Key Takeaways

To check and verify if a Singapore money lender is licensed, visit the Ministry of Law’s official website and access the “Info for Borrowers” section to download the list of licensed money lenders. Cross-check the lender’s name, contact number, and office address. Additionally, you can visit the money lender’s office to verify their license certificate and contact the Registry of Money Lenders for added assurance. Avoid unlicensed lenders to ensure safe borrowing.

Ensuring that your money lender is licensed is crucial for a safe and legitimate borrowing experience in Singapore. With numerous lenders advertising their services, it can be challenging to distinguish between licensed and unlicensed ones.

This guide will walk you through the steps to verify a money lender’s licence, helping you avoid potential scams and unethical practices.

Following these tips will help you to confidently select a licensed money lender who adheres to the regulations set by the Ministry of Law, ensuring your financial transactions are secure and transparent.

Where Can I Find A List Of Licensed Money Lenders?

To find a comprehensive list of licensed moneylenders in Singapore, visit the Ministry of Law’s (MinLaw) Registry of Money Lenders. This official list includes the names and contact information of all legally authorised money lenders in the country and is regularly updated.

As of June 1, 2024, there are 153 licensed money lenders in Singapore.

It’s important to avoid any lender that provides excuses for not being on this list, as they are likely unlicensed loan sharks. For instance, they might claim there is a system glitch or that their company name differs from their brand name.

Some loan sharks, also known as “Ah Longs” in Singapore, might even display fake licences on their websites, hoping you won’t verify their legitimacy.

For additional assurance, you can send an inquiry to the Credit Association of Singapore (CAS) to check if the money lender is registered with them. While membership in CAS is not mandatory for legal money lending, it signifies a commitment to higher ethical standards.

What Licensed Money Lenders Can and Cannot Do

Understanding what licensed money lenders can and cannot do helps ensure you are dealing with a legitimate and ethical financial institution, providing you with protection and peace of mind.

Permissible Actions by Licensed Money Lenders

Licensed money lenders in Singapore are regulated by the Ministry of Law and must adhere to strict guidelines. Here are some key points about what they are allowed to do:

  • Provide Various Loan Types: Licensed money lenders can offer different types of loans, including personal loans, business loans, and renovation loans.
  • Charge Interest Rates: They can charge an interest rate of up to 4% per month, calculated on the remaining loan balance.
  • Administrative Fees: A one-time administrative fee not exceeding 10% of the principal loan amount can be charged.
  • Late Payment Fees: If you miss a payment, they can impose a late repayment fee of up to $60 per month and a late interest rate of up to 4% per month on the overdue amount.

Restrictions on Licensed Money Lenders

To protect borrowers, there are strict rules about what licensed money lenders cannot do:

  • Advertising Restrictions: They are only allowed to advertise through business directories, their official websites, and within their business premises. Any direct marketing via SMS, emails, or flyers is prohibited.
  • Retention of Personal Documents: They cannot keep your personal documents such as NRIC, passport, or ATM card.
  • Demand for Sensitive Information: They are not allowed to ask for your SingPass login details or any other personal passwords.
  • Unethical Practices: Using threats, harassment, or abusive language to collect payments is strictly forbidden.
  • Contract Changes: They cannot change the terms of the loan contract without your consent, ensuring transparency and fairness.
  • Approval Process: Loans must be approved through a face-to-face verification meeting at their office, ensuring that all terms are clearly explained and agreed upon.

Important Practices for Borrowers

As a borrower, it’s important to be aware of these regulations to avoid falling victim to illegal money lenders. Here are some tips:

  • Read the Contract: Before signing, ensure you fully understand the loan terms, interest rates, and any fees.
  • Verify Details: Always verify the money lender’s licence and details with the Ministry of Law’s Registry of Money Lenders.
  • Report Unethical Behaviour: If a money lender engages in prohibited practices, report them to the Registry of Money Lenders immediately.

