Until recently, people taking personal loans bore the stigma of chaotic spenders. The reasoning was that only people who spend within their means are diligent planners, while the rest are erratic unconscious spenders who haven’t grown up.

That’s a massive myth that still has some influence today.

The truth is that you can’t live without taking at least one personal loan at some point in your life. You’ll need it for your education, to buy your first car, first home, or host your wedding.

The catch is you have to plan that loan.

Also, did you know that the best licensed moneylenders today are not much different than banks? It is no longer like the past. Licensed moneylenders today offer loans that are affordable and will never use threats during debt repayment.

Now, back to the original topic of loans. How can I safely borrow money? We’ll discuss factors to consider, sums involved, requirements, paperwork, and more.

What Are Licensed Moneylenders?

“How can I borrow money fast?”

If you need money urgently, getting a personal loan from a licensed moneylender within hours is possible.

Licensed moneylenders are financial institutions that offer legal loans to consumers. They are alternatives to banks. Depending on your income, you can borrow from $10,000 to $50,000.

Also, contrary to popular belief, it is safe to borrow from licensed moneylenders in Singapore.

These companies are governed by the Ministry of Law and will definitely follow the rules unless they want to risk losing their license.

They are not the same as loan sharks and it is very safe to borrow from them.


What Do You Need To Do Before Borrowing From A Legal Moneylender? 

According to the Ministry of Law, you have to consider these fundamental issues to ensure you’re taking up a legal loan with fair conditions:

  • Several government schemes or assistance that you’re eligible for, especially if you’re budget is already tight
  • Several legal moneylenders in Singapore because these agencies specialise in different things. For example, some are best for emergency loans, whereas others are best for long-term loans.
  • Contractual conditions. You have to understand the contract. Obviously, make sure you can afford to pay the instalments regularly every month.

That said, two other issues can make or break your loan:

Decide On The Type Of Loan You Need

Googling about personal loans can give you a headache. There’s just so much information online! Here’s an example:

Some websites list renovation loans, car loans, and education loans as personal loans. That makes sense at first because this is money you take for personal reasons, so they make a nice contrast to business loans.

But here’s where these websites are wrong.

Renovation, education, and car loans can only be used for specific purposes, so they come with particular conditions.

The catch is that sometimes “personal loans” is short for “personal installment loans”.

So, decide on the type of loan you want:

  • Personal installment loans are versatile, short to long term, and allow you to borrow more money
  • Specific loans have different tenures, principal amounts, and collateral. For example, renovation loans are shorter-term and cheaper than home loans, plus they require no collateral. As a rule of thumb, specific loans have lower interest rates than personal installment loans, and, of course, you can’t use the money how you please. 


What Is A Credit Score And How Will It Affect Your Loan Application?

Your credit score is a rating you’re given based on your past financial transactions following a proprietary algorithm. It’s a pretty fair grading for all.

This rating is based on things like:

  • Paying your bills on time
  • The number of open credit facilities
  • Your spending pattern
  • Your income vs debt ratio
  • Having loans that you’re repaying diligently or not
  • Whether you’re constantly submitting loan applications and/or you’re getting lots of rejections

Basically, if you spend your money wisely without getting into trouble, your credit score is high. If you are able to repay your credit card bills and loan repayments on time, your credit score is high.

In cases like these, banks and licensed moneylenders trust you more because you’ve proven you can respect your financial obligations.

Consequently, they’ll grant you several benefits:

  • Access to larger loan amounts
  • Better, more flexible conditions
  • Longer tenure
  • Lower interest rates

But, what if your credit score is low?

When your credit score is low, it means that you don’t have an AA or BB or even CC rating. Banks will not want to disburse a personal loan to you.

If you require money urgently, you can apply for a personal loan from licensed moneylenders, who can approve your loan within hours. They are 100% more lenient in loan approval and can provide faster replies. 

Also, much to the confusion of many, the final interest charged for personal loans with licensed moneylenders is lower than that of credit cards. This is because there are high late fees and interest rates for credit cards. 


How Much Can You Borrow From A Licensed Moneylender In Singapore? 

MinLaw established several rules to make sure that Singaporeans don’t get head over heels in debt. These rules also protect you from dishonourable financial institutions that would grant you massive loans knowing that you can’t repay them.

So, here are the sums you can expect:

Annual incomeSingapore Citizens and Permanent ResidentsForeigners residing in Singapore
Below $10,000
$10,000 – $20,000$3,000
$20,000+Six times monthly incomeSix times monthly income

Also, licensed moneylenders can’t grant personal loans over $250,000.

Remember that these amounts above are just maximum guidelines. A moneylender can decide to lend you less money if they’re not satisfied with your current ability to repay them.

For those who need a large loan greater than $250,000, they can apply with large financial institutions who allow loans up to $1 million. Larger loans may require collateral.


