Introduction to licensed money lenders in Singapore

When you’re living in one of the most expensive countries in the world, being short of cash can be an issue for many, especially when you have to pay off essential bills like your monthly mortgage or hospital fees.

In these cases, many may turn to applying for a loan from a bank but local banks tend to have a longer processing time and more stringent rules. For borrowers looking to get an instant cash loan, a licensed money lender is your best bet.

Licensed money lenders in Singapore are regulated by the Ministry of Law and have to adhere to the Moneylenders Act when conducting their business. Licensed money lenders are always registered under the official Registry of Moneylenders with a unique license number that shows their legitimacy.

How to avoid loan scams by illegal money lenders in Singapore

With the rise of money lender scams in Singapore, it’s important to differentiate between illegal and approved money lenders in Singapore. It’s always best to first check the money lender license number of your borrower but here are some other ways to identify a possible scam.

Licensed Money Lender Illegal Money Lender
Has a registered money lender license number in the Registry of Moneylenders Does not have a registered license number
Has a registered physical office address May not have a physical address
All loan applications must include a face-to-face interview in the lender’s office before money is disbursed to you. Will usually request for a remote or online loan application and loan can be disbursed without meeting face to face.
Only allowed to advertise on their websites and at lender’s office May advertise through SMS, emails, calls
Prohibited from threatening clients. Licensed money lender harassment could result in loss of license May use threats and violence as a method for debt collection

Here are some other ways you can identify a licensed money lender as well as prohibited practices that may be a sign that the lender may be illegal.

It’s important to read up about licensed money lenders in Singapore so you can better identify a good one and avoid scams. At Galaxy Credit, we share our knowledge with readers on our blog so they can make an informed decision. Check it out below.

Read more about licensed money lenders Singapore.

Banks vs licensed money lenders in Singapore

While it is always recommended to try for a loan with a bank first, a reliable licensed money lender can also be a reliable option.

It is a known fact that banks are more affordable as private money lenders’ interest rates can be pricey for many. However, not all candidates may get their bank loans approved and that is when authorised money lenders in Singapore may be of help.

For a clearer understanding of the differences between a bank and money lenders, here’s a breakdown of what they both offer.

Banks Licensed money lenders
Provides loan up to 10 times monthly income Provides loans up to 6 times monthly income
Minimum annual income requirement for Singaporeans & PR: $20,000

Minimum annual income requirement for foreigners: $45,000

Will offer loans to borrowers with an annual income of less than $10,000
Average interest fee of 3.5 – 11% per annum Interest fee can range from 1 – 4% per month
Repayment period of up to 5 years Repayment period of up to 12 months
Requires a good credit score for loan approval Does not require a good credit score
Allows online loan applications Loan applications can be done online, but will require face to face verification in lender’s office before loan is disbursed

Why you should approach a legal money lender in Singapore

Fast approvals Borrowers can make an enquiry with a Singapore online money lender on their website, go down to their branch office for a short interview and collect their loan in a single day.

Bank applications usually take a few days.

Less strict on credit scores Licensed money lenders usually do not check borrowers’ credit scores when approving a loan. Borrowers with a bad credit score can still get their loans approved, but usually at higher interest rates.

Banks will not accept borrowers with a bad credit score.

Flexible loan agreement If you require an extension on your loan, you can negotiate your loan terms and fees with your lender.

Banks have a fixed late fee that is non-negotiable.

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When you should NOT approach a money lender in Singapore

While private money lenders in Singapore are a great option for those looking for a quick loan with a bad credit score, not all borrowers are suitable to take a loan from one.

You should not approach a money lender in Singapore if:

You are unable to pay on time

While it is advised to never miss any of your payments whether you are borrowing from a licensed money lender or a bank, the consequences are much higher if you’re unable to pay a money lender in Singapore.

Private money lenders have high interest rates and even higher late fees as these enterprises have a higher risk when running their businesses compared to banks.

Unfortunately, this can greatly affect borrowers who have a history of late repayment and long-term debt. If you have a tendency of deferring your payments, work on managing your finances before approaching a licensed money lender.

You have a good credit score

Legal money lenders are usually an option for those with a bad credit score as they are less strict on borrowers’ credit scores. If you have a stable monthly income and a good credit score, it is recommended to apply for a loan with a bank as they generally have much lower interest rates that will help with your finances in the long run.

Here’s how you can obtain your credit report with Credit Bureau Singapore (CBS).

You have multiple loans and want to take another

To manage your finances well, you should never apply for a loan that exceeds your financial capabilities. Reaching out to various lenders for multiple loans may also increase the responsibility and stress of repaying them. This could lead to you deferring your payments and landing yourself in even bigger debt, especially with the high interest rates and fees of money lenders in Singapore.

