How To Settle Licensed Money Lender Debt And Where To Get Help When Required

A quick loan from a licensed money lender during an emergency can be a lifesaver, but what if you cannot repay the loan? How can you settle licensed money lender in this instance?

If you’re fretting over how you can repay the debt, don’t worry.

In this guide, you’ll learn everything you need to know about how to settle licensed money lender debt in Singapore and where to get help when required.

What Are Licensed Money Lenders?

A licensed money lender in Singapore is legally approved to provide you with a loan.

These money lenders are regulated by the Ministry of Law (MinLaw). They provide loans to Singaporeans, permanent residents, and foreigners with valid employment passes.

Licensed money lenders have to abide by the Moneylenders Act. They have moneylending licenses and are not allowed to resort to harassment or violence to collect their payments.

Legal money lenders tend to have more lenient loan requirements than banks and are often much quicker in terms of processing time.

This makes them a good option if you are looking for a quick loan but don’t have a good credit score.

However, it’s important to differentiate licensed money lenders  from illegal money lenders, which work outside of Singapore’s moneylending regulations and laws. They are also known as loan sharks.

There is a list of licensed money lenders in MinLaw’s website that you can use to check if a money lender is licensed. This list is available online, updated regularly, and can be downloaded as a PDF for easy reference.

Illegal money lenders pretend to be legitimate lenders and prey on desperate victims whom they later harass. On the other hand, licensed money lenders follow the guidelines and regulations set out in the Moneylenders Act.

These include the maximum amount borrowers can get depending on their annual income, the maximum interest rate they are allowed to charge, minimum age requirement, and any other extra fees.

What Types Of Loans Can You Borrow From A Licensed Money Lender?

There are two different types of loans available from legal money lenders in Singapore – secured and unsecured loans.

As the name suggests, a secured loan implies that the loan is covered by collateral or an asset such as a property or vehicle. There are no loan limits for secured loans.

If you repeatedly fail to repay your loan, the money lender can seize your collateral to recover the debt.

Unsecured loans refer to loans that are not secured by any collateral. Depending on your citizenship status and how much you earn yearly, you can only borrow up to a certain amount. We’ll elaborate on that later.

For now, here are the different types of loans you can get from a legal money lender.

Payday Loans

Such loans are spread out over a month, meaning you have at least 30 days to repay the money between the loan collection and repayment dates.

Usually, the repayment includes the interest on the loan. You can get up to six times your salary with a payday loan.

Personal Loans

This is a short-term loan that you can get from legal money lenders or banks.

It’s pretty flexible and can be used to meet various types of needs. You can use a personal loan for one-time expenses such as hefty medical bills and automobile purchases.

However, it’s not always advisable to take many personal loans as doing so can make the loan more expensive than other credit sources because of their higher interest rates.

Personal loans have a repayment period of up to a year. They are paid with regular monthly payments.

Most personal loans are unsecured loans that do not require any collateral or security to cover the loan.

It may be faster to take a personal loan from a legal money lender instead of a bank due to the latter’s strict requirements and lengthy approval time.

Bridging Loans

A bridging loan is a short-term personal loan that “bridges” the financial gap between the sale of your current home and the purchase of a new one.

This loan is designed to help you get by until you receive the proceeds from the sale of your old home. It allows you to make the required downpayment on your new home.

Home Renovation Loans

Legal money lenders in Singapore have more flexible renovation loans compared to banks.

For instance, some money lenders allow borrowers to buy electrical appliances and furniture with a renovation loan, which banks do not allow.

Wedding Loans

A wedding loan can be used to cover wedding-related costs. You can borrow up to six times your monthly salary.

Foreigner Loans

Depending on your income, a typical foreigner loan can range between $300 and six times your monthly salary.

Business Loans

The amount and tenure of a business loan depends and varies on a case-by-case basis. Business loans can be unsecured or secured, but the latter is more common.

Other types of loans include:

  • Debt consolidation loans
  • Study loans
  • Medical loans

Pros And Cons Of Borrowing From A Licensed Money Lender

Borrowing from a legal money lender has its advantages and disadvantages.

If you’re worried about how to settle licensed money lender, here are the pros and cons of getting a loan from an authorised money lender in Singapore.