Prepare These Documents Before Visiting The Bank Or Licensed Moneylender’s Office

Obtaining a personal loan in Singapore is pretty much bureaucracy-free because:

  • You need just a few documents
  • You can log into your moneylender’s website using your SingPass, and these documents will get to them automatically. Thus, it takes about five minutes to fill in your loan application online.

But back to the documents. You’ll need:

  • Proof of identity, such as NRIC, employment pass or passport
  • Proof of address, such as utility bill or contract for your lease
  • Proof of income, which is usually past 3-month payslips/ past 12-month CPF statement/ Tax NOA

Now here’s an industry secret:

Sometimes people get smaller loans even if they technically qualify for larger amounts. If you want to avoid that, include the paperwork that reflects the highest income. 

You can check out the list of top licensed moneylenders in Singapore here.


Is There A Cap On The Costs Licensed Moneylenders Can Charge? How Much Can Licensed Moneylenders Charge?

How can I safely borrow money? Do not worry! Licensed moneylenders cannot charge you too much!

Yes, MinLaw established several caps on the costs that licensed moneylenders can charge. These measures also aim to protect customers from greedy, immoral agents. 

So, here’s what you can expect:

  • The maximum interest rate is 4%/month from your remaining balance, regardless of the secured/ unsecured type of loan.
  • The maximum late interest rate is 4% from the sum you didn’t pay on time.
  • The maximum penalty fee is $60.
  • The maximum admin fee is 10%, and the moneylender can only retain it from the loan amount when making the transfer.

Side-note: We’ll discuss loan scams in the section below, and you’ll see how Ah Longs distort these conditions. So stay tuned below. 


Here’s An Example Of A Personal Loan 

But for now, let’s explain these conditions through a practical example:

You’re taking a $20,000 loan. Your monthly installments are $1,000, and your interest rate is 4%. In this case:

  • The initial admin fee can’t be more than $2,000, so the moneylender is legally obliged to transfer you at least $18,000.
  • For the first month, your interest is 4% out of $20,000 = $800. You’re paying a $1,000 installment, so $200 goes to your principal amount. After the first month, your remaining balance is $20,000-$200=$19,800.
  • The second month’s interest rate stays constant at 4%. However, the actual interest is now smaller because it’s calculated based on your $19,800 balance. 4% of $19,800 is $79.2.

As you can see, the more installments you pay, the more money goes toward your principal amount and the less towards your interest.

Now let’s say the time has passed, and you only have $10,000 in your outstanding balance. But this month, you can’t fork out the $1,000 installment.

  • The moneylender can impose a 4% late interest on that $1,000, which equals $40. They can also add a $60 maximum penalty fee.
  • They can’t impose a 4% late interest rate on the entire $10,000 balance or the entire $20,000 loan. 
  • The penalty fee can’t be more than $60.

Please understand that the above example is for illustrative purposes only. The actual rates might differ for each depending on the financial institution and the borrower’s profile.


How Do I Know If I’m Dealing With A Licensed Moneylender Or A Loan Scam? 

How can you check if a lender is licensed in Singapore? Loan scams are easy to recognise if you know the tell-tale signs.

Needless to say, steer clear of them. Loan sharks are incredibly dangerous because they resort to extortion tactics and abuses regular people don’t even dream of. They are trouble!

So, here’s what you have to do to stay out of trouble:

1. Refer And Check The Ministry Of Law’s List Of Licensed Moneylenders 

Open MinLaw’s website, where you can find the list of licensed moneylenders currently allowed to operate in Singapore. Check your moneylender’s name on this list and this list only. This list is updated monthly.


  • Don’t trust a moneylender who invents reasons why they’re not on that list.
  • Don’t skip the list just because the moneylender’s website says they’re licensed.
  • Call the Registry of Moneylenders at 1800-2255-529 or submit a petition here if you have significant doubts.

2. Look Out For The Form Of Advertisement By The Moneylender 

The government in Singapore tries to protect its citizens from taking loans without giving it too much thought. They also try to prevent moneylending from becoming a mindless trend.

So, MinLaw prohibited all advertising channels for this activity, apart from:

  • Business and consumer directories
  • The licensed moneylenders’ websites
  • The licensed moneylenders’ physical premises (actual shop)


  • Never take money from someone who contacts you directly through e-mail, WhatsApp, social media, texts, flyers, etc. These people are either loan sharks or licensed agents working outside the law.

3. Check The Interest Rate And Fees Offered By The Lender 

Moneylenders can’t move outside of the charges we discussed in the earlier section. 


  • You can recognise a good part of loan scams because the agents will ask you for a sum of money to facilitate that loan. But this is technically a bribe.
  • Loan sharks impose higher interest, more charges and don’t stick to a pre-set schedule with fixed installments.

4. Check If The Licensed Moneylender Has A Physical Address

MinLaw requires all licensed moneylenders to have physical addresses. They’re supposed to ask you for at least one meeting at their office, and usually, all loan-related discussions should take place there.