However, if you have multiple loans, the only loan that might be suitable for you is a debt consolidation loan. A debt consolidation plan with a money lender helps you combine all your loans into a single loan with a single lender, often with a lower interest rate, which would be much easier to manage.

What to enquire with licensed money lenders to avoid being overcharged

Licensed money lenders can charge their borrowers through several means: interest rates, late interest rates, late repayment fees and administrative fees.

It’s important to go through your contract and loan terms thoroughly and be aware of the possible fees you can be charged. Take note of your payment date to avoid incurring extra late charges. Under the Ministry of Law, licensed money lenders have a cap on the fees they can charge. Make sure your borrower is not overcharging you by referring to the table below.

Chargeable fee Maximum charged
Interest rate 4% per month (48% p.a.)
Late interest rate 4% a month (48% p.a.) for the amount that was not paid on time, excluding the remaining loan amount
Late repayment fee $60 for each month of late repayment
Administrative fee 10% of the principal loan amount

In total, the sum of all charged fees cannot exceed the principal loan amount.

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The different types of loans licensed money lenders offer

Licensed money lenders offer both secured and unsecured loans. Secured loans are often used for vehicle and property purchases while unsecured loans are more flexible if you are taking a personal loan – this can be used for personal reasons including credit card bills, renovation or student fees.

Secured loans also require collateral (such as a car or property) to be pledged, which can be seized by the lender if the borrower is unable to pay off their loans.

If you’re deciding between a secured and unsecured loan, here are the differences between the two:

Has a bigger loan amount with lower interest rates Has a smaller loan amount with higher interest rates
Borrowing limit for home loans and car loans subject to maximum TDSR of 55%. HDB and EC loans subject to MSR of 30%. Car loans’ LTV kept at maximum 60-70%. Has a borrowing limit depending on borrower’s income and citizenship
Requires declaration of collateral Does not require collateral
Fixed loan use for vehicle/property purchase Flexible loan use (if personal loan)
Easier to obtain even with bad credit history Easier to get with a more favourable credit history
Loan application may take a few more days Fast loan disbursal

Here are the types of loans that you can apply for, depending on your financial needs:

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How to apply for a loan with a legal instant money lender

Documents required for Singaporeans/PRs:

✓ Proof of income for the preceding 3 months prior to loan application

  • Eg. Payslips, income statements, bank statements

✓ CPF contribution statement


✓ IRAS Notice of Assessment (for self-employed individuals)

Documents required for foreigners:

✓ Latest payslips for the 3 months prior to loan application

✓ Valid employment pass

✓ Passport

✓ Tenancy agreement / billing proof of address

Before applying for your loan, remember to compare money lenders and their different rates as well as loan tenures and repayment schedules. Loans with lower interest rates are not necessarily the best – because if loan tenures are short, it means a higher repayment amount per month.

So pick one with an interest rate, loan tenure and monthly repayment amount that is comfortable for you and your budget.

Check out our loan application process and apply here.

Reasons why money lenders may reject your loan

There are times when a borrower may submit the required documents but still get their loan rejected. Here are some reasons why this could happen:

You do not have an income

When applying for a loan with a money lender, you will be required to prove you have a steady source of income. Without one, you will be considered a risky borrower who may not be able to repay their loan. Even the best licensed money lenders in Singapore will not take such a risk so always prepare the needed documentation that proves you have a regular source of income.

Your income does not need to come from full-time employment but could also come from various part-time jobs or even rental income.

You deferred your past loan repayments

While money lenders may not access your credit score during the loan application, they will check your borrowing history with other lenders through the Money Lenders Credit Bureau (MLCB).

If you have an unfavourable history of deferring past loan repayments, future lenders may not take the risk of offering you a loan.

You applied for too many loans within a short time frame

Lenders will also be able to check the number of loan applications you have made with other lenders through MLCB, and when a borrower has applied for several loans in a short span of time, this is usually a red flag for the lender.

Lenders avoid such clients as borrowers who have multiple loans to pay off have a higher risk of deferring their loan repayments.

You have filed for bankruptcy

If you are unable to pay off your past loans, you may have been advised to file for bankruptcy. However, filing for bankruptcy can impact your financial future including applying for a loan.

A past lender has taken legal action against you

Licensed money lenders are able to file for litigation against their borrowers if they are unable to repay their loans. In such cases, the borrower’s legal history will be on record and other lenders will be able to access them. If a lender has taken legal action against a client, future money lenders are more likely to avoid them.

Apply for a loan with the best licensed money lender in Singapore

At Galaxy Credit, we offer flexible personal loans including medical, business and study loans.

We provide instant loans for emergency situations and pride ourselves as a trusted 24 hours money lender in Singapore.

Keen to apply for a loan? Drop us a loan enquiry and we will get back to you within one working day.

Apply for your loan online now.