  • Easy and fast access to funds
  • Flexible repayment plans that match your monthly income
  • Quick and easy application process
  • Access to loans even with a bad credit rating
  • Most legal money lenders offer borrowers debt consolidation plans to help them restructure their loans when they have financial constraints
  • You can use the loan for any purpose


  • Loans come with a high monthly interest rate of up to 4%
  • The loans have a shorter repayment period with a term of up to 12 months, and may limit your monthly budget and income
  • The amount available depends on your annual salary – so if your salary is low, the amount available might not be enough to meet your needs
  • Failure to make monthly payments results in late payment penalties
  • Late repayments affect your credit score, and compromise your chances of getting another loan in the future
  • Frequent and small borrowings can get you into a cycle of debt

More on this topic:

Are You Protected By The Law When Borrowing From A Licensed Money Lender?

The simple answer is yes. The Moneylenders Act and Regulations consists of a set of money lender rules put in place by the Singapore government to protect borrowers from predatory lending practices.

The Act specifies that no individual or business can operate any form of moneylending without first acquiring a valid moneylending license.

This rule requires a moneylending license for each branch of the money lender that operates loan activities.

The Act is the fundamental part of legislation governing licensed money lenders in Singapore. It aims to protect borrowers like yourself from illegal and unscrupulous lenders.

It states the processes that every money lender must follow, such as the maximum loan amounts, interest rates, and fees that can be charged.

The table below shows the capped loan amounts for different levels of annual income.

Annual Income Of BorrowerCitizens And Permanent Residents Of SingaporeForeigners Residing In Singapore
Not up to $10,000$3,000$500
At least $10,000, but not up to $20,000$3,000$3,000
At least $20,000Up to 6x of borrower’s monthly incomeUp to 6x of borrower’s monthly income

Before providing a loan or entering into a loan agreement with you, a licensed lender must take the required precautions to ensure that you can actually repay the loan – whether secured or unsecured.

Legal money lenders also have to explain their terms and conditions of the loan contract. The maximum interest they are allowed to charge is capped at 4%.

They are also not allowed to advertise except in business directories, their websites and offices, nor intimidate or harass borrowers.

In the event that you don’t know how to settle licensed money lender because you are unable to pay for monthly installments, talk to your lender about it.

Try to negotiate for an extension of the loan period, or opt for a refinancing plan with the money lender. However, this comes at an extra cost.

To avoid late repayment penalties, it’s advisable to make repayment before the next loan installment is due in the case of a term loan.

However, if you are unable to repay a loan amount of at least $15,000, you can file for bankruptcy. Once you do so, the money lender cannot take legal action against you.

But this should be a last resort as your credit score will be adversely affected. Your assets and property can be liquidated to settle your loan obligations.

What Happens If You Default On The Loan?

As mentioned, defaulting on a loan will negatively affect your credit score and rating, which will make it harder for you to get approved for a future loan.

Moreover, the loan contract signed with a legal money lender in Singapore is legally binding, meaning the money lender can sue you in a court of law.

If you take a secured loan with a legal money lender and can’t repay your loan, you can lose your collateral such as your property or automobile.

If you took a secured loan, the money lender has the right to repossess your collateral to recover its money.

How Credit Counselling Singapore Can Help

Credit Counselling Singapore (CCS) is a non-profit organisation that provides free counselling and education to those struggling with debt.

This helps them get back on track and achieve financial stability. CCS works with borrowers to create a budget and establish a repayment plan. It can also help in negotiating with creditors and improve your credit score.

Moreover, if you are facing foreclosure or are at risk of defaulting on your loan, CCS can provide you with the necessary support and resources to help you avoid these consequences.

It can also offer financial education and counselling services to help you better understand your finances and make better financial decisions in the future.

Other Ways To Get Help

You can also seek help from various social service institutions that can help you negotiate for a money lender debt repayment plan.

They can also provide other services such as support group therapy and addiction counselling.

You can sell your assets or property to repay your outstanding loans. Or you can ask a friend or relative for an interest-free loan to repay your debts.

But more importantly, if you encounter a situation where you’re totally unable to repay your loan with an authorised money lender, contact it immediately.

Explain your financial predicament and work out a repayment plan that can work for you.

A money lender is likely to help you repay the loan, so don’t be afraid to reach out to your lender for help.

Learn How To Settle Licensed Money Lender Debt

You now have a better idea of how to settle licensed money lender. You have several ways of repaying your debts. The ideal option will depend on your personal needs and situation.

If you’re having a hard time making multiple monthly repayments, you can try consolidating your debts into a new loan to help you reduce the interest payments you make, saving you money in the long run.

However, make sure you understand the terms and conditions of the new loan before you consolidate your loans, as it can worsen your financial situation if you’re not careful.

If you need help, visit Horison Credit. We’re here to help you get the loan you need, and we’ll be more than happy to answer any questions you have.

Contact our experienced loan officers today or apply for a loan now in just five minutes.


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