Borrowing From Licensed Money Lenders Singapore? Read This Guide First

In this pandemic-stricken economy, we may find ourselves in a string of unfavorable financial situations. To tide through the rough patch, some of us may borrow money from banks.

However, urgent cash needs or bad credit history may mean that we stand a better chance of getting our desired loans approved with licensed money lenders in Singapore. In this comprehensive guide, let’s take a deep dive into everything you need to know about licensed money lenders.

What exactly are licensed money lenders?

A licensed money lender is approved by the Ministry of Law to lend money to Singapore citizens, Permanent Residents and foreigners with valid Employment Passes. Legal money lenders must follow the rules and regulations as determined by the Ministry of Law, and adhere to the Moneylenders Act.

Licensed money lenders are also subjected to further layers of regulation through the Moneylenders Credit Bureau (MLCB). The Ministry of Law has designated the Credit Bureau Singapore to operate the MLCB, which contains information on borrowers’ loan and repayment records with all licensed money lenders in Singapore.

When you apply for a loan, the money lender will have to check your existing loan records with other money lenders. This is done through purchasing an MLCB report and this process is required by law. This way, licensed money lenders can ensure that the approved loan amount does not exceed the borrower’s loan limit.

Read more about getting an MLCB report here.

The main difference between banks and licensed money lenders is that licensed money lenders usually grant faster approvals. They also have more lenient loan restrictions and requirements, which makes legal money lenders in Singapore suitable for urgent cash needs.

Advantages and disadvantages of borrowing from legal money lenders in Singapore

While reliable money lenders offer many benefits including those mentioned above, there are also some downsides. Be sure to weigh the pros and cons carefully before borrowing.

Pros of borrowing from approved money lender Singapore:

1. Fast approval

Most quick money lenders would approve your loan application in about thirty minutes.

2. Lower minimum income requirement

If you have an annual income of less than $20,000, you will be hard pressed to get your loan applications accepted by banks. However, personal loan money lenders in Singapore such as Dio Credit can offer you loans even if your annual income is less than $20,000.

3. Streamlined process

This means minimal red tape as best money lenders in Singapore typically favour efficiency and are customer-oriented.

4. Bad credit history is no deal breaker

Getting turned away from banks because you defaulted on your loans in the past? Best money lenders will give you a second chance after a detailed consultation. You may even find some money lenders with no credit checks.

Here are some types of loans you can get even with bad credit.

Cons of borrowing from approved money lenders in Singapore:

1. High interest rates

As SG money lenders take a higher risk in general as well as provide cash flow at a short notice, you will have to pay a higher interest rate.

2. Costly late interest and fees

Late fees can go up to $60 per month, while late interest can reach up to 4% per month. Both are levied on the loan amount that is overdue. Avoid this by paying on time.

3. Costly processing fees

Money lenders can charge processing fees up to 10% of your loan amount. You only have to pay this once after your loan is approved.

4. Shorter loan tenure

The repayment period is usually up to 12 months. This means that you have a shorter time to repay your loans, as compared to a bank loan which can extend to a few years. The shorter the repayment also means the amount paid per instalment can be higher – so you will need to assess if the instalment amount is reasonable for you based on your budget.

However, this can mean that the total amount of interest paid is less than a loan with longer tenure.

Looking for an urgent cash loan?

Visit Dio Credit now.

What loans to take from best licensed money lenders in Singapore: Secured vs unsecured loans

While licensed money lenders provide many types of loans, you should first understand the difference between secured and unsecured loans.

Secured loans are backed by the borrower with assets such as a house or a vehicle, and typically include lower interest rates, a higher amount that can be borrowed and a longer tenure. Examples of secured loans include home and vehicle loans. However, should you default, you may lose your collateral.

Unsecured loans, on the other hand, do not require collateral and typically come with higher interest rate, a lower amount that can be borrowed and a shorter tenure. Examples of unsecured loans include personal loans, payday loans, etc.

So how do you know which type of loans to take?

If you need quick cash for your wedding, to buy a home, or to pay for a medical emergency, you’ll be looking at an unsecured personal loan. Personal loans are flexible loans that can cover anything from wedding to education.

