Do you need cash quickly? Are you thinking of getting a loan from a money lender in Singapore?
Understanding the rules and regulations that guide money lenders and money lending in Singapore may mean the difference between having a hassle-free experience or getting scammed.
The money lenders act seeks to protect the interest of borrowers from being exploited by money lenders. It highlights how to identify licensed money lenders, interest rates and fees that can be charged, as well as what a money lender can or cannot do.
While getting access to quick loans with less paperwork sounds appealing – as this is one of the advantages of borrowing from money lenders – before you take out that loan, learn everything about the Money Lenders Act in this article.
The money lenders act is a set of written laws governing the business of money lenders in Singapore. Under this act, no business or its agent is permitted to carry out the activity of legal moneylending in Singapore unless it has been licensed.
However, other than licensed money lenders, two categories of people can carry out the business of money lending without holding a license. They are:
Excluded money lenders refer to those who are permitted to, or not prohibited from carrying out the business of money lenders by other laws or regulations – such as pawn brokers.
Exempt money lenders are those whom the government has granted exemption from holding a license based on its discretion. However, they can carry out the business of moneylending.
The money lenders act also requires that money lenders assess the repayment capability of the borrower before granting the loan.
The Registry of Moneylenders is the body responsible for enforcing the content of the money lenders act of Singapore.
It oversees the practices of licensed money lenders, and ensures both a borrower and the money lender are protected by the act.
The Registry has the authority to issue or not issue licenses, renew licenses, revoke licenses, impose fines on erring money lenders, and approve or disapprove the place of business for a money lender.
It is also responsible for receiving complaints filed against licensed money lenders for unacceptable behaviours.
According to the Money Lenders Act, there are moneylenders rules that borrowers like yourself should be aware of that guide the conduct of money lenders.
Aside from an excluded or exempt money lender, any other individual or business engaging in moneylending must hold a valid license.
At the time of conducting business, this license must not have expired. The application for renewal must be done one month before the expiration date of the license.
If a supposed money lender doesn’t have a license, it is likely to be a loan scammer. To protect borrowers, the Ministry of Law created a list of licensed money lenders in Singapore. Only money lenders in that list are permitted to carry out money lending.
A licensed money lender must have a principal place of business that is approved by the Registry. When applying for a license, the place(s) must be included in writing to the Registry of Moneylenders.
Acquiring a new place of business or changing a place of business, a money lender must also make that known in writing and have the request approved.
Money lenders can charge a nominal interest rate of up to 4% each month for the loan repayment period. A late interest rate of up to 4% can also be charged if a borrower fails to repay the loan as of when due.
The nominal interest rate is charged on the outstanding balance of the loan principal, not the entire loan amount.
This means if a borrower takes out a loan of $10,000 and has paid back $4,000, the 4% interest rate for that month will be on the $6,000 left.
In addition, late interest is only charged on the instalment that is due and not yet paid for a given month.
If the borrower in our example above pays out the loan in $1,000 installments every month and fails to pay for a given month, late interest is charged on the $1,000 only for that month.
Aside from the interest rate, other fees a money lender can charge include:
The Money Lenders Act of Singapore permits money lenders to do the following when it comes to moneylending.
Money lenders are permitted to grant you a loan or disapprove a loan request once they have reviewed your loan application and assessed your ability to repay the loan.
As you read earlier, money lenders can charge interest and fees for any loan as regulated by the money lenders act.
Money lenders are permitted to advertise their services in a manner approved by the money lenders act. The three channels for advertisement include:
Any other channel apart from the above is prohibited.
This means that money lenders cannot reach out to you via phone, text or email to solicit that you take a loan, and cannot advertise their services on social media platforms.
Just because a money lender is licensed doesn’t give it the right to act in a certain manner such as harassing a borrower for failing to repay the loan.
To protect borrowers, the following behaviours are not acceptable from a legal money lender in Singapore.
When you notice any of these behaviours from a licensed money lender, you have the right as a borrower to file a complaint to the Registry of Moneylenders.
The Registry will carry out an investigation, and the money lender will be fined or have its license revoked upon the evaluation of the degree of the malpractice.
To file a complaint against a money lender, visit the Registry’s website or call 1800-2255-529.
How much money you can borrow from a money lender depends on factors such as the type of loan, your annual income, and whether you’re a citizen, permanent resident, or foreigner residing in Singapore.
When it comes to the type of loan, secured loans – loans that require some form of collateral – have no capped amount. Provided the money lender considers the borrower eligible, he or she can borrow any amount.
Unsecured loans, however, have a capped amount according to the Money Lenders Act. The amount is capped depending on the annual income, and citizenship status of the borrower.
The table below shows the maximum amount a borrower can solicit for unsecured loans.
|Borrower’s Annual Income
|Citizen or Permanent Resident
|Foreigners Residing in Singapore
|Less than $10,000
|At least $10,000 but less than $20,000
|At least $20,000
|Up to 6x a borrower’s monthly income
|Up to 6x aborrower’s monthly income
While the Money Lenders Act seeks to protect borrowers from exploitation by money lenders, you are mandated to repay their loan as when due.
When you are unable to pay back the loan, the money lender can:
If you have persistently failed to repay the loan, a money lender can hire the services of a debt recovery lawyer to recover the debt.
Once legal action has been filed against you, the court can mandate you to pay legal fees once final decisions have been reached.
However, even if a you can’t repay the loan, a money lender cannot:
If you’re finding it difficult to repay the loan, you can:
Money lenders are a viable option to get loans fast to finance your needs. However, you can be exploited if you aren’t aware of the laws governing money lending in Singapore as contained in the Money Lenders Act.
Having a proper understanding of the act helps you avoid loan scams, and know what to expect, or what not to expect from a licensed money lender.
If you’re looking to get a quick loan for travel, wedding, property downpayment or your business, 1AP Capital offers some of the lowest interest rates and fees.