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How Moneylenders Act Protects Borrowers Like You From Moneylenders

The Moneylenders Act primarily protects borrowers from any abusive act that moneylenders may commit within the duration of the contract. The Ministry of Law requires the signing of a cautionary statement by borrowers before handing any personal loan. This cautionary statement signifies that borrowers were fully informed of potential unlawful conducts of moneylenders. Moreover, it contains a guide on how and where to file a complaint once borrowers are confronted with errant licensed money lenders.

How to Know if a Moneylender Is Licensed?

The easiest way to verify when a moneylender is licensed or not is to check if its name appears on the list provided by the Registry of Moneylenders working under the Ministry of Law. A licensed moneylender should be distinguished from an excluded moneylender. The former is one whose principal business is moneylending. The latter also lends money but only as an incident of a principal business whose primary objective is not moneylending.

It’s important to note that having a license to operate is never a guarantee that the moneylender would not be involved in unfair lending practices. Some of the prohibited practices for moneylenders include asking for SingPass user ID and/or password, retaining personal identification documents like NRIC card, granting loans without giving client his copy of the contract, withholding a portion of the principal loans and engaging in any form of harassment, threat or intimidation.

How Much Can You Borrow?

The amount of money that can be borrowed depends on the kind of loans applied for. If it’s a secured loan, then the borrower can get as much as he needs. If it’s an unsecured loan, the amount that can be obtained will depend on one’s annual income, citizenship and status of residence.

Singapore citizens and permanent residents whose annual income is less than S$10,000, on the one hand, and more than S$10,000 but less than S$20,000, on the other hand, can loan up to S$3,000. Their foreign counterparts who reside in Singapore can respectively loan a maximum amount of S$500 and S$3,000. Those earning an annual income of over S$20,000 are entitled to loan as much as more than 6 times their monthly income without regard to citizenship.

Statistics show that over the past years, the number of foreigners like domestic workers borrowing money from licensed moneylenders has skyrocketed. The Ministry of Law needs to set these loan limits in order to prevent domestic workers and other low-income earners from over-borrowing.

What Are the Interest Rates & Other Charges Moneylenders Can Charge?

It doesn’t matter whether the loan is secured or unsecured for the interest rate cap of 4% per month should be applied. This means that upon default, moneylenders can only charge a maximum of 4% interest against the unpaid principal amount.

Aside from the interest rates, licensed moneylenders can also charge a monthly late payment fee of not more than $60. When the loan has been granted, they can also charge borrowers an approval fee of not more than 10% of the principal loan. Lastly, moneylenders in Singapore are also entitled for legal costs ordered by the court. Remember that these additional charges permitted by the Moneylenders Act should not, in any way, be more than the principal loan.

How to Know if the Advertisement Is Legitimate?

The Advertising Rules provide guidelines on how legitimate moneylenders can advertise themselves. Moneylenders are only allowed to use specific platforms. First, they can utilize their official website for the said purpose. Second, licensed money lending firms or individuals may advertise through business or consumer directories for both print and online media. And third, they can post advertisements only within or without their office premises.

Money Lending advertisements in other channels not included in the Advertising Rules most likely come either from an errant licensed moneylender or unlicensed moneylender. Loan sharks are those that are engaged in the business of moneylending but are without license. They deceive customers by advertising themselves as legitimate moneylenders. They create websites that mimic those seen on the websites of licensed moneylenders. Loan sharks also contact their victims thru text message, phone call, WhatsApp or email.

two man talking about loan in singapore

What Moneylenders Should Provide to Borrowers After Being Granted a Loan?

The Moneylenders Act gives every moneylender some legal obligations to fulfill to the borrower after the credit has been approved. First, they should deliver the agreed principal loans. Second, moneylenders should issue receipts every after repayment has been made by the borrower. Third, they are ought to release at least every January and July a statement of account of all the borrower’s loans. The borrower should always check the accuracy of information contained in receipts and statements of account and keep them for proper documentation.

In addition, the Registrar of Moneylenders is very strict with the requirement that all licensed money lenders Singapore should adequately inform borrowers of the terms and conditions of the contract in such a way that they will understand how the interest rates and other fees will be calculated. Failure to do so entails S$20,000 or imprisonment.

How to Report a Moneylender or Its Unfair Practices

While loan sharks should be reported to the police, a legitimate money lender that operates in violation of the law should be reported to the Registry of Moneylenders at telephone number: 1800-2255-529. All pertinent information of the unlawful conduct should be disclosed to help the Registry take the proper course of action. Your identity as complainant won’t be disclosed absent your consent.

What if You Can’t Pay the Loans?

There are two scenarios that may take place if you can’t pay your loans. First, you may try to negotiate your repayment plan with your money lender. If you offer to pay in installment rather than in full, then you’re lucky if the moneylender agrees to it. But remember, this is not without cost as you can be charged additional fees for it. You can’t ask the Registry to assist you in the negotiation because debt contracts are privy only to the parties.

Second, if the moneylender did not agree with your proposal to change the repayment option and you still can’t pay, filing a legal action against you especially when the debt is secured by an asset are some of the rights reserved for license money lender in Singapore.

Aside from catering to the needs of borrowers, the Moneylenders Act also assists every licensed moneylender in assessing credit-worthiness of applicants through the information contained in the Borrower Credit Report provided by the Moneylenders Credit Bureau. The Credit Bureau uses real-time update information on clients like credit standing. Such information should be promptly provided by moneylending firms.

What Can You Do if the Moneylender Is Harassing or Threatening You?

When you’re experiencing any act of harassment from moneylenders, report them immediately to the Registry. The Ministry of Law regulates the business of moneylending primarily to protect borrowers from any act creating alarm and distress to borrowers.


Obtaining a loan creates a legal obligation on borrowers to keep up on their repayment plans. They should only borrow an amount which they can pay. One way to do this is to find the right match that offers the best repayment plan according to their capacity to pay. 

It is important for borrowers to be able to determine credible and trustworthy firms. An indication that a company is licensed could be the Pte Ltd label following the company’s name. It indicates that the company is a private limited company, a common type, and a preferred company in Singapore. 

Money lending companies that rated in the top ten in Singapore are all private limited companies with Pte Ltd in their name. It is therefore a good indication of their positive relationship with the law.

Finding the best loan offer from over 150 moneylenders is not an easy task. If you are in search of the best loan offer in Singapore, Instant Loan, a loan comparison site, sends you free quotes from top loan providers so you can weigh in your options and make smarter financial decisions.

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