Identify What Sets A Legal And Illegal Moneylenders Apart

Most Singaporeans face the challenge of running out of cash occasionally. While some might run to family or friends for quick cash solutions, most people resort to consolidation loans in Singapore. Many borrowers face the challenge of distinguishing between licensed and unlicensed moneylenders. The Singapore government is the sole authority that can grant licenses to moneylenders and, therefore, all licensed moneylenders are legal moneylenders who abide by the rules and regulations set by the government.

Here are five things that can help you distinguish between licensed and unlicensed moneylenders in Singapore.

1. Clear and Understandable Terms and Conditions

A licensed money lender will take the time to explain their terms in easy to understand words. They will be willing to answer all of your questions without feeling bothered. However, if the lender only focuses on the contract and is not prepared to take you through their terms and conditions, you should beware. You don’t want to take a gamble with unlicensed moneylenders, so it is always best to opt for the next available licensed money lender.

2. Unsecured Limits

Licensed moneylenders operate under the Ministry of Law. Singapore’s laws and rules on moneylending stipulate the amount of money you are allowed to borrow, which is primarily based on your income. If you encounter a lender claiming to offer you an unsecured loan of any limit notwithstanding your income, then you might be dealing with an illegal, unlicensed money lender. The best way to deal with this situation is to walk away.

3. Market Rate

Another sure way of identifying an unlicensed debt consolidation loan lender is by looking at their interest rates. While the interest rates in other lending sectors keep fluctuating, the Singapore government sets the maximum interest rates that licensed moneylenders may charge. By law, the interest rates charged by licensed moneylenders in Singapore may not exceed 4% per month for personal loans and therefore, if you find a lender who charges anything more than that, you might be dealing with a loan shark.

4. Signature

A signature is an indication that you agree with all the terms and conditions of the moneylending institution. Any licensed money lender will require you to sign a contract in their approved office by Minlaw before lending you any money. Some of the things to look at in the agreement include the loan amount, repayment interval, interest, and late payment fees. If any of the four items is not indicated in the contract, then you have a reason to worry. Also, if they are ready to give you the loan before signing anything, then you are likely dealing with an unlicensed lender.

5. ID and Account Password

Your identity card is your item, and no one is allowed to retain it. If they must have your ID, it is for confirmation purposes. If anyone threatens to retain your ID, then you might be dealing with an unlicensed moneylender. Your account password is your secret, and under no circumstances should you give it out.


These are some of the unacceptable practices you should look out for to determine whether you are dealing with a licensed or unlicensed moneylender. The government of Singapore has provided laws and regulations to protect both parties, and that ensures that fairness prevails. Always be on the lookout so that you do not fall into the hands of loan sharks who have no interest in your welfare or success. All loan sharks are interested in is multiplying their money.

Leave a comment

Your email address will not be published. Required fields are marked *

error: Content is protected !!