactics used by unlicensed money lenders are: 

• Excessive fees: Such fees are usually downplayed or disguised as they’re not added to the loan’s interest rate. Fees totalling more than 5% and prepayment penalties are examples of abusive fees charged by unlicensed money lenders.
• Balloon payment: This term refers to the single massive payment at the end of a loan’s tenure, generally opted for by unlicensed money lenders to decrease the monthly repayment amount and mislead a borrower.
• Loan flipping: Unlicensed lenders that intend to extract more money from you tend to resort to loan flipping. In this strategy, the money lender convinces the borrower to refinance a loan repeatedly, leading them to a debt trap.
• Asset-based lending: In this deception tactic, the money lender grants a loan based on your assets such as a property or car. Once you cannot repay the loan, you risk losing the assets that got you the loan in the first place.

Criteria For Excluded Money Lenders

A licensed money lender is considered an excluded money lender if it is:

• Licensed, approved, registered or otherwise regulated by the Registry under any written law, to the extent they’re sanctioned to lend money or are not restricted from lending money under that written law
• Certified as a credit society under the Co-operative Societies Act
• A pawnbroker authenticated under the Pawnbrokers Act 2015
• Lends money solely to; employees, accredited investors within the meaning of section 4A of the Securities and Futures Act, limited liability partnerships, corporations, trustees/trustee-managers, or trustees of real estate investment trusts

Always Know How To Check Money Lender License

As you can see, it’s essential to be careful while taking out a loan from a money lender in Singapore. This is why you must know how to check money lender license. 

The first step towards caution is verifying whether the lender is licensed by the Registry of Moneylenders. 

If you follow our tips, the chances of you working with an unlicensed lender unknowingly are low. 

But if you need a loan urgently, check out licensed money lender Katong Credit. 

We are one of the most trusted licensed money lenders in Singapore, offering some of the most affordable interest rates and fees. 

Give us a call now or apply for a loan today.