Here are the different types of personal loans:

If you’re a business owner looking at injecting cash flow into growing or sustaining your SME, you may need a business loan. This loan comes with a much higher principal amount, and would require relevant supporting documents.

Searching for personal and business loans with competitive rates and professional advice?

Apply for a loan with Dio Credit now.

How much can you borrow with SG money lenders?

Secured loans

For secured loans, there are three metrics to consider.

The first metric is the Borrower’s Total Debt Servicing Ratio (TDSR), which is applicable for property and car loans. TDSR refers to the portion of a borrower’s gross monthly income that is taken to repay all their loans, and its maximum is 55%.

The second metric is the Borrower’s Mortgage Servicing Ratio (MSR), which is applicable for HDB and Executive Condominiums (EC) loans. MSR refers to the portion of a borrower’s gross monthly income that is taken to repay their property loans for HDB flats and ECs, and its maximum is 30%.

Lastly, we have the Loan-To-Value (LTV), which is applicable for car loans. LTV refers to the amount of loan expressed as a portion of the purchase price of the motor vehicle, and that amount cannot exceed 60 to 70%, depending on the open market value (OMV) of your vehicle.

Unsecured loans

For borrowers with an annual income of less than $10,000, the maximum amount that can be borrowed by Singaporeans and PRs is $3,000, and $500 for foreigners residing in Singapore.

For borrowers with an annual income of at least $10,000 but not more than $20,000, the maximum amount that can be borrowed by Singaporeans, PRs and foreigners residing in Singapore is $3,000.

For borrowers with an annual income of more than $20,000, the maximum amount that can be borrowed by Singaporeans, PRs and foreigners is 6 times their monthly income.

Familiarize yourself with licensed money lenders Singapore interest rates

Because all private money lenders in Singapore are required to follow the laws and guidelines stated by the Ministry of Law, they adhere to strict limits on interest rates.

Money lenders cannot charge more than 4% interest rate per month. Fortunately, licensed money lenders’ interest rates are calculated based on a reducing interest rate. This results in you paying less interest over time compared to a flat interest rate.

Here’s a table for better visualization:

Say you borrowed $3,000 to be repaid over 6 months with an interest rate of 4% per month.

The total reduced balance interest you will be paying is $433.71, and not $720 (if it is a flat interest rate calculation). The interest you pay every month decreases with each payment.

Month Payment Amount Interest Principal Balance
1 572.29 120.00 452.29 2,547.71
2 572.29 101.91 470.38 2,077.33
3 572.29 83.09 489.20 1,588.13
4 572.29 63.53 508.76 1,079.37
5 572.29 43.17 529.12 550.25
6 572.26 22.01 550.25 0.00

In the event if you have to incur licensed money lender late repayment, no more than 4% late interest fee per month and a late payment fee of no more than $60 per month can be charged on the amount that is repaid late.

Also, do take note that all charges – from interest to late fees and processing fees – cannot exceed the original loan amount.

The loan tenure you receive would vary from lender to lender, but best money lenders in Singapore offer up to 12 months, while some may offer only 1 to 6 months. On average, the loan amount approved can range from 1 to 3 times of the borrower’s monthly income, with a processing fee of around 3.5% to 10% of the loan amount.

Dio Credit is a top licensed money lender that offers some of the most competitive interest rates in the market.

Get your quote online now.

Verify if your money lender is legal: How to check money lender license?

Now that you are familiar with the deals you get with licensed money lenders, let’s look at how to find the right money lender.

First and foremost, it is imperative to confirm that the licensed money lender is legal and licensed. In addition to protecting yourself from getting scammed or receiving unfair deals, this is also to ensure that you are not going to be embroiled in illegal financial activities.

To do this, follow this checklist of requirements:

Is the money lender on the Ministry of Law’s Registry?

Refer to the complete list of licensed money lenders registered with the Ministry of Law, and this list is updated frequently. In the list are addresses, phone numbers, names of companies, website URLs and license numbers so you can cross check and confirm the legitimacy of the lender.

