Understanding Licensed Money Lenders in Singapore

 Before you get a money lender’s loan, check the legitimacy of a money lender license by comparing the money lender’s license number listed in the Registry of Moneylenders’ list of licensed money lenders document against the license number you see on the displayed money lender license at the money lender’s office. Their business address and landline number must be the same as the ones listed in the document, too

 Private money lenders offer a huge range of loans, such as personal loans, education loans, vacation loans, medical loans, renovation loans, private hire loans, payday loans, debt consolidation loans, business loans, etc.

A debt consolidation loan from a money lender can help you streamline multiple debts while possibly cutting down on the total interest incurred on your debts. It is ideal for you to:

• Use a debt consolidation loan to pay off all your existing unsecured debts
• Make repayments for your debt consolidation loan punctually according to your repayment schedule

By doing so, you only need to focus on making a single repayment instead of many separate repayments. Instead of juggling multiple loans, repayment amounts, and due dates, a debt consolidation loan can make it easier for you to keep track of your repayments. 

Private money lenders (i.e. licensed money lenders) are allowed to charge up to 4% interest per month. While their interest rates are higher than what banks offer, not everybody can qualify for bank loans. 

Apart from being more accessible, the top private money lenders in Singapore may offer those with good credit history, or their regular customers, reduced interest rates among other perks.

In Singapore, interest on a loan from a licensed money lender is calculated using the reducing balance method. 

This method calculates interest based on the outstanding principal balance. As you pay down your debt, the amount of interest will also decrease since your outstanding loan balance is decreasing. Take note that the advertised interest rate is the same as its true, effective interest rate.

Licensed money lenders can charge the following fees: 

• a fee not exceeding $60 for each month of late repayment;
• a fee not exceeding 10% of the principal of the loan when a loan is granted; and
• legal costs ordered by the court for a successful claim by the money lender for the recovery of the loan.

The total charges imposed by a moneylender on any loan, including interest, late interest, upfront administrative, and late fee cannot exceed an amount equal to the loan principal. For instance, if you take a loan of $10,000, your interest, late interest, administrative fee, and late fee cannot exceed $10,000.

Licensed money lenders can only charge late fees of up to $60 for each month of late repayment made. 

As for late interest, it can only be charged on the amount that was paid late. The maximum late interest rate a money lender can impose is also 4% per month for each month the loan is repaid late. Take note that late interest is accumulated daily. 

For example, assume you’re taking a loan of $6,000 with a 6-month loan tenure, at an interest rate of 4% per month. If you fail to pay the first instalment of $1,145 before your due date, the licensed money lender can charge the late interest of 4% per month on the $1,145 but not the remaining $5,722 that is not yet due.

Most licensed money lenders only provide a loan tenure ranging from 1 to 6 months, but some also provide a loan tenure up to 12 months. 

The loan amount approved is typically around 1-3 times your monthly income, charged at a 4% interest rate. Most of the time, licensed money lenders charge a processing fee of 5-10% of the approved loan amount.

There’s no need for either party to resort to violence to settle any dispute that may arise.

To settle licensed money lender disputes, consider the following options: 

• Negotiate a new repayment plan amicably
• Reach out to social service organisations 
• File for bankruptcy (last resort)

If a money lender keeps threatening you despite pleas to stop, you should immediately lodge a complaint against your licensed money lender. You can do so by calling the Registry of Moneylenders at 1800-2255-529 or filling up their online form. All errant licensed money lenders will be taken to task.

Quick and reliable licensed money lenders can give you a loan approval online in less than 30 minutes from the time you enquire about the loan. However, you’ll still be required to head down to the money lender’s registered business address for a face-to-face verification before your loan can be disbursed.