Licensed Moneylenders: What They Are And What to Consider Before Borrowing

Short on cash, too shy to borrow from friends, and rejected by the bank? You’re not out of options just yet.

Licensed moneylenders are like a shining beacon of hope in a sea of debt, but before you rush into applying for a loan, there are some key things you should know.

So, before you hit send on that awkwardly long text to your second cousin twice removed—asking him for coffee so you can subtly slip in a loan request—keep reading to learn how borrowing from a licensed moneylender could be the better option.

 

What are licensed moneylenders?

As their name suggests, the “licensed” part of licensed moneylenders means they operate under the Ministry of Law and must be registered with the Registry of Moneylenders to run their businesses. Most importantly, this registry helps distinguish legal moneylenders from illegal ones (also known as loan sharks, or more colloquially, ‘ah longs’).

Licensed moneylenders must also adhere to the Moneylenders Act and Rules, a set of regulations that dictate things like the maximum fees they can charge, the interest rates, and late payment charges.

 

Difference between licensed vs unlicensed moneylenders

According to the Moneylenders Credit Bureau, there are 4 key differences between licensed and unlicensed moneylenders that you should watch out for:

	Licensed moneylenders	Unlicensed moneylenders
Advertising channels	Approved channels (business/consumer directories, own website)	Text, phone calls, social media, flyers
Advertising method	Follow strict advertising rules set by the Ministry of Law	Engage in unsolicited advertising
Identity verification	Required to meet borrowers in person at business premises	May skip in-person verification
Business premise	Operate only at approved business premises	May operate online or at unregulated locations

Most importantly, if you’re unsure whether a moneylender is licensed, it’s best to refer to the Ministry of Law’s website and check the list of licensed moneylenders. As of 1 Feb 2025, there are 153 licensed moneylenders in Singapore. 

 

How to borrow money from licensed moneylenders?

Before you contact a licensed moneylender, you may want to do your homework and find the one that fits your loan requirements. For example, different moneylenders may offer different interest rates or loan tenure, so it’s best to find one that suits your needs.

Once you’re ready, you can call them to get a quote and submit your loan application. Most licensed moneylenders will require details such as:

• Full name
• Date of birth
• Proof of the total income
• Utilities bills
• Pay slips or income tax statements
• Amount of loan applied for

You’ll then need to attend a face-to-face meeting with the moneylender. The moneylender will provide you with the loan agreement, which you should carefully review before signing.

 

When should you go to a licensed moneylender?

Ask yourself the following questions before committing to borrowing from a licensed moneylender:

1. What is the loan amount that I need?

Licensed moneylenders are happy to lend you small loans that range from a few hundred to S$3,000. If you’re not in need of a large sum of money, and simply need a quick financial boost to cover unexpected expenses, a licensed moneylender can provide a convenient solution to suit your needs.

2. How urgently do I need the loan?

As mentioned, licensed moneylenders offer modest loan amounts, which allows for quick approval and disbursement, typically within 24 hours of application. This is great news for those facing an emergency, as the approval process is simpler and more accessible.

3. How much time do I need to repay the loan?

When it comes to repaying your loan, licensed moneylenders generally offer shorter yet more flexible tenures compared to banks. These can range from 6 to 24 months, so be sure you can repay the total amount (including interest) before taking out the loan.

In summary, licensed moneylenders offer quicker processing times and more relaxed borrowing criteria, but don’t expect to secure a large loan. For larger amounts, you may want to consider a personal loan from a bank. You can also click here to learn more about the differences between borrowing from a licensed moneylender and a bank.

 

7 things to know before borrowing from licensed moneylenders

If you’ve considered the questions above and decided to borrow from a licensed moneylender, make sure to look out for the following:

1. Ensure that the moneylender delivers to you the correct principal amount of the loan. The upfront deduction of the loan approval fee is capped at 10% of the principal amount.
2. Pay the loan instalments on time to avoid incurring late payment fees and extra late interest charges.
3. The moneylender has to issue you a receipt every time you make any repayment towards your loan. Check it for correctness (e.g. name, amount, date).
4. Check that you receive a statement of account for all your loan(s) at least once every January and July, and check it for correctness (e.g. name, amount, date).
5. Retain all statements of accounts and receipts of payments, as documentation and evidence of payments.
6. All moneylenders are permitted to impose a fee not exceeding S$60 for each month of late repayment.
7. All moneylenders are permitted to impose legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

Do note that your borrowing records with licensed moneylenders will be consolidated by the Moneylenders Credit Bureau. If you’ve lost track of the moneylenders you’ve visited or need to review your repayment history, you can obtain a copy of your loan information report for just S$0.50 here.

Most importantly, don’t bite off more than you can chew; manage your loans responsibly!

Found this article useful? Share it with your family and friends!