Choosing a Licensed Money Lender: Singapore Interest Rate Offers for Personal Loans

Singapore is full of financing options when you’re in a financial bind and looking to get personal loans. You’ve got banks, the Singapore government, and even loan sharks–although it’s best (and common sense) to forget that the last one even exists. One other source of personal loans is licensed, money lenders.

There are over 160 licensed money lenders in Singapore, all regulated by the Ministry of Law and the Registry of Moneylenders. These businesses offer different financing options for people who have difficulty getting bank approval: from personal loans to payday loans, renovation loans, debt consolidation loans, business loans, home loans, and more.

What do licensed money lenders offer for personal loans?

The standard fare when it comes to a personal loan from a licensed money lender may vary between each business, but across the board follows the same rule of thumb.

With secured loans or loans that require collateral, you may get any amount of loan. Unsecured personal loans do not require collateral, but because of this, it has more restrictions.

Depending on the borrower’s annual income and residency, they may get a different loan amount.

Singapore citizens with an annual income of less than $10,000 can get a $3,000 loan, while foreigners within the same income bracket can only get $500.

For borrowers with an income between $10,000 to $20,000, regardless of residency, can get a maximum principal amount of $3,000.

Those who have annual earnings exceeding $20,000 can get a loan that is 6 times their monthly salary.

Personal loans from licensed money lenders are also known for being less strict when it comes to their requirements and quick approval process. However, the main catch with their offers is in their interest rates.

How much interest rates do licensed money lenders in Singapore charge?

Licensed money lenders typically charge interest rates that are higher than what banks or other financial institutions charge.

The Monetary Authority of Singapore typically enforces a monthly interest rate cap of 4%, but despite this, the interest rates from personal loans and paydays loans from licensed money lenders can get 2 to 5 times higher than that of credit cards or a personal loan from banks.


Interest Rate Comparison: Licensed Money Lenders vs. Other Financial Institutions

Lender Average Interest Rate
Licensed Money Lender 4%
Banks >1%
Pawn Shops 1.5%
Credit cards 2%


Licensed money lenders are known to charge rates more than that of other financial institutions. As mentioned, they can be comparatively higher than other alternatives. It’s likely more advisable to opt for credit cards instead, especially for smaller regular amounts.

While 4% doesn’t seem like a large enough interest rate, with a $500 loan on a short, one-year tenure, you may find yourself paying equal to the principal, especially if you miss some payments along the way.

Generally, banks offer comparatively lower interest rates. The cheapest ones are as follows:

Bank Interest Rates* Loan Amount Min. Monthly Salary Loan Tenure
HSBC Personal Loan From 6.5% $5,000 to $200,000 $30,000 (Citizens & PR); $40,000 (foreigners) 1 to 7 years
Standard Chartered Personal Loan From 6.5% $1,000 to $250,000 $20,000 (Citizens & PR) 1 to 5 years
POSB/DBS Personal Loan From 7.56% $500 to 10x monthly salary $30,000 (Citizens & PR) 1 to 5 years
Citibank Citi QuickCash Loan From 6.5% $1,000 to 4x monthly salary (or $150,000) $30,000 (Citizens & PR); $42,000 (foreigners) 1 to 5 years
OCBC Cash-On-Instalment From 6.96% (for new customers); 9.06% – 10.45% S$1,000 to Max. Credit Limit $30,000 (Citizens & PR); $45,000 (foreigners) 1 to 5 years

*Effective Interest Rates

You may notice that the interest rates from banks go over the earlier mentioned 4% monthly rate limit from licensed money lenders.

In actuality, this is what is known as the Effective Interest Rate or Effective Annual Rate, which is the interest rate charged per annum, along with other charges that may come with the personal loans. Essentially, this is the total interest charged, which is then divided by 12 for each of the months to get the monthly interest.

In essence, then, bank personal loans charge much lower interest than their counterpart from money lenders.