Knowing what licensed money lenders can and cannot do helps you make informed decisions and protects you from potential fraud and unethical practices.

How Much Can You Borrow From A Licensed Money Lender?

Licensed money lenders in Singapore must adhere to strict guidelines regarding the amounts they can lend to borrowers.

Borrowing Limits Based on Annual Income

The borrowing limits for unsecured loans vary depending on your annual income. Here are the specific limits:

  • For Singapore Citizens and Permanent Residents:
    • Annual Income Less Than $10,000: You can borrow up to $3,000.
    • Annual Income Between $10,000 and $20,000: You can borrow up to $3,000.
    • Annual Income of $20,000 and Above: You can borrow up to six times your monthly income.
  • For Foreigners Residing in Singapore:
    • Annual Income Less Than $10,000: You can borrow up to $500.
    • Annual Income Between $10,000 and $20,000: You can borrow up to $3,000.
    • Annual Income of $20,000 and Above: You can borrow up to six times your monthly income.

Secured Loans

For secured loans, there is no maximum borrowing limit. The amount you can borrow is determined by the value of the collateral you provide, such as property or other valuable assets.

Total Debt Service Ratio (TDSR)

The Total Debt Service Ratio (TDSR) is an important factor in determining how much you can borrow. The TDSR represents the percentage of your monthly income that goes towards repaying your debts, including the new loan. In Singapore, the TDSR is capped at 55%.

  • Example Calculation:
    • If your monthly income is $10,000 and you are already spending $4,500 on other debts, the maximum amount you can borrow is calculated as follows:
    • $10,000 x 55% = $5,500 (total allowable debt repayments)
    • $5,500 – $4,500 (existing debts) = $1,000 (maximum additional loan repayment)

What Are the Interest Rates and Fees a Licensed Money Lender Charges?

When borrowing from a licensed money lender in Singapore, it’s important to understand the interest rates and fees you may incur. These charges are regulated by the Ministry of Law to ensure fairness and transparency.

Interest Rates

Licensed money lenders can charge a maximum interest rate of 4% per month, regardless of the borrower’s income or whether the loan is secured or unsecured. This cap helps protect borrowers from excessive interest costs.

  • Reducing Balance Model:
    • The interest is calculated based on the outstanding loan principal, not the original loan amount.
    • For example, if you borrow $10,000 and repay $1,000, the interest for the next month will be calculated on the remaining $9,000.

Late Interest and Repayment Fees

If you miss a payment, licensed money lenders can impose additional charges to cover the cost of late payments. These include:

  • Late Interest Rate: Up to 4% per month on the amount that is repaid late.
  • Late Repayment Fee: A maximum of $60 per month for each month of late repayment.
  • Example Calculation:
    • If you miss a $500 instalment, the late interest would be 4% of $500, which is $20 per month.
    • Combined with the late repayment fee, if you are 60 days late, you could owe an additional $100 ($40 in late interest and $60 in late fees).

Administrative Fees

Upon approving a loan, licensed money lenders can charge an administrative fee. This fee is capped at 10% of the principal loan amount.

  • Example Calculation:
    • For a $10,000 loan, the administrative fee could be up to $1,000.
    • The lender would then disburse $9,000 to you after deducting the fee.

Total Charge Cap

The total charges imposed by a money lender, including interest, late interest, administrative fees, and late fees, cannot exceed the principal loan amount.

  • Example:
    • If you take a $10,000 loan, the total interest, fees, and charges cannot exceed $10,000 over the life of the loan.

Understanding the interest rates and fees associated with a loan from a licensed money lender can help you make informed borrowing decisions and ensure you are aware of all potential costs.

If you are looking for a reliable and transparent lending option, consider Credit 21. We offer loans with clear terms and a straightforward application process. Apply for a loan with us today to experience a hassle-free borrowing experience.

How To Check If A Money Lender Is Licensed

The simplest method to verify if a money lender is licensed is to check their registration number on the Ministry of Law’s website.

