List of MinLaw Licensed Money Lenders in Singapore (Sept 2018 Update)

There will always be times where we need money urgently or have emergencies that needs to be taken care of. Some of us would turn to banks for financial help but there is always the chance that they will reject the application due to their strict criteria. The other option that applicants have is moneylenders but many would frown as the word moneylender is commonly linked with loan sharks. The truth is, not all moneylenders are loan sharks. There are legal and reliable moneylenders and we have included a complete list of licensed moneylenders in Singapore.

 

Here is the complete list of legal and licensed moneylenders in Singapore.

(Updated List as of 10 September 2018 based on the Ministry of Law)

What are licensed moneylenders in Singapore? Are they loan sharks?

Contrary to the belief of many, not all moneylenders are loan sharks. Yes, not all of them will hang pig heads and splash paint at your door. Loan sharks who charge exorbitant interest rates are illegal moneylenders in Singapore.

To provide more options for financing, there are licensed moneylenders who are reviewed and approved by the Ministry of Law and many of them have been in business for many years. Some of them even operate 7 days a week. The interest rates of licensed money lenders are not sky-high. Instead, they are able to offer lower interest rates, faster approval and flexible repayment plans depending on individual’s profile.

Loans offered by licensed moneylenders are usually unsecured. Unsecured loans are loans that do not require collateral (house, car, assets). Most of the loans offered by banks are secured and require collateral. This means that it may be harder for some to get a loan from banks.

How can getting a loan help me?

There are always times in our lives where we need some extra cash. It could be money to pay the bills, money to pay off other loans, for an emergency or simply cash to purchase the goods that you’ve been eyeing for the longest time. Licensed moneylenders are here to help you achieve your goals or get through the tough period. Nonetheless, we strongly recommend you to only apply from financial institutions that you truly trust and only apply for the amount that you can repay.

What if I have a bad credit score? Can I still get a loan?

Unfortunately if you already have a bad credit, it may be harder for you to get a loan from local banks. Banks generally have more stringent checks. Having a bad credit score implies that it is riskier for banks to provide a loan for you and hence, they may reject your application. Licensed moneylenders on the other hand are usually more flexible and willing to understand your situation in order to help you.

Can I still get another loan if I already took one?

The answer is yes, you can still get another loan. You might already have a home loan or a car loan but still need some cash for your emergency. It is still possible to get another loan at an amount that you prefer. Each financial institution will evaluate your profile and provide you with the best rates and amount.

I don’t want to get conned. What should I look out for when getting a personal loan from a moneylender?

We understand how scary it can be to take a loan. After all, it is a serious financial commitment.

The first step you should take is to check with the most updated list of licensed moneylenders by the ministry of law to make sure that the company you are planning to borrow from is legal and reliable. Secondly, shop around the different moneylenders so as to get yourself the best interest rate and repayment plan. Thirdly, be clear of the amount that you are borrowing, the interest rate and the monthly repayment fee. Do ensure that you are getting an amount that you can handle and repay. The last and most important tip, is to always read the small fine prints on the forms in case they have additional terms and conditions. Take your time and shop around for the best repayment plans and lowest interest rates, do not rush into a loan.

How do I know if the loan advertisements are real or not?

It can be hard to differentiate between a legal licensed moneylender and an illegal moneylender. We all want to work with reliable moneylenders and we definitely don’t want to fall into a high interest rate debt trap. Other than checking the list of licensed moneylenders in Singapore, note that licensed moneylenders are only allowed to advertise through 3 channels. First, only on consumer and business directories in both print and online media. Next, their own websites and lastly, advertisements can only be placed within the premises of their own shop or business area. Do be wary that flyers, SMSes, emails might be from unlicensed moneylenders.

What are the interest rates moneylenders can charge?

From 1 October 2015, the maximum interest rate licensed moneylenders are able to charge is 4% per month. This is applied regardless of the borrower’s income and if it is a secured or an unsecured loan. If the applicant fails to repay on time, the maximum rate of interest charged is 4% per month for each month the loan is repaid late.

Computation of interest charged on the loan should be based on the remaining loan amount left. For example, if Ben takes a loan of $10,000 and repays $3,000, only the remaining $7,000 can be taken into account for the computation of interest.

Late interest can only be charged on the amount that is repaid late. Licensed moneylenders are not allowed to charge on amounts that are outstanding but not due yet. For example, if Charlie takes a loan of $20,000 but fails to pay for the first installment of $2,000, the moneylender may only charge the late interest on the late fee of $2,000, not on the remaining $18,000 that is not yet due.

What are the fees that moneylenders can charge? How to avoid unnecessary payments?

Licensed moneylenders are not allowed to charge a fee exceeding $60 for each month of late repayment. They are also not allowed to charge a fee that exceeds 10% of the principal loan amount when the loan is granted. Moneylenders in Singapore can impose the legal costs ordered by the court for a successful claim by the moneylender for the recovery of loan. All licensed moneylenders are suppose to explain all the conditions and rates clearly in a language that the borrower’s are comfortable with before completing the contract.

I can get a credit card loan if I need some extra cash. Why should I choose personal loans from a moneylender?

Yes, a credit card loan is also another option available to borrowers. However, most of the credit cards charge a very high interest rate that is mostly higher than that of personal loans. If you need cash urgently and cannot wait for the approval or bank or is rejected by the bank, you can approach a licensed moneylender as they are much quicker in approval and disbursement and have lower interest rates than credit cards. Licensed moneylenders also have knowledgeable and friendly financial assistants to address your queries.

Here are the 5 simple steps to getting the best loan for yourself:

1. Evaluate your financial needs – One of the greatest mistakes applicants make is borrowing without any plan in place. You have to carry out a financial assessment and clearly identify the reason and amount that you need.

