The big question: Do money lenders offer loans with no credit check? The short answer is no, but that doesn’t automatically rule you out as a candidate for a loan.
Having a bad credit score can hurt your loan applications especially when you are applying for one from a bank. Unfortunately, there’s little you can do within a short period to erase those bad credit records.
However, if you need money urgently, there are alternative sources of finance you can consider. Here are several ways to get the money you need, legally, without going down the illegal money lender route.
Most people may frown upon the word “money lender”, equating them to the illegal ones whom you often see on TV and confusing them with loan sharks. In Singapore, licensed money lenders are licensed and regulated by the Ministry of Law; they are required to abide by strict criteria if they want to stay in the business of moneylending.
Do licensed money lenders offer loans with no credit check? No, they do not. Licensed money lenders are expected to do their due diligence and assess your creditworthiness before extending any credit facility to a borrower. That being said, the best money lenders for people with bad credit exist in Singapore. These private money lenders refer to your Loan Information Report from the Moneylenders Credit Bureau (MLCB) to get a glimpse of your outstanding loans and payment history with licensed money lenders in Singapore, if any.
Therefore, you stand a better chance of getting a loan approved by a licensed money lender even if your credit score with the Credit Bureau Singapore isn’t the most spectacular.
Additionally, your money lender may offer you a loan without a payslip if you have other documentation that proves you’re gainfully employed and earning a salary (e.g. monthly bank or CPF statements, latest Income Tax Assessment Notice). For instance, freelancers and gig workers who can show their money lender proof of consistent income for the past few months may be able to get a loan despite not having traditional payslips.
Before you seek out a loan from a licensed money lender, you should always make it a point to verify that they are truly licensed. For example, it is good practice to check that the licensed money lender is within the Ministry of Law’s list of licensed money lenders. Check that the money lender’s business address and landline are the same as the ones listed in the Ministry of Law’s list.
Just so you know, licensed money lenders in Singapore can only charge a monthly interest of up to 4%, late interest of up to 4%, as well as processing fees of up to 10%. Most licensed money lenders’ processing fees hover at around 8-10%.
If your loan had been rejected by a bank, try to figure out what could have caused them to reject your application. Was it the income requirement? Bad credit score? Or was the amount you asked too big relative to your monthly income?
The Monetary Authority of Singapore has a guideline to limit the amount borrowers can borrow for unsecured loans to less than 12 times a person’s monthly salary if their annual income is less than $120,000. Applying for a smaller loan may increase the success rate of your loan application with a bank.
How much can you borrow from a licensed money lender in Singapore? This depends on your monthly salary, too. The total amount you can borrow across all licensed money lenders at any point in time is as follows:
|Borrower’s Annual Income||Singaporeans and PRs||Foreigners Residing in Singapore|
|Less than $10,000||$3,000||$500|
|$10,000 to $20,000||$3,000||$3,000|
|$20,000 and above||6 times of borrower’s monthly income||6 times of borrower’s monthly income|
If you have a close friend or family member with good credit records, you may try asking them to be your guarantor for the loan. A guarantor is a person who agrees to repay the borrower’s debt should the borrower default on the repayments.
This is a rather common arrangement for certain loans, such as a student loan where the parent would usually be the guarantor. In this case, you want to be sure to pay off your debt so that your guarantor does not get into trouble or jeopardise their credit standing.
If you happen to have a life insurance policy, you might be able to take up a policy loan. Insurance policies that come with cash value that accumulates are suitable policies for such purposes. These policies might come in the form of whole life insurance, endowment plans, and annuity plans. The cash value increases over time as you pay more premium.
With a policy loan, you are basically borrowing money from yourself using the cash value as collateral. You can expect to borrow up to 90% of the gross surrender value, depending on the type of policy you have.
You can simply write to your insurer to request the loan; interest usually ranges between 5-7% per annum. However, keep in mind that doing so may impact your insurance portfolio negatively.
Having bad debt and bad credit doesn’t necessarily mean you can’t ever get loans from money lenders. It pays to know where to look.
Borrowing from an illegal money lender is an offence in Singapore; you can also bring harm to yourself and your family. If you need a loan urgently, licensed money lenders can be a good alternative to traditional sources like banks. The majority of licensed money lenders offer fast cash loans to borrowers who have poorer credit scores.
CompareSing helps you gather loan quotes from reliable licensed money lenders in Singapore. Our services are free of charge to boot.