The Singaporean government has consistently acknowledged the importance of safeguarding the interests of both borrowers and moneylenders. These protections and rights for individuals and groups are succinctly outlined in a legal document known as the Moneylenders Act.

This document serves as a comprehensive guide to how the moneylending industry should operate. It delineates the specific guidelines regarding the collection, utilization, and disclosure of borrower information and data by moneylenders.

Familiarity with this document is of paramount importance for both moneylenders and borrowers in Singapore. It ensures that they remain vigilant against potential scams and fraudulent schemes that could result in financial losses.

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How to Determine if a Moneylender Is Licensed?

The moneylending sector has witnessed significant growth over the years, with numerous legal and illegal moneylenders operating in Singapore today. Consequently, borrowers must exercise extreme caution when selecting a trustworthy company to engage with. Consequently, borrowers often search online for terms like "licensed money lenders in Singapore" or "licensed money lenders Singapore."

A straightforward method to identify reputable and licensed money lenders in Singapore is to consult the official list of authorized moneylenders registered in Singapore, which is periodically released by the Ministry of Law. The most recent update of this list was made in August 2021, and the Ministry of Law consistently maintains an up-to-date version for the benefit of borrowers. You can easily access the latest version of this list on the Ministry of Law's website.

Regardless of their licensed status, exercise caution when dealing with a moneylender if they exhibit the following concerning behaviours:

• Employ abusive language or engage in threatening conduct towards you.
• Request your SingPass user ID and/or password.
• Keep hold of your personal identification documents like your NRIC card, driver's license, passport, work permit, employment pass, or ATM card.
• Request your signature on a blank or incomplete loan agreement (Note of Contract).
• Provide a loan without furnishing you with a copy of the loan agreement (Note of Contract) or failing to adequately explain all the associated terms and conditions.
• Approve a loan without conducting proper due diligence, such as sanctioning a loan via phone, SMS, or email before receiving your loan application form and supporting documents, such as income tax assessments and payslips.
• Retain any portion of your principal loan amount without a valid reason.

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How Much Can You Borrow?

The amount you can obtain from a moneylender is contingent upon several factors. In the case of secured loans, there are no prescribed limits; you can secure any amount of loan provided the moneylender is willing to grant it.

On the other hand, for unsecured loans, borrowers fall into distinct categories. For Singaporean citizens and permanent residents with an annual income below $20,000, the maximum borrowing limit from all moneylenders combined is capped at $3,000. However, if your annual income exceeds $20,000, you have the flexibility to borrow up to six times your monthly income from all moneylenders combined.

Foreign nationals residing in Singapore have a different set of borrowing limits. Those with an annual income below $10,000 are restricted to borrowing a maximum of $1,500. Those earning between $10,000 and $20,000 annually can access loans of up to $30,000. For individuals with an annual income exceeding $20,000, the borrowing limit is set at six times their monthly income. Below is a comprehensive breakdown of the established loan caps:

What are the interest rates that moneylenders can charge?

Starting from October 1, 2015, moneylenders are restricted to charging a maximum interest rate of 4% per month. This interest rate limit applies universally, regardless of the borrower's income level or whether the loan is secured or unsecured. If a borrower fails to repay the loan on time, the highest rate of late interest that a moneylender can impose is 4% per month for each month that the loan remains unpaid.

The calculation of interest applied to the loan should be based on the remaining principal amount, which is determined after deducting the total payments made by or on behalf of the borrower allocated to the principal. To provide an example, if an individual, referred to as X, borrows $10,000 and has repaid $4,000, only the remaining $6,000 can be considered for interest calculations.

Late interest can only be charged on the portion of the loan that is overdue. Moneylenders cannot impose charges on amounts that are outstanding but not yet due for repayment. To illustrate, if X borrows $10,000 and fails to pay the initial installment of $2,000, the moneylender may charge late interest on the $2,000 but not on the remaining $8,000, as it is not yet due.

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What fees can moneylenders levy?

Starting from October 1, 2015, moneylenders are authorized to impose only the following charges and expenses:

• A fee that does not exceed $60 for each month of delayed repayment.
• A fee that does not exceed 10% of the principal amount of the loan at the time of its approval.
• Legal expenses ordered by the court in the event of a successful claim by the moneylender for loan recovery.

The cumulative charges imposed by a moneylender on any loan, including interest, late interest, upfront administrative fees, and late fees, cannot surpass an amount equivalent to the principal of the loan. To provide an illustration, if X obtains a loan of $10,000, the total charges, which include interest, late interest, a 10% administrative fee, and monthly $60 late fees, cannot exceed $10,000.

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Requirement for all loans

Before granting you a loan, a licensed moneylender must:

1. Explain the terms of your loan to you in a language you understand
2. Give you a signed copy of the loan contract which includes the terms in writing
3. Give you a separate cautionary statement in writing

For any existing loan, licensed moneylenders must:

1. Issue you a receipt for every repayment made towards the loan
2. Provide you a statement of accounts once every half year in July or January

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What happens if you are unable to repay your loan?

Consider initiating discussions to revise the repayment schedule if you encounter difficulties in meeting your loan obligations. When faced with such challenges, it's advisable to get in touch with your moneylender to explore potential solutions.

You can propose to renegotiate the repayment schedule, which may involve extending the duration of the loan. This adjustment will result in reduced monthly repayment amounts, easing the burden of meeting your debt commitments. However, it's essential to recognize that this extension will also prolong the period of indebtedness, potentially impacting your other financial plans. Additionally, the overall interest amount you will need to repay will increase over the extended term.

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Know what moneylenders can and cannot do to collect their debts:

Although authorized moneylenders possess the legal capacity to recover loans, they are subject to stringent regulations that explicitly prohibit licensed moneylenders from engaging in harassing tactics.

If you are experiencing coercion, threats, or aggressive behavior from your moneylender, you have recourse to address the situation. You can choose to report the issue to the police or file a complaint with the Ministry of Law, CAS (Consumer Association of Singapore), or relevant social service agencies.

Conclusion

In conclusion, the Moneylenders Act in Singapore serves as a vital protective shield for borrowers like yourself. The government has established a robust legal framework to ensure your financial well-being. It is imperative that you exclusively engage with licensed moneylenders for your financial requirements.

It's essential to exercise caution and disregard loan offers that come through unsolicited channels such as SMS messages, phone calls, or flyers. Under the Moneylenders Act Singapore, there are strict limitations on how moneylenders can advertise their services, which include:

• Business or consumer directories (print or online).
• Their official websites.
• Advertisements displayed at their business premises.
• Any loan offers received through flyers, SMS messages, emails, or unsolicited phone calls are highly likely to originate from unlicensed moneylenders, even if they attempt to portray themselves as legitimate. Therefore, it is advisable to ignore such unsolicited moneylending advertisements.

For further protection and to contribute to maintaining a safe lending environment, consider reporting these advertisements by contacting 1800 2255 529 or utilizing the feedback form available on the Ministry of Law's website. Your vigilance can help ensure the integrity of the lending industry and safeguard borrowers from potential risks.

Lendingpot is an online loan aggregator for legal licensed moneylenders in Singapore. We are dedicated to addressing your financial requirements with a strong emphasis on ethical and professional conduct. Apply now to compare across moneylenders for the lowest interest rate.