FAQs on Borrowing From Licensed Moneylenders

FAQs on Borrowing from Licensed Moneylenders

1. What should I consider before taking up a loan?
You should keep these key points in mind:

Before approaching a moneylender, consider other alternatives, such as the various financial assistance schemes offered by various Government agencies. You may contact the agencies to find out more about their schemes.
You are legally obliged to fulfil any loan contract you enter into with a licensed moneylender.
Consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations. Borrow only what you need and are able to repay. Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family.
The law requires moneylenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract. Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable.
Consider carefully before agreeing to any contractual term which allows a moneylender to lodge a caveat on the sale proceeds of your real estate property upon default of the loan repayment. When a caveat is lodged against your property, you will not be able to sell it without first repaying the moneylender in full. If the repayment is taken from the net proceeds from the sale of the property, it can wipe out all or a substantial portion of the proceeds.
You should shop around different moneylenders for the most favourable terms. You should not rush into and commit yourself to a loan until you are satisfied with the terms and conditions.

2. How much can I borrow?
For secured loans, you can obtain a loan of any amount.
For unsecured loans, please refer to the table below for the total maximum amount that you may borrow at any time across all moneylenders in Singapore:

Borrower’s annual income	Singapore Citizens and Permanent Residents	Foreigners residing in Singapore
Less than $10,000	$3,000	$500
At least $10,000 and less than $20,000	$3,000	$3,000
At least $20,000	6 times monthly income	6 times monthly income

3. What are the interest rates moneylenders can charge?
With effect from 1 October 2015, the maximum interest rate moneylenders can charge is 4% per month. This cap applies regardless of the borrower’s income and whether the loan is an unsecured or secured one. If a borrower fails to repay the loan on time, the maximum rate of late interest a moneylender can charge is 4% per month for each month the loan is repaid late.

The computation of interest charged on the loan must be based on the amount of principal remaining after deducting from the original principal the total payments made by or on behalf of the borrower which are appropriated to principal. [To illustrate, if X takes a loan of $10,000, and X has repaid $4,000, only the remaining $6,000 can be taken into account for the computation of interest.]

The late interest can only be charged on an amount that is repaid late. The moneylender cannot charge on amounts that are outstanding but not yet due to be repaid. [To illustrate, if X takes a loan of $10,000, and fails to pay for the first instalment of $2,000, the moneylender may charge the late interest on $2,000 but not on the remaining $8,000 as it is not due yet.]

4. What are the fees that moneylenders can charge?
With effect from 1 October 2015, all moneylenders are only permitted to impose the following charges and expenses:

a fee not exceeding $60 for each month of late repayment;
a fee not exceeding 10% of the principal of the loan when a loan is granted; and
legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

The total charges imposed by a moneylender on any loan, consisting of interest, late interest, upfront administrative and late fee also cannot exceed an amount equivalent to the principal of the loan. [To illustrate, if X takes a loan of $10,000, then the interest, late interest, 10% administrative fee and monthly $60 late fees cannot exceed $10,000.]

5. How do I know whether a moneylender is licensed or not?
Do not borrow from unlicensed moneylenders. Verify that a moneylender is licensed by checking the list of licensed moneylenders. Click here to access the list of licensed moneylenders.

Notwithstanding that the moneylenders are licensed, be mindful if they:

Use abusive language, or behave in a threatening manner towards you.
Ask for your SingPass user ID and/or password.
Retain your NRIC card or any other personal ID documents (e.g. driver’s licence, passport, work permit, employment pass or ATM card).
Ask you to sign on a blank or incomplete Note of Contract for the loan.
Grant you a loan without giving you a copy of the Note of contract for the loan and/or without properly explaining to you all the terms and conditions.
Grant you a loan without exercising due diligence (e.g. approving a loan over the phone, SMS or email before even receiving your loan application form and supporting documents, such as the income tax assessment and payslips).
Withhold any part of your principal loan amount for any reason.

Such practices are not acceptable. If you encounter them, you should report the moneylender to the Registry of Moneylenders, with information such as the moneylender’s business name, licence and contact numbers. Please see Question 10 for more details.

