During times of financial hardship, most people are looking to get assistance from friends or family, and if push comes to shove, they resort to bank loans. 

What they don’t realise is how easy it has been made by the Singapore government to acquire small, short-term loans with a medium interest rate and a timeline of the borrower’s choice. Yes, the most neglected loan option is a licensed money lender – of which there are more than 100 operating across Singapore to help people in difficult times.

Perhaps the most important step taken by Singapore to protect borrowers and provide a framework for licensed money lenders is the legislation of the Moneylenders Act. 

The money lenders act is an important legal document that safeguards the rights of both licensed money lenders and borrowers. It aims to promote problem-solving between the two parties amicably. Let’s find out more about the money lenders act. 

What Is The Money Lenders Act?

The Moneylenders Act is a legal document describing and defining the terms that a legitimate moneylending business must adhere to in Singapore. 

It contains the code of conduct, as well as the details, terms, and important information regarding interest rates, fees and additional service charges that a licensed money lender can charge borrowers in return for its service. 

The Moneylenders Act also includes in-depth details of all the rights borrowers have, and protects both lenders and borrowers from scams.

The comprehensive Moneylenders Act is available for reference at the official Singapore Statutes website. It is a useful document to solve any disputes and resolve all matters related to a licensed money lender’s services in Singapore.

What Is A Licensed Money Lender In Singapore?

According to the Moneylenders Act, no one can pursue the business of moneylending as a principal or an agent, except when they are authorised by a license. 

When you are applying for a loan from a money lender, always check for its registration number and licence before signing on any loan contract. 

You can check the list of licensed money lenders in Singapore from the website of the Ministry of Law (MinLaw). The list is updated regularly. 

You can also check a licensed money lender’s license when you visit its place of business. If it is a licensed lender, you should see the license displayed prominently in its premises.

How Much Borrowers Can Get From Licensed Money Lenders

The amount of money that you can acquire from a licensed money lender as an unsecured loan is also dictated by the Moneylenders Act. 

The amount of loan that you can get approved for is dependent on two factors: your Singapore citizenship status and your annual income. 

Depending on these two variables, the minimum amount that you can borrow is $500 if you are a foreigner in Singapore with an annual income that is less than $10,000. Singaporeans and permanent residents earning the same amount can borrow up to $3,000. 

Singaporeans, permanent residents, and foreigners residing in Singapore who earn less than $20,000 but more than $10,000 annually can get a maximum loan amount of $3,000 from a licensed money lender. 

Singaporeans, permanent residents, and foreigners residing in Singapore who annually make more than $20,000 can get a maximum loan amount up to six times their monthly income. 

As for secured loans – loans that require a property or valuables for collateral – there is no limit to the amount that you can borrow, as long as your licensed money lender can provide it.

What Are The Interest Rates And Fees A Licensed Money Lender Can Charge Borrowers?

For an unsecured loan approved by a licensed money lender, the interest rate that they can charge from a borrower is capped at 4% of the principal amount. 

Whenever the borrower is unable to pay their loan installment on time, the licensed money lender is authorised to charge an late interest fee of up to 4%, or a late fee not greater than $60 for each month the payment is late. 

In addition to some of the most important clauses pertaining to the business of moneylending in Singapore, the Moneylenders Act also includes a code of conduct, and some dos and don’ts for licensed money lenders. 

What Are Some Prohibited Practices For Licensed Money Lenders?