Why do licensed money lenders in Singapore charge relatively higher interest rates?

The question now is why even get personal loans from licensed money lenders when you can get a loan with better terms from banks?

There are in actuality a couple of compelling reasons why it can be reasonable to borrow cash from money lenders.

#1: More Lenient Requirements

The first reason is that licensed money lenders are generally less strict when it comes to the requirements. If you earn below the usual bank loan threshold, you can be rejected outright, whereas with a licensed moneylender you can still get financing if a smaller amount, even if the loan is unsecured!

Moreover, banks can be very strict with your credit checks, along with other requirements that are left to the discretion of each institution.

Licensed lenders typically are considerate when it comes to providing you with a loan. While having specific brackets, you still have the opportunity to borrow money even with a smaller monthly income and a lower credit score.

This is of course perfect for people who do not meet the minimum requirements from banks.

Fast Loan Approval and Disbursal

Licensed money lenders are also known for their fast approval times for different loans, and is inarguably a major selling point.

Personal loans can be near-instantly approved and disbursed within the span of a day, unlike banks which average on 3 working days on approval alone, with disbursal taking as long as 7 working days.

This is perfect for situations where you need a quick source of cash, whether it be some sort of emergency or a financial opportunity that you need to immediately address.

This trait added to the fact that personal loans can be used for nearly anything without the need for collateral makes licensed moneylenders a good source for immediate financing.

Read 5 Things You Should Know About Personal Loan Interest Rates in Singapore.

Things to note when borrowing from a licensed moneylender

1.) How do I know whether a moneylender is licensed or not?

The Monetary Authority of Singapore (MAS) and the Registry of Moneylenders has a list of licensed money lenders in the country which can be found here. Moreover, there are signs to keep an eye out for to tell if a lender you are working with is a loan shark or unlicensed. Some of them are:

  • Ads & solicitations through SMS, emails, WhatsApp, flyers away from their office
  • No physical location
  • High rates and fees
  • Offering blank contracts

2.) What fees can moneylenders charge?

Licensed lenders can only charge the following:

  • Maximum $60 for a late repayment fee each month.
  • An admin fee of no more than 10% of the principal is charged for granting the loan but only upon approval
  • The lender will be required to pay for court costs if the claim for recovery is successful

In addition, The total charges by a moneylender on any loan, including interest, late interest, upfront administrative and late fees also cannot exceed an amount equivalent to the loan amount.

3.) How do I deal with unpaid debt?

Contact your lender to come for any debt consolidation plans that they may offer. Lenders can be willing to help you as your payment is how they make a profit.

You may also work with social service programmes for credit counselling and debt consolidation plans.

4.) What should I keep in mind when applying for personal loans?

  • Before approaching a moneylender, it’s best to consider alternatives. Government agencies have different financial assistance schemes that may suit your situation.
  • You have a legal obligation to complete the contract with a licensed lender.
  • Consider your own capacity to comply with the contract. Factor in your income, regular expenses, and other debt obligations. Inability to comply will only worsen your financial situation.
  • Keep in mind that lenders are legally obliged to help you understand the loan terms. Do not hesitate to thoroughly understand the contract before signing.
  • Don’t go for the first loan you find. It’s always best to take a look around and consider your options. Many different financial institutions can lend you money, so it’s best to shop around and find which works best for you.

5.) How do I know what loan offer is best for me?

Different loans and different lenders will each have their own pros and cons that will address your specific need differently. Keep in mind the amount, tenure, requirements, and rates of your options, and measure them against your particular situation.


Final Word

If you need help choosing between different personal loans, consider contacting Instant Loan. Instant Loan is a loan comparison service that helps you by assessing your financial situation and helping you in your search!

Instant Loan can provide you with a list of different financing options from top licensed lenders in Singapore, curated to address your needs, whether it be personal loans, home loans, renovation loans, business loans, payday loans, and more!

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