Singapore continues to be an attractive hub for foreign workers. In mid-2023 the number of foreigners in Singapore stood at 1.77 million, including dependents and those who are students. According to the Ministry of Manpower, the number of foreigners with work passes in Singapore stood at slightly over 1.52 million towards the end of 2023, with about half being domestic, construction and shipyard workers.
If you’re a foreigner living in Singapore, you may be wondering if there are any financing facilities available to you. The answer is a resounding yes; both banks and money lenders have loans for foreigners. Today, we’ll be focusing on the latter, with a few options to consider should you find yourself in need of a loan.
In general, loans offered to foreigners in Singapore tend to have stricter requirements than those offered to Singaporean citizens or permanent residents (PRs). This includes quotas or higher minimum income to protect marginalised foreign workers.
For foreigners applying for a personal loan, the basic requirements often include:
Furthermore, when evaluating your loan application, your intention and ability to stay in the country for the duration of the loan is critical to the success of your loan application. Note, that while proof of residence is a key requirement, dormitories are usually not accepted. Lenders prefer tenancy agreements or proof of home ownership.
With regards to proof of employment, moneylenders usually require an employment letter as well as payslips. This is slightly different from banks where you’ll need to show a valid work permit, S pass or employment pass with at least one year validity at the point of application.
In addition, when moneylenders require proof of income, cash payments are not accepted, and only statements showing bank transfers are legitimately allowed.
The loan quantum for foreigners in Singapore differs slightly from that of citizens or PRs when it comes to unsecured loans. Secured loans, on the other hand, have no limit; you can obtain any amount depending on the value of your collateral. The following table summarises the unsecured loan limits for foreigners, based on annual income.
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For the average foreign wage earner, moneylenders may offer a higher loan cap, at 6X your monthly income, whereas banks generally offer up to 4X a borrower’s monthly income. Banks only offer up to 12X one’s monthly income if you earn more than $120,000 per year.
Private moneylenders do not have a minimum income requirement, unlike banks who require their lenders to have a minimum income of $30,000 per annum. However, moneylenders do have a quota system for foreigners with an annual income of less than $40,000.
Licensed Moneylenders in Singapore are required to follow a quota for foreign borrowers earning $40,000 and less per year. They are only allowed to onboard not more than 15 new foreign borrowers each month, and should not exceed 50 in a year. Additionally, including existing borrowers, each moneylender is not allowed to lend to more than 300 foreigners or extend more than $150,000 in existing loan principals at any given time.
As such, if you’re a foreigner earning $40,000 or less per year, you are advised to apply early in the year. Looking for a moneylender with quota openings can be difficult. You can consider applying at Lendingpot, which allows you to access multiple moneylenders via a single sign-up.
As a foreigner, it is important to borrow from a licensed money lender as this will minimise the risk of fraud and other untoward incidents. Singaporean money lenders are monitored by the Ministry of Law, and are subject to several regulations which are strictly enforced. Here’s how you know that a money lender in Singapore is authorised to conduct business:
The Ministry of Law keeps a register of licensed money lenders, and one of the first things you can do is to check the list for the lender in question. The money lenders’ physical addresses and websites are listed as well. It is important to note the lender’s legitimate website address as scammers have been known to create illegal websites mimicking those of legitimate businesses, with closely matching URLs as well.
As mentioned previously, Singaporean money lenders are subject to strict regulations. One of the conditions levied prevents them from advertising themselves openly, whether online or in traditional media. They are also not allowed to solicit for business via phone calls, text messages or social media posts. If you receive messages or calls from money lenders persuading you to conduct business with them, it is highly likely that you’ve encountered scammers.
A licensed and legitimate money lender will require you to be present at their approved office address in order to verify your identity face-to-face and sign any documents before releasing funds. Loan transactions done fully online or at locations other than the registered business address are strictly prohibited.
A common tactic of scammers is to request for a payment of ‘processing fees’ or ‘GST fees’ before your funds are released to you. It is safe to say, based on the advice of the Ministry of Law, that no legitimate lender will make such a request through calls or text messages.
Any fees chargeable will be made clear to you upon a face-to-face consultation with the lender, which should only take place at their registered office and nowhere else. Money lenders are allowed to charge a fee upon disbursement, capped at 10% of your loan principal. This however, will usually be deducted from your loan before being disbursed to you rather than as a mandatory cash payment before receiving your loan.
The types of fees and interest charged by licensed moneylenders are heavily regulated as well. This is to prevent borrowers from falling into the debt trap, as well as hinder abusive behaviour from lenders. As of October 2015, money lenders in Singapore are only allowed to charge a maximum interest rate of 4% per month, and is applied to both secured and unsecured loans, regardless of the borrower’s income. The following are other charges moneylenders are allowed to collect, with their mandated limits:
Singapore’s registered moneylenders offer financial services that are highly regulated by the Ministry of Law. Remember to always check that you’re dealing with licensed moneylenders before proceeding. Sign-up at Lendingpot today to enjoy access to more than 45 personal loan partners, consisting of both banks and private lenders. You will be able to compare loan terms from the various institutions, choosing the best deals for your current circumstances.
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