2. Assess the lending company – The lender must be licensed and regulated by the Registry of Moneylenders. They should also be members of the Moneylender’s Association of Singapore (MLAS). Additionally, they should have a great track record and extensive experience in lending and helping applicants.

3. Compare loans available – Go online and use comparison websites to find as many loans as possible. Look at the best rates and flexibility of the repayments before opting for any. Most of them even have a live chat function for you to ask clarify your doubts.

4. Look for a tailored loan – Talk to different lenders and ask if they can offer a loan based on your unique financial situation. Such a loan will be easier to service.

5. Prepare for the loan – You need to have the necessary documents for the loan. Borrowers usually need to be 21 to 65 years old and have a stable source of income. Each moneylender will usually state the other information they require on their website.

What are personal loan tenures? What affects the tenures? 

Loan tenure refers to the term of the loan, or how long it will take you to repay the loan. Every lender has their minimum and maximum loan repayment period, but on average, a personal loan repayment term can be between one and five years. Tenure for personal loans is affected by the following factors:

Loan amount – There is a relationship between tenure and how much you end up paying on the loan. When the tenure is very long, you end up paying more in the long run. However, with a longer tenure, your monthly repayments are less and your debt burden ratio decreases as well. The Singapore government has capped the Debt Burden Ratio (DBR) at 60% of your monthly income. By spreading out your loan repayments, you are able to take a higher loan amount than if you had kept your tenure shorter.

Monthly repayments – As your loan tenure increases, the amount you pay every month is spread out more and therefore you get to pay less. If you have a shorter tenure, the monthly payments will increase because you are paying off a large amount of money in a short period of time. This makes loan tenure an individual choice, because you will have to look at your current responsibilities and determine how much you can pay. The monthly payments should be comfortable for you, and should not strain your finances unduly.

Interest rates – The amount of interest you need to pay on the money borrowed remains the same whether you go for longer or shorter term. However, when your personal loan tenure is short, the interest is crowded into that period, which contributes to the hike in your monthly payment amount. It is important to note that when the tenure is increased by say another year, you end up paying more because the loan accrues additional interest for the extra year.

Bank options – If you decide to borrow from the bank, you will find that each bank has its own rules regarding Debt Burden Ratio (DBR). Some cap it at the 60% recommended by the government, while others will cap it at 40%. This means that even if they will be happy to loan you the money you need, they may not be able to give it to you at a short tenure because it will raise your DBR above their cap. Should you have a DBR that is actually above their cap, but less than what the government recommends, the bank will consider you ineligible for any of their loans.

Pros and Cons of Short Loan Tenure

• Reduced interest amount. When the tenure is short, your total interest amount reduces automatically even when your monthly repayments increase.
• Unfortunately, with the higher monthly repayments, chances of defaulting increase. Should you default, you will feel the effect in your credit report since your credit score will drop, and in the future, getting a loan may be a little more difficult. A poor credit score tells financial institutions that you might not be able to make repayments on time, making it risky for them to lend you the money.

Pros and Cons of Long Loan Tenure

• It is ideal for someone whose DBR is already high. By making smaller payments spread out over a longer period of time, you will be able to keep managing your finances without too much strain.
• With longer tenure, the monthly repayments are reduced.
• However, your number of monthly repayments increases. You need more time to repay the entire debt.
• The amount of interest you pay also increases because it takes longer to pay off the debt.

Prior to taking a personal loan and selecting a tenure, you need to think through some personal factors that can make a deal great for you.  Remember that a loan with terms that you are happy and comfortable with. It should not strain you too much financially.

Here are some tips that will help you make the best choice for your current financial situation.

Consider your monthly budget – You will have to review your current budget and write down your fixed and variable commitments. Be sure to put aside some money for miscellaneous expenses as well, so that when something unexpected crops up, you will have the finances to deal with it. Now check the money already assigned to expenses against what is left over and see how much you have to spare. The personal loan tenure you select should offer you a monthly repayment amount that fits well within that budget. You don’t want to give yourself additional financial pressure at the end of every month.

Review any financial prospects you may have in the future – In the event that as a salaried employee you are due for a raise soon, you can factor that in as an increase in disposable income. This means that you can accommodate higher monthly repayments. By putting this extra income to loan repayment, you will be paying off your loan in less time, and will reduce the amount of money you pay overall in interest. It is important to note that until you actually receive the pay raise, you will have increased financial burden, but when the raise comes, everything will be smooth.

Existing liabilities – Don’t let the excitement of taking the loan cause you to forget your other liabilities. Existing liabilities can include study loans, tuition fees, credit card payments, rent, the car note and more. Also consider that in Singapore your DBR should remain under 60% and these liabilities will have already eaten up some of that allowance. The personal loan tenure you opt for needs to take these into account and balance your obligations out so that you are not struggling from month to month. Using a spreadsheet to note everything can help you keep an eye on the bigger picture even as you plan for your personal loan.

Do the math – It is a good idea to do the math prior to signing up for the loan. Understand what this loan will cost you in terms of interest rate and other fees. Calculating how much you will pay in interest based on the tenure you select is especially important. Of course, longer tenure equals more interest, but by how much? That is the question you want to answer.

Calculate your EMI – Most lenders have tools on their website that you can use to get a rough idea of what taking the loan will mean for your finances. Using an EMI calculator will help you check on how much you will be making in monthly repayments. A good calculator will also show you how the various charges are broken up so that you understand where the costs are coming from. Use these tools to carry out a comparison of loan offers and various tenures so that you find the one that works perfectly for you.

Personal loans are readily available, but that does not mean that you use them carelessly. Always look for the best deals in the list of licensed moneylenders and ensure that you have good financial discipline so that you do not affect your credit score in the future by biting off more than you can chew.