How are they advertising their loans?

According to the ministry, licensed money lenders are not allowed to solicit loans through phone calls, text messages or through social media platforms.

Take further note that approved money lenders in Singapore can only advertise or solicit business through business or consumer directories, their own websites, or advertisements located inside the interior and exterior side of their registered place of business such as gate, wall and window.

Do take note not to fall prey to loan shark advertisements!

Do Singapore online money lenders exist? Do they need you to go down to their office?

Although you can apply for your loan online, via licensed money lenders’ websites, even the best online money lenders (licensed) cannot perform a loan transaction fully through online platforms. They are required to meet the borrower in person at the approved place of business (their physical office) to conduct physical face-to-face verification of the borrower’s identity.

Is their license certificate displayed clearly in their office?

When visiting the money lender’s registered place of business, do look out for their money lender license certificate. All legitimate money lenders are supposed to display their license certificate prominently so that borrowers can know or verify their legitimacy.

Which money lender is suitable for you? Check licensed money lender in Singapore review

Unsure of which licensed money lender to choose from? Here’s a checklist on how you can find out if they are the most suitable one for you:

Check background and reviews of the money lender

Google the money lender and check their reviews, favouring those that seem more genuine. Also, look out for any red flags on the website that might suggest illegal activities such as complaint against money lenders.

Assess if interest rates and loan terms are suitable for you

It’s important to check with the money lender the interest rates and loan tenures they can offer you, to see if they are compatible with your financial situation.

If you have less budget every month, you may want to borrow from money lenders who can offer you a longer loan tenure. This way, you can pay less per installment. The downside for a longer repayment period is that you will be paying a higher total amount of interest.

On the other hand, if you have the budget to pay off more of the loan every month, you might prefer a shorter loan tenure. You will pay more of the loan every month, thus clearing off the loan amount more quickly and pay less overall interest.

Also, do check the other terms and conditions of their contract (such as late fees, late interest, processing fees) and see if you disagree or need clarification on anything. Remember that you are allowed to leave at any time and go to another money lender for better terms before signing the contract.


When interacting with the loan executive, do you feel that a clear bridge of mutual respect and clear communication is formed? The nature of this relationship is important as it can determine how much stress you feel and how much support you stand to receive from this money lender if faced with difficulties during repayment.

At Dio Credit, we value professionalism, lawfulness and transparency.

Talk to us today.

Applying for your loan: Documents required

For the licensed money lenders to process your personal loan application, you will need the following documents:

For employed SIngaporeans:

  • IC
  • Latest 3 months CPF contribution statement
  • Latest year IRAS notice of assessment (NOA)

For self-employed SIngaporeans:

  • IC
  • Latest 2 years IRAS notice of assessment (NOA) or
  • Any proof of income such as invoice or bank statement

For foreigners residing in Singapore:

  • Work pass
  • Passport
  • Proof of home address such as tenancy contract or billing proof
  • Latest 3 months payslips

For the licensed money lenders to process your business loan application, you will need the following documents:

  • ACRA business profile information
  • Constitution of the company
  • Latest 2 years’ Notice Of Assessment (NOA) of all directors and/or shareholders of the company
  • Latest Credit Bureau Singapore (CBS) report of all directors and/or shareholders of the company
  • Latest 2 years’ worth of financial statements of company
  • Latest 6 months’ worth of bank statements
  • ICs of company’s major shareholders and directors
  • Other documents that the money lender might need, usually accessible via Singpass

Before you apply for any loan, remember to check and compare money lenders to see which offers the most competitive rates and loan terms for you.

Step-by-step guide to applying for your loan

  1. Complete the online application form.
  2. Wait for the money lender’s loan officer to call you and confirm the loan. You will be asked to drop by their office for a short interview and verification. Bring all necessary documents when you visit the money lender’s office.
  3. After your interview, your loan can be approved in 15-20 minutes.
  4. The loan officer will then go through with you the loan contract which consists of all the loan terms. It is important that you understand all the loan terms such as interest rates, loan tenure and other charges before committing to it.
  5. Once you sign the loan contract, you will receive loan amount through bank transfer or by cash on the spot.

