When faced with a sudden financial shortfall, borrowing money may be your only recourse if you don’t have enough savings but need money urgently.

Licensed money lenders in Singapore are the most preferred, if not the best available option, in such situations.

However, due to the cost of such loans and shorter repayment periods, defaulting on your loan from a licensed money lender is a possibility – especially if you lose one stream of your income.

Defaulting on a loan has a negative impact on your credit score, which will affect your future borrowing limit and even lead to your applications being declined.

If you opted for a secured loan, your personal assets may be recovered to cover the debt.

However, all is not lost if you find yourself in such a situation. There are different ways you can redeem your creditworthiness in Singapore.

In this article, we shall outline where to get help and guide you on how to settle a licensed money lender loan.

What Are Licensed Money Lenders?

The Ministry of Law is mandated to approve licensed money lenders in Singapore.

Singaporeans and permanent residents can apply for instant loans. Licensed money lenders also lend personal loans to foreigners in Singapore who have valid employment passes.

Once licensed in Singapore, all money lenders must be registered with the Ministry of Law, and their information is included on the list of licensed money lenders.

This list is posted on its official website and periodically updated to ensure that borrowers receive the most up-to-date information.

All licensed money lenders must follow the rules and regulations established by the Singapore government.

These regulations cover the maximum amount that can be borrowed based on income, the minimum age requirement, the maximum interest rate, and any additional fees.

Legal money lenders in Singapore are the ideal option to consider when searching for urgent loans because their processes are often faster and less stringent than those of traditional banks.

What Types Of Loans Can You Borrow From A Licensed Money Lender?

There are two different kinds of loans available from authorised money lenders in Singapore. These are secured or unsecured loans.

A secured loan means that your loan is backed by collateral, such as your home.

If you fail to repay your loans, your collateral may be seized to pay back the debt you owe the money lender.

Unsecured loans refer to those that are not secured by any collateral and are the most populous among Singaporeans.

This is because of their ease of application and fast approval process.

Here are some examples of other types of loans.

Personal Loans

A personal loan is a type of short-term loan that is often received via banks or legal money lenders.

It is quite flexible and consequently, is able to meet the needs of different borrowers.

It is generally not advisable for you to take many personal loans.

This is because doing so could make the loans more expensive than some other sources of credit due to their higher interest rates.

These loans have a repayment period of up to 12 months, with monthly payments to be made.

The majority of personal loans on the market are unsecured loans, meaning the borrower is not required to put up any security or collateral to cover the loan.

It is typically advisable to obtain a personal loan from a licensed money lender rather than a bank because of the latter’s fairly strict regulations.

It’s for this reason that such a loan is most frequently used to cover one-time, big-ticket items such as automobile purchases and hefty medical bills.

Payday Loans

Such loans are spaced out over a month, so you have 30 days to make repayment between loan collection and repayment.

This means that if you take out a $1,000 payday loan on the 10th of this month, you must repay the amount on or before the 10th of the next month.

The repayment includes the interest on the payday loan, and you can borrow up to six times your salary with the payday loan.

Bridging Loans

As the name implies, a bridging loan is a short-term personal loan designed to “bridge” the monetary gap between the sale of your previous home and the purchase of your new one.

It can help you get by until you receive the money from the sale of your old property, which will allow you to make the necessary down payments on your new home.

Pros And Cons Of Borrowing From A Licensed Money Lender

Borrowing from a licensed money lender has its pros and cons.

Here are the advantages and disadvantages of borrowing from a legal money lender in Singapore to help you make an informed decision.


Here are some plus points of getting an emergency loan from a licensed money lender in Singapore:

  • The application is straightforward and quick to complete, and is available online as most money lenders have official websites.
  • If you have the necessary documents, the approval procedure can be completed in less than 30 minutes. But you will still need to visit the money lender’s office to sign the loan contract physically.
  • They offer flexible loan repayments to match your monthly income.
  • Most licensed money lenders are willing to offer you a debt consolidation plan to help you restructure your loans if you have financial constraints.
  • Money lenders do not heavily rely on your moneylender credit report. Even if it’s poor, they may still be willing to approve your loan.


Here are some minus points to consider:

  • The loans come with high monthly interest rates of up to 4%.
  • They have a shorter repayment duration of up to 12 months, and constrain your monthly income and budget.
  • The amount you can borrow is determined by your annual salary, which means if your salary is low, the loan amount may not meet your urgent need.
  • Failure to honour your monthly payment will result in late payment penalties.
  • If you do not make timely payments, you risk damaging your credit score and compromising your future borrowing.
  • The small and frequent borrowings may have the effect of tying you into a cycle of debt.

How Are You Protected By Law When Borrowing From A Licensed Money Lender?