Follow these steps:

  1. Access the Ministry of Law’s Website:
    • Visit the Ministry of Law’s official website.
    • Go to the “Info for Borrowers” section.
  2. Download the Licensed Money Lenders List:
    • Look for the link titled “List Of Licensed money lenders In Singapore.”
    • Click on the link to download the latest PDF document containing the list of licensed money lenders.
  3. Verify the Money Lender’s Details:
    • Cross-check the name, contact number, and office address of the money lender against the information in the list.
    • Ensure all details match accurately to confirm the legitimacy of the money lender.

Additional Verification Methods

  • Visit the Money Lenders Office:
    • Licensed money lenders will prominently display their licence certificate in their office.
    • Verify the physical address and ensure it matches the information provided in the Ministry of Law’s list.
  • Contact the Registry of money lenders:
    • For added assurance, contact the Registry of money lenders to confirm the money lender’s status.
    • This step can provide peace of mind and ensure all information is up-to-date.
  • Check with the Credit Association of Singapore (CAS):
    • Although not mandatory, being registered with the CAS indicates higher ethical standards.
    • Send an inquiry to CAS to verify if the money lender is registered with them.

If you encounter any suspicious behaviour or believe you are dealing with an unlicensed money lender, report them immediately to the Registry of Money Lenders. Provide as much detail as possible, including the money lender’s name, contact information, and any relevant incidents.

Ensuring you deal with a licensed money lender is crucial for your financial safety and peace of mind. Always verify their legitimacy using the official resources provided by the Ministry of Law.

What To Do After Your Loan Is Granted

After your loan has been approved, it’s crucial to double-check the interest rates and fees with the licensed money lender. Ensure that all details are correct before you sign the contract.

Make sure to thoroughly read and understand the contract, including every fee and charge. If anything is unclear, ask the money lender for clarification. Licensed money lenders are legally required to be fully transparent about all aspects of your loan.

If you are satisfied with the terms, sign the contract. Once signed, the money lender will transfer the loan amount to your bank account within one working day.

That’s it – you have successfully obtained a loan from a licensed money lender in Singapore. However, the process doesn’t end here:

  • Keep your contract, Statement of Account, and receipts organised in a dedicated folder.
  • Make copies of these documents for safekeeping.
  • Ensure you make payments on time.
  • Consider setting up automatic payments through your bank to avoid missing instalments.
  • If you encounter financial difficulties, contact your money lender promptly. Being honest about your situation can help you negotiate more manageable repayment terms.

Lodging a Complaint Against a Licensed Money Lender

Licensed money lenders in Singapore are required to comply with specific regulations set by the Ministry of Law. If you believe a licensed money lender has breached these rules, you can file a complaint with the Registry of Money Lenders.

When lodging a complaint, provide the lender’s name, contact information, and detailed descriptions of the incidents, including dates. Supporting documents, such as loan agreements and correspondence from the lender, can strengthen your case.

Once your complaint is submitted, the Registry of Money Lenders will conduct an investigation. If they find that the lender has violated industry regulations, they may revoke the lender’s licence or impose fines.

For more information on filing a complaint, visit the Registry’s website. Additionally, under the Consumer Protection from Unfair Trade Practices Act, you have the option to file a claim with the Small Claims Tribunal or the Court.

Ensuring a Safe Borrowing Experience

Ensuring that you borrow from a licensed money lender is crucial for your financial safety and peace of mind. By following the steps outlined in this guide, you can confidently verify the legitimacy of a money lender and understand your rights and responsibilities throughout the borrowing process.

Are you looking for a trusted lender to meet your financial needs?

At Credit 21, we are dedicated to providing transparent and fair loan services to everyone. Whether you need a personal loan, business loan, or any other financial assistance, our licensed money lender services are designed to meet your needs responsibly.

To apply for a loan with us, visit our website and get started on securing the financial support you need. We ensure clear terms and a straightforward application process to make borrowing easy and stress-free.