Dio Credit is a top licensed money lender that offers a streamlined application process as well as a professional and friendly service.

Apply for a loan with us now.

My loan application is rejected! What can I do?

If your loan is rejected by private money lenders, it is likely that you might have not met certain criteria. Here are some things that you can do to increase the chances of getting your loan approved the next time you apply.:

Find a guarantor

One reason for loan rejection is that the lender does not believe you have the capability to repay the loan. This itself may be due to several reasons, from your income to your requested loan amount.

Finding someone who has a good credit history to be your guarantor may give the lender enough confidence to approve your loan. A guarantor is someone who holds a responsibility to repay the borrower’s loan obligations, should the borrower default. Therefore, a guarantor should be someone who has the ability to repay the debt and is trusted.

Apply for a secured loan

A secured loan, where you pledge an asset as a collateral, gives the money lender more confidence to approve the loan. This is because if you default, the money lender can liquidate your collateral to recover the loan amount.

Get more consistent sources of income

Having no consistent regular source of income signals to the money lender that you may not be able to repay the loan.

However, you don’t have to be employed full-time to get your loan approved. As long as you have consistent sources of income, be it from driving Grab, rental income or through your business, you may stand a higher chance of getting your loan approved.

Don’t have too many loans at once

It may get difficult to repay loans if you have multiple loans at once. Thus, your current loan record and borrowing history is something the money lender will consider. If you’re already paying off a few loans, finish paying some of them before applying for a new one.

What to do when my money lender claims I did not repay my loan?

It can feel frustrating and even worrying if your money lender claims you have not repaid your loan when you have actually made payment. But keep calm and don’t panic. These are the steps you can take:

Check your payment records

Firstly, check if you received receipts for the payments that you have made. You should be receiving receipts every time you make payment, and you should check that the information is correct. The receipt, which can be digital or physical, should also show the outstanding amount you owe so that you can plan your finances accordingly.

If you had made a cash payment, you should have received a cash receipt as well.

Secondly, did you receive any Statements of Accounts (SOA)? These statements contain the payment already received by the money lender and the dates on which they were made, as well as the outstanding amount. The lender is obliged to provide you with the SOA, so do ask for it, especially if there are discrepancies.

Check your banking records

If you had paid by bank transfer, log into your bank account and retrieve that proof of transaction. Was it paid to the money lender’s registered company? If so, that should be sufficient proof of payment.

Have a discussion with the money lender

Contact the licensed money lender you borrowed from and ask for a meeting with a loan officer. Show them the payment records as mentioned above, and discuss the situation with them calmly to see if there had been any miscommunication.

If the previous receipt was not sufficiently clear, request for a clearer receipt that states the outstanding amount next time.

What to do if you are unable to pay money lenders in Singapore?

Firstly, you can request for an extension. Explain sincerely and truthfully your situation to your money lender, and negotiate with them to come up with an extended payment deadline. Do ensure that this new deadline is derived through proper financial planning and that it can be met.

Next, if you are unable to repay your debts and are under a lot of stress, you can also seek help from social services as recommended by the Ministry of Law. These agencies can provide general credit management help, credit counseling, and may be able to help you negotiate a debt repayment plan with creditors.

Lastly, in the event that your debt has exceeded $15,000 and you are repeatedly defaulting despite payment extensions, you can file for bankruptcy. While this is the last resort that no one wants, bankruptcy stops the accumulation of loan interest and prevents legal proceedings to be carried out against you.

That said, the consequences of bankruptcy can be severe and long-term.

At Dio Credit, our professional and friendly loan officers are always available to renegotiate your loan terms with you if you are struggling to repay your loan.

Contact us here.

Final things to note before borrowing from authorised money lenders in Singapore

Here are some things to note so that you may make the greatest use of licensed money lenders and their services.

1. What if I don’t abide by the contract terms?

It is never good to go against any of the contract terms, as you run the risk of penalties.

For instance, if you do not pay by a specified date, you may incur late interest charges. This increases the overall amount you have to pay.

