When you’re caught in a financial knot and your finances are tight, the last thing you would want is to find out that you have borrowed from an unlicensed money lender. Not only are they illegal, they are also unscrupulous when it comes to charging you exorbitant interest rates.


What Are Licensed Private Money Lenders?

Licensed private money lenders are essentially money lenders other than financial institutions, such as companies that offer money lending services.

In Singapore, they have to be registered with the Registrar of Moneylenders in order to get a license to operate. They are strictly regulated by the government, ensuring that they offer fair rates to their clients and do not overburden people with more debt than they can comfortably afford.

At Credit 21, we have established ourselves as one of the leading pioneers in Singapore’s licensed private money lender’s landscape.


What Do Licensed Private Money Lenders Do?


Licensed private money lenders in Singapore offer a variety of loans to individuals and businesses.

As we are strictly regulated by the government, we adhere to a strict code of ethics under the Ministry Of Law. We are transparent with our interest rates, charges, fees, and eligibility requirements.

Additionally, we look at your income and your total debt servicing ratio before granting you with the loan. Those whose income levels do not match up will be further considered for a loan.

The same applies to those whose TDSR will exceed 60% should they get the loan that they seek. As a borrower, it is important that you are able to comfortably offset the loan and not become overburdened.


How Do Licensed Private Money Lenders Differ From Traditional Lending Institutions?


Traditional financial institutions differ from a licensed private money lender in several different ways as follows:

1. Credit Check 

Even though both lenders carry out a credit check, it is common knowledge that traditional institutions have more stringent requirements, which means that people with bad credit will most likely get their loan applications denied.

As a licensed private money lender, we are less rigid and in fact, have put together loan packages specifically for people with bad credit.

2. Interest Rates 

Traditional lenders in Singapore tend to offer lower interest rates than licensed private money lenders. This makes sense when you consider that they tend to provide loans to those with better credit ratings.

However, their interest rates are only stable for two to three years and then they change. Although licensed private money lenders have a higher interest rate on the onset, this rate will be fixed for several years.

3. Loan Amounts 

Traditional lenders tend to be more conservative in how much money they lend to an individual. This means that you are likely to get a higher loan amount with us as compared to a traditional financial institution.

At Credit 21, depending on your monthly income, we are able to provide you with a loan amount of up to 6 times your monthly income. This is if your annual income is more than $30,000 but less than $120,000.

4. Approval Process 

As a licensed private money lender, we are quick to approve of our loan applications, often disbursing funds within 24 hours.

On the contrary, traditional lenders have a long and tedious process and can take as long as one month to approve of a loan. If you find yourself struggling with a financial emergency, it makes sense to consider applying for a loan with Credit 21.

In addition, we do not require as much supporting documentation as the traditional lenders.

5. Security

Most traditional lenders will require collateral for the loans they provide. In our case, we do not require any collateral from you. The loan we provide you hinges more on your credit rating and security is usually not needed.

For most, this is an added advantage since you do not have to worry about us seizing off your assets should you be unable to pay off the loan.


Why Borrow From Licensed Private Money Lenders?


Borrowing from private moneylenders has many advantages as follows:

1. A Simpler Application Process 

You can put in your application online and submit the basic supportive documents without too much hassle. This means that the application process is faster and much easier, saving you more time and in turn, ensuring that you’ll be able to receive the funds, quickly.

2. Fixed Interest Rates 

This is a major benefit because it means that the monthly repayments will be predictable for the duration of the loan. If your credit score is good, in some cases, we may also be able to lower your interest rates.

3. Loan Limits 

Private lenders tend to offer higher loan limits, usually as much as 4 times your monthly income. This means that one of the loan eligibility requirements will be a proof of employment, and with that proof of income.

4. Flexibility 

As a licensed private money lender, we tend to be more flexible than institutional lenders when it comes to terms and conditions. We are more than glad to work with you to ensure that the terms and conditions make it favorable for you to pay off the loan amount.


Knowing The Difference: Licensed Private Money Lenders In Singapore vs. Unlicensed Moneylenders In Singapore


This is important because you want to make sure that you are borrowing from a lender who submits to the rules and regulations laid out by the Ministry of Law. You wouldn’t want to find yourself borrowing from illegal unlicensed money lenders and chalking up exorbitant interest rates which you find yourself struggling to repay after.

Even though the difference may not be obvious to those who do not know what to look for, they become glaringly obvious if you look for the following things:

1. Ministry Of Law Listing 

This is the first place that you should go to if you are looking to see if a lender is licensed.

The Ministry Of Law website keeps a current listing of every licensed private money lender Singapore. You can confirm whether or not the lender you are intending to take a loan with is truly licensed.

It is common knowledge that the Ministry remains up to date on this list, adding new members immediately so that there is no confusion. Any lender whose company name is not reflected on the website is a fraud. Avoid such lenders at all costs.

2. Transparency 

We have the responsibility of being transparent to our borrowers. This means that our terms and conditions are laid bare and explained to you from the onset of the loan application.

In addition, we will ensure that you have understood all the requirements of taking the loan, and we will also answer your questions satisfactorily. If you require any assistance before making a trip down to our office, you are welcome to have a chat with us to find out more about our loan packages. We’ll be more than glad to review your financial situation and find a loan package that suits you best.

The discussion should outline the interest rate, the loan tenure, the various options available for repayment and the like. If at any time you feel that your questions are not adequately answered, or that the loan advisor is dodging them or leaving out information deliberately, it is best that you look for a different lender.

3. Loan Amount

According to the legal guidelines that a licensed moneylender should follow, the loan amount is guided by your monthly income. You can check how much you will be able to borrow with your monthly salary here.

If you come across a lender who is willing to grant a loan amount that exceeds what your income actually allows, then chances are that you are dealing with a loan shark and not a licensed moneylender.

4. Loan Contract 

The loan contract must have the following details clearly written in it:

  • How much money you are borrowing
  • The interest rate that you are being charged
  • The loan tenure, also known as the repayment period
  • The repayment options which should have been discussed with you prior
  • Charges and fees, including all penalties that could become applicable

Any lender that is happy to disburse funds prior to contract signing is probably not a licensed moneylender. Thoroughly review the contract, including the fine print. If there is something that you are unclear of, ask questions. The contract should be precise and to the point.

5. Interest Charged

The Ministry of Law has stringent guidelines on this, specifically that interest charged should not exceed 4% of the principal per month. This means that no licensed moneylender will dictate their own interest rates or fees since they are already laid out by law.

Loan sharks tend to charge exorbitant interest rates, even as high as 40% of the principal. This keeps the borrower in the debt trap for longer periods of time while enriching the loan shark.

6. Fees 

The fees that a licensed moneylender can charge is also laid out by law. There are only three types of fees that can be charged on top of interest.

They are the loan processing fee or upfront service fee, a late payment fee, and finally a legal fee. When it comes to the late payment fee, the amount charged cannot exceed $60 monthly. In addition, the amount accumulates monthly, not daily or weekly. Upfront fee on the other hand cannot be more than 10% of the principal.

Putting in your loan application with Credit 21 is simple and quick.

The eligibility requirements are basic: You must be above the age of 21, be able to prove your Singaporean citizenship or permanent residency, provide proof of employment, and proof of income. In the case of foreigners, you should have a valid income and work permit proof.

Upon doing so, we will access your credit score and strive to provide you with a loan package that is specifically tailored to your needs. Speak to us today to find out more about our loan packages and how we can help!