A face-to-face verification is needed, as mandated by law.

Here is a list of legal lenders that have a physical address. Most are within walking distance from the MRT. From the list, there are licensed lenders at Tanjong Pagar, Orchard, Bedok, Toa Payoh, Jurong, Yishun and more.


  • Don’t take money from someone who doesn’t have a physical address. Check them on Google to make sure before discussing your loan with them further.

5. Licensed Moneylenders Will Ask You For A Face-To-Face Verification 

Face-to-face verification is a legal obligation. So, the moneylender must arrange this meeting at their offices, and you’re required to go even though you may have submitted your loan application online.


  • Avoid lenders who promise online money transfers without due diligence or those who arrange informal meetings in parking lots.


What Should You Take Note Of When Dealing With A Licensed Moneylender? 

Remember that licensed moneylenders can break the law too, so take note of any whiff of illegal behaviour, such as:

  • Foul or abusive language
  • Threats, harassment such as constant phone calls or the moneylender contacting your boss
  • Withholding personal documents
  • Asking for passwords
  • Using your credit cards
  • Asking for blind signatures
  • Not explaining the contract terms
  • Charges and interest that’s too high


So, What Should You Do When Your Loan Has Been Approved? 

Your loan’s been approved, but now’s not the time to relax. Make sure:

  • The moneylender hasn’t retained more than the 10% admin fee.
  • You receive copies of all essential documents, such as signed contract and account statement.
  • You work through your installment schedule diligently.
  • You receive and keep receipts.
  • You communicate with your moneylender if something ever happens to stop you from reimbursing the loan.
  • You report illegal behaviour.

What Should You Do If You Are Unable To Repay Your Loan? 

Some people panic when they can’t repay their debt. Thus, they shun the licensed moneylender, don’t answer phone calls, and eventually reach out to loan sharks.

In truth, your licensed moneylender will want to help you ease your financial situation so that you can repay your loan fully and comfortably.

Here’s what to do instead:

Speak To Them And Request For An Extension 

Trust us, your licensed moneylender will appreciate your honesty, and they’ll likely give you that extension.

You can prepare a plan before your meeting to show what you’re thinking and needing. But in most cases, the moneylender will happily assist you with a convenient restructuring plan.

File For Bankruptcy 

Singaporeans with debt over $15,000 can file for bankruptcy. Remember that this should be a last resort if you genuinely can’t repay the loan even after restructuring it.

While bankruptcy protects you from being sued and stops interest from accumulating, it also blemishes your financial reputation.

So before filing for bankruptcy, try reaching out to specialised organisations.


Here Are Some Organisations That Might Be Able To Help You:

Credit Counselling Singapore (CCS)

Credit Counselling Singapore

Image source: https://www.facebook.com/CreditCounsellingSG/?ref=page_internal

CCS is a treasure-trove of resources and courses that help you understand sensible budgeting. The CCS agents work closely with you to draft a customised budget, find your budgeting mistakes and restructure your debt. They even negotiate on your behalf with your creditors.

Registry of Moneylenders (MinLaw)

Best Licensed Moneylenders: Guide to Borrowing Personal Loans from Legal Moneylenders 1

Image source: https://www.facebook.com/minlawsg/

RoM is the best-updated resource of legal conditions for moneylenders and borrowers. Access their website if you feel that your rights have been violated.

National Council on Problem Gambling (NCPG)

National Council on Problem Gambling

Image source: https://www.facebook.com/NCPG.org/

If you can’t repay your debt because of gambling, get help from the NCPG to recover from your addiction and, consequently, stop your debt from getting worse.

Credit Association of Singapore (CAS)

CAS Connect

Image source: https://www.facebook.com/mlasconnect/

CAS is another treasure-trove of resources where you can find out more about moneylenders, financial solutions, and eligibility requirements.

ComCare (MSF)

MSF Singapore

Image source: https://www.facebook.com/MSFSingapore/

If you’re in urgent need of cash, ComCare is specialised to help you. They’ll offer medium-term financial assistance, public assistance if you can’t work, as well as childcare subsidies.


In Conclusion

Personal loans are helpful whether you’re going through financial difficulty or want to make your life better.

It becomes a good debt when you use the money to invest in your future or in yourself. For example, it could be for educational purposes or for urgent home repairs.

The important factor lies in being able to repay the loan punctually and to choose the best licensed moneylender.

Licensed moneylenders today are not much different from banks. They offer affordable interest rates and sincerely offer financial services to all. Here’s a list of the best and most affordable financial institutions in Singapore.

For other business listings, you can refer here.

Shortlist several licensed moneylenders according to your needs and budget before choosing the best one. Remember to report any illegal behaviour, steer clear of loan sharks, and reach out to the organisations above if you need further assistance.

Tagged with: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,