You may also wonder, can a money lender file a case in court? Yes, the money lender can file for litigation against you in court if you default on the loan. And if your money lender manages to make a successful claim against you, you will have to bear the legal costs as decided by the court.

Hence, it is important to fully understand how the contract works as well as all the loan terms. If you don’t fully understand them, ask the loan officer to explain to you. A good licensed money lender would be more than happy to explain anything you might not understand.

2. Know what happens when you default on payments

Should you default on your loans, it is within the rights of money lenders to hire debt collection agencies to collect back the debt from you. These agencies need to follow a set of professional rules and code of conduct as determined by the Ministry of Law.

The first thing they can do is to send a Letter of Demand (LOD) to your residential address or work place to demand that you return the debt. They can also visit you at these places so that you feel even more pressured.

In the event of disputes with licensed money lenders, the first step is to remain calm. Communicate with the other party in a respectful manner to try and resolve the matter. Try and negotiate towards a deadline extension by communicating across your predicament. In the event if the situation escalates, get a third party such as a family member or friend to mediate or call the police.

3. Read the fine print before signing the loan contract

Do read the contract carefully for certain clauses.

For example, in some cases, there may be a caveat lodged on your property, which allows your property to be sold so that the money lender can get their payment. All proceeds from the sale goes to paying the lender first, so you may lose your property without gaining anything.

4. Stay clear of illegal money lenders in Singapore

You may come across illegal money lenders or loan sharks but you should never engage with them in any capacity.

Engaging with illegal money lenders may result in becoming a victim of a money lender scams in Singapore or a money laundering activity. You may also find yourself paying unfairly high interest or be part of a loan contract that may land you in even more debt. If you spot any illegal money lenders, call the police immediately.

Here’s a comparison of legal money lenders and illegal ones so that you can spot the bad apples:

Illegal money lenders Legal money lenders
Not registered with the Ministry of Law Registered with the Ministry of Law
Advertise through SMS, emails, calls or WhatsApp Advertise through business or consumer directories, official website, or advertisements placed within or on the exterior of the money lender’s registered place of business.
Conducts loan process entirely online without face-to-face verification Conducts loan process with in-person verification
May demands upfront fee before loan approval Any fees are only paid when loan is approved
Approves large loan with no determination of your ability to pay Approves loan only after a thorough checking of factors that could affect loan amount and repayment

5. Consider borrowing from the bank first

When you are in need of cash, it is tempting to borrow from licensed money lenders as you will get the cash fastest this way. However, do consider other options such as banks first.

This is because banks typically charge a lower interest rate, which means you are under less financial stress when paying, in turn increasing the chances of you fulfilling the loan repayment.

How to deal with licensed money lender harassment?

Licensed money lenders are prevented by the law from resorting to violence or harassment.

This means they cannot do the following, which are commonly done by unlicensed money lenders:

  • Send multiple SMS or calling repeatedly to harass borrowers.
  • Repeatedly contact or visit borrowers during odd hours. This can include the borrower’s home and workplace.
  • Hang around the borrower’s residential address and workplace to “ambush” the borrower.
  • Make threats, such as:
    • “You’ll lose your job if you don’t pay up.” Do not heed such baseless threats.
    • Threaten to announce your debt to all your family and friends.
    • Threaten to hurt the borrower or the borrower’s loved ones.
    • Threaten to resort to violence by beating the borrower up.

Should you face such harassment, do the following:

  1. Call the police. It would be helpful to note down the time and location of such acts so that you can relay them to the police.
  2. Complain the money lender to the Credit Association of Singapore (CAS).
  3. Complain the money lender to the Ministry of Law.

Here are more tips if you face licensed money lenders’ harassment.

Your most reliable instant money lender – Dio Credit

As one of the top 10 money lenders that offers a streamlined process and competitive rates, rest assured that your experience with Dio Credit will be seamless and comfortable.

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While all reasonable efforts are made to include accurate and up-to-date information on this website, errors or omissions may still occur. We are not liable for any loss or damage caused by the use of this website. The information on this website is for general information only and should not be taken as professional advice.

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