To find out more about unlicensed moneylenders, you may click on this link: Unlicensed Moneylending

6. How can I tell whether an advertisement is from a licensed moneylender or an unlicensed moneylender?
Under the Registrar’s Directions on Advertising & Marketing Activities of Licensed Moneylenders, which took effect on 1 November 2011, licensed moneylenders are permitted to advertise only through these three channels: (a) business or consumer directories (in print or online media); (b) websites belonging to the moneylender; and (c) advertisements placed within or on the exterior of the moneylender’s business premises. All other channels are prohibited.

In this regard, the advertising rules can help you differentiate between licensed and unlicensed moneylenders. If you receive flyers, SMSes, emails or other forms of advertisements which are not permitted under the rules, these would be from either licensed moneylenders operating in violation of the rules, or unlicensed moneylenders. Hence, you are advised not to respond to such advertisements. Instead, you should report the advertisements to the Registry at 1800-2255-529 (airtime charges may apply to calls made from mobile phones to ‘1800’ local toll-free numbers) or via Contact Us @ OneMinLaw. Errant licensed moneylenders will be investigated by the Registry and unlicensed moneylenders will be investigated by the Police.

7. Can I rely on the content of an advertisement to take up a loan from a moneylender?
You are advised to seek clarifications on specific terms of the loan contract before signing up with a licensed moneylender, and not to rely solely on the content of advertisements from the moneylender.

8. In the event that I am standing as a surety for a loan, what should I look out for?
You should ensure that:

You understand your responsibilities as a surety;
You receive a copy of the Note of Contract at the time that the loan is granted to the borrower;
The moneylender has explained the terms in the Note of Contract in a language that you understand; and
The moneylender does not keep your NRIC card or any other personal ID documents (e.g. driver’s licence, passport).
The moneylender does not acquire any information that contains passwords to your user accounts (e.g. Singpass account, Internet banking account, email account).

9. What should I do after being granted a loan?

Make sure the moneylender delivers to you the correct principal amount of the loan. The moneylender is only permitted an upfront deduction of a loan approval fee of up to 10% of the principal amount.
Pay the loan instalments on time to avoid incurring late payment fees and late interest.
Make sure the moneylender issues to you a receipt every time you make any repayment towards your loan, and check it for correctness (e.g. name, amount, date).
Make sure 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); and
You should retain all statement of accounts and receipts of payments, as documentation and evidence of payments.

10. How do I make a complaint about a moneylender?
If you wish to complain about a moneylender for any reason, including unfair practices, contract issues, or potential offences, you may lodge a report with the Registry of Moneylenders or contact the Registry at 1800-2255-529 (airtime charges may apply to calls made from mobile phones to ‘1800’ local toll-free numbers). When lodging a complaint, please keep in mind the following points:

(a) Provide all relevant documentary evidence to substantiate your complaint related to your loan transactions and circumstances of your dealings with the moneylender. Our officers may contact you for additional information or documents, or to schedule an interview.

(b) The Registry takes all complaints against moneylenders seriously and will investigate them thoroughly. Errant moneylenders will be taken to task.

(c) If a moneylender has engaged in an unfair practice towards you, you can pursue the matter through the Small Claims Tribunal or the Court under the Consumer Protection (Fair Trading) Act. The Court also has the power to set aside loan transactions that are exorbitant or substantially unfair.

(d) If a moneylender has harassed you during the debt collection process, please lodge a police report in addition to informing the Registry.

Rest assured that the Registry will not disclose your details to the licensed moneylender without your consent.

11. I am facing financial difficulties and unable to repay the licensed moneylenders. Can the Registry of Moneylenders help to negotiate with the licensed moneylenders?
The Registry of Moneylenders is not in a position to assist the borrower in restructuring his loans, as this is a private contractual matter between the licensed moneylender and the borrower.

You may wish to negotiate with the licensed moneylender(s) directly or through an intermediary (e.g. a lawyer or a social service agency), with a view to arriving at a mutually acceptable debt settlement arrangement.