There have been instances where legitimate and registered money lenders have been caught implicit in illegal and unlawful activity.
The Moneylenders Act has defined all such practices that are strictly prohibited for licensed money lenders. The following is strictly prohibited:

• Harassing the borrowers over late payments, hurling abusive language at them, and carrying out violent action against a borrower 
• Asking for important details from a borrower, such as Singpass details and other sensitive details that may result in identity theft
• Not providing the borrower the complete principal amount for some reason
• Keeping the borrower’s important legal documents, such as the passport, ATM card, or NRIC, and refusing to return them after identity verification
• Asking the borrower to sign on a blank or incomplete loan contract 
• Rushing the borrower into signing off the Note of Contract of the loan
• Refusing to provide a copy of the loan contract to the borrower
• Hastily approving the loan, sometimes even through a phone call, and not verifying the borrower’s documents and details before approving a loan amount
• Coercing the borrower into signing a loan contract without providing proof of its legitimacy as a lender
• Not explaining details of the loan contract such as the terms, fees, and other charges clearly

If you ever face such practices being carried out by a money lender, chances are that they are not a licensed business, but a loan shark.
These rules and regulations were drafted to weed out licensed and law-abiding moneylending businesses from the bad ones. As such, loan sharks involved in harassment, coercion, and overcharging must be immediately reported to the authorities.

What A Money Lender Is Permitted To Do

A licensed money lender is permitted to carry out their business using all the right means and approved practices. 

Licensed money lenders are allowed to advertise their business through limited means, and cannot approach potential clients through any unsolicited way.

A licensed money lender can advertise through these three channels:

• Providing details of its business on local and online business directories, where its address, contact number and registration number are clearly visible
• Its own website, where it informs others of its service using digital marketing techniques
• Banners and advertisements on the doors and windows of its office

It is important to note that when going to the digital marketing route, licensed money lenders cannot place pop-ups on other websites, or send unsolicited emails.
Similarly, print ads are also limited to the physical premises of their office. Handing out flyers or going door-to-door is also a big no-no for licensed money lenders in Singapore.

If you, by any chance, receive calls, emails or text messages from a money lender offering you quick loans at low interest rates, chances are that it is a loan shark masquerading as a licensed money lender. 

It is highly encouraged that you inform authorities of any unsolicited calls and messages that you receive from these so-called money lenders.

Another quick and easy method to gauge the reliability of the money lender that you plan on liaising with is to compare its business details, such as its contact number and license number, with the list from the Registry of Moneylenders, which is under MinLaw. 

As mentioned, the list is a comprehensive directory that contains the details of all licensed money lenders in Singapore. It is easily accessible online from the Ministry of Law website.

Licensed Money Lenders’ Code Of Conduct 

As per the Moneylenders Act, the code of conduct for all licensed money lenders is to refrain from all acts of harassment and violence. 

If a borrower fails to pay back a loan, a late fee is applicable, the amount of which is decided in the loan contract chalked initially. If a borrower refuses to pay back their loan completely, the licensed money lender is not to resort to violence or abuse, but take the matter to the relevant authorities.

Debtors facing harassment from licensed money lenders must immediately report their poor behaviour to the police, or file a complaint with the Registry of Moneylenders. They can also officially complain of them to the Credit Association of Singapore. 

What A Money Lender Can Do If You Can’t Repay The Loan

If you are unable to pay back their loan on the timeline decided in the contract, then late interest, as well as a late fee, is applicable for each month the amount was paid late.

In the event that you are not able to continue paying the loan, you should try to renegotiate the terms of the loan, and ask if the timeline can be extended. 

Most licensed money lenders would offer their guidance in the case of deciding a new timeline, and would assist you in finding legal ways to pay back your loan on time. However, they may charge an additional fee for the renegotiated terms of the deal.

If your loan is secured with a property or a valuable, the licensed money lender has the authority to lodge a caveat against your property in case you default. 

This means the property would be sold off to pay back the loan you owe with the proceeds of the sale. You must also remember that you may not receive any amount from your sold property if the proceeds are equivalent to, or less than the borrowed amount, the applied interest rate and any other service charges and late fees.

Avoid the hazard of dealing with a loan shark or scammer. 

Apply for convenient loans with Horison Credit. We are a reputable licensed money lender that fulfils all the criteria and regulations outlined in the money lenders act. 

Get in touch with us now or apply for a loan using your Singpass today. It just takes five minutes.