The Moneylenders Act and Rules are a set of legal money lender rules implemented by the Singapore government to protect borrowers from predatory lending practices.

The Act states that no one may operate in any type of moneylending company without first obtaining a valid moneylending license.

This regulation requires a license for each money lender’s branch that undertakes loan activities, which means that each branch must have its own moneylending license.

The Act is the fundamental piece of legislation governing money lenders, and it is intended to protect borrowers from unscrupulous lenders.

It outlines the operations, interest rates, fees that can be charged, and processes that each lender must follow.

Before extending credit or entering into any loan agreement, every money lender must take reasonable precautions to guarantee that the borrower is financially capable of repaying the loan, whether secured or unsecured.

What If You Are Unable To Pay Back The Loan?

Are you having challenges in getting adequate money to pay your loan installment every month?

Your licensed money lender should strive to provide you with the best professional advice possible, including services to assist you in difficult times.

In some cases, you may negotiate for the extension of your loan period or a refinancing plan with your money lender.

This remedy will, however, come at a cost. To prevent late payment penalties, it is best to do this before the next loan installment is due in the case of a term loan.

If you are unable to repay obligations totalling at least $15,000, you may file for bankruptcy.

Once lodged, the money lender cannot pursue legal action against you.

This action, however, has serious implications because your property and assets will be liquidated to settle your obligations.

As a result, you should only consider this as a last resort.

What Happens If You Default On The Loan?

As mentioned, defaulting on your loan will affect your credit score negatively.

As a result, you will find it harder to get your loan approved in the future.

Although licensed money lenders do not only consider your credit score, each loan application must go through the Moneylenders Credit Bureau (MLCB).

MLCB provides information about your borrowing limit, delinquent loans, and repayment history with other licensed money lenders.

Furthermore, the loan contract you signed with a licensed money lender is legally binding, which means the lender has the right to sue you in court.

If you have a secured loan with a licensed money lender that requires you to offer any valuable assets as collateral such as your estate or automobile, and you are unable to pay, you will lose your collateral.

This is due to the fact that you will have given the money lender the right to seize your collateral in order to recover its money.

How Credit Counselling Singapore Can Help

In case you have gotten a loan that you are unable to pay a money lender in Singapore, as well as a bank loan, you can seek help from Credit Counselling Singapore (CCS).

The institution may be able to help you come up with a debt restructuring plan.

Previously, CCS exclusively assisted customers who owed banks and credit card firms debt. However, it now assists distressed borrowers who owe both banks and licensed money lenders.

However, if you owe money only to licensed money lenders you can seek help from social service institutions.

These institutions have been helping debtors of legal money lenders in Singapore.

They can assist in negotiating a money lender debt repayment plan with the licensed money lender. They will also offer other services such as addiction counselling and support group therapy.

To receive CCS support, you must first attend a mandatory Debt Management Info Talk.

If you intend to seek additional assistance, you must first attend the presentation before submitting a request for a counselling appointment.

CCS will offer you a monthly payment plan with a fixed interest rate that they can extend from five to 10 years if it determines that you are a good fit for its plan after the session.

Your income and expenses determine the right period.

If you fail to honour the debt repayment scheme’s monthly payments plan, your creditors may pursue bankruptcy proceedings against you.

Your repayment plan will be terminated, and your Official Assignee will issue you a Certificate of Failure.

Other Ways To Get Help

The Debt Repayment Scheme (DRS) is a government-run programme that will allow you to combine all of your debts including credit cards, banks, personal loans, hire purchases, and other loans into one.

In sum total, the unsecured obligations and the overall loan amount must not exceed $150,000.

The maximum payback duration for the DRS is five years. In other words, you will be free of your debts after that time period.

Your monthly payments will be determined by your income and expenses.

Thereafter, legal money lenders for unsecured loans are prohibited by the DRS from initiating legal action against you unless the court allows authorisation.


Most borrowers are fully aware that bankruptcy is the most severe debt settlement option, and that it is only available to people who have exhausted all other options.

A DRS is preferable to filing for bankruptcy.

The main advantage of partaking in a debt management programme is that banks may offer you a cheaper interest rate and/or prolong your payback time.

However, just like bankruptcy, being on a Debt Management Plan is something that most people would prefer to avoid because it will appear on their credit report.

As a result, you will be unable to apply for a credit card or other unsecured credit facilities in Singapore.

To address your debt situation fully, you will also need to consult with credit counsellors.

Are you in a debt crisis where you are paying multiple loans from different money lenders in Singapore?

Credit 21 is the best money lender in Singapore that can offer you a debt consolidation plan to make your repayment comfortable and within your income. Contact us today.

If you need cash urgently, apply for a loan with us now. It just takes a few minutes.