If you need help to resolve your debt problems with licensed moneylenders, you may approach any of the following voluntary welfare organisations:

Adullam Life Counselling
Address: 315 Outram Road #15-02 Tan Boon Liat Building Singapore 169074
Tel no.: 9423 8832
E-mail: admin@adullam.org.sg
Association of Muslim Professionals (AMP)
Address: 1 Pasir Ris Drive 4 #05-11 Singapore 519457
Tel no.: 6416 3960
E-mail: corporate@amp.org.sg
Arise2Care Community Services
Address: No. 5 Harper Road #02-01A Singapore 369673
Tel no.: 6909 0628
Email: admin@arise2care.sg
Blessed Grace Social Services
Address: 16 Arumugam Road, #04-02B Block D, LTC Building Singapore 409961
Tel no.: 8428 6377
Email: billy.lee@blessedgrace.org
Credit Counselling Singapore*
Address: 51 Cuppage Road #07-06, Singapore 229469
Tel no.: 6225 5227 / 6338 2663
Email: enquiry@ccs.org.sg
One Hope Centre
Address: 8 New Industrial Road #04-04B LHK 3 Building Singapore 536200
Tel no.: 6547 1011
Email: help@onehopecentre.org
Silver Lining Community Services
Address: (East) 11 Playfair Road Singapore, (West) Jurong Spring CC, 8 Jurong West St 52 Singapore 649296
Tel no.: 6749 0400
E-mail: admin@silverlining.com.sg

*Credit Counselling Singapore only handles cases that also involve debts with banks.

Notes to Borrowers when obtaining loans from licensed moneylenders </b>

12. Are moneylenders allowed to collect payment from me at my place of residence or employment?

Licensed moneylenders can take reasonable steps to recover their debts as long as they do not infringe the law. Such steps may include contacting the borrower to ask for repayment and taking legal action to enforce the loan contract.

Approaching a debtor at his place of residence or employment to collect debts, while potentially embarrassing, does not necessarily constitute an offence. However, debt collectors cannot resort to vandalism, violence, or threatening words or behaviour, as such acts may infringe general criminal law. Whether or not a debt collection activity constitutes a criminal offence would depend on the facts of each case.

If there is any harassment, threat or violence involved in the course of debt recovery, you should lodge a police report, detailing your encounter(s) with them.

13. Can I ban a family member from taking loans from all moneylenders?

The Registry of Moneylenders is not in a position to compel licensed moneylenders to not grant loans to a person who is otherwise eligible to be granted a loan legally. It is primarily the business decision of the licensed moneylender to determine if the loan should be granted, the suitable loan quantum if the loan is to be granted and the terms of the loan contract, etc.

The most effective solution to financial/debt management is for individuals to spend within their means. If a person needs to borrow, he should do so responsibly and take into consideration his ability to service and pay off outstanding loans without default.

An individual may apply for self-exclusion via the Moneylenders Credit Bureau (“MLCB”). Once the self-exclusion is registered, licensed moneylenders are not allowed to grant any unsecured loan (except a debt consolidation loan) to that individual. The self-exclusion period lasts for either **1 or 2 years**¹ in which the individual is generally not allowed to withdraw from exclusion. On expiry of the minimum period, the self-exclusion remains in force until such time the individual withdraws from it.

The process is voluntary, and no individual may be excluded without his/ her consent.

¹ Singapore Citizens/PRs may choose a minimum period of either 1 or 2 years. Foreigners need to fulfil a default minimum period of 2 years.

14. What should I do if I receive SMS from moneylenders?

Licensed moneylenders are not allowed to advertise via SMS. Therefore, any SMS soliciting for loans, is either sent by a licensed moneylender in contravention of the advertising restrictions, or by an unlicensed moneylender.

Such unsolicited SMSes or calls from unknown sources which are related to loans or financial assistance are likely to be associated with unlicensed moneylending, which is a criminal offence. Do not respond to such advertisements.

If you receive such messages, please provide the information to Singapore Police Force through their online portal I-Witness or call the X-Ah Long hotline at 1800-924 5664.

If you suspect the SMS is sent by a licensed moneylender, you may write in to the Registry of Moneylenders via our Contact Us @ OneMinLaw with a screenshot of the SMS you received.