How To Identify Between Licensed And Unlicensed Moneylenders

Many Singaporeans do consider borrowing money from friends and family. It is a great solution when your family or friends will offer you the cash you need. When not, you will need help from a legal moneylender.

In order to avoid falling prey to a loan shark, it’s a good idea to look at these tips. It’ll help you determine if the moneylender is trustworthy and legal or not.

Types of Fees Acceptable

According to the Singapore law on money lending. The types of fees chargeable by legal moneylenders are three. These fees are charged additionally to the set interests. This also has a cap for all moneylenders in Singapore. These costs include the legal fees, upfront service charges, and late payment fees.

Loaned Amount Based on Your Income

The amount offered in loan depends on your salary. The licensed moneylenders do adhere to the regulation. The law regards the maximum amount based on the borrower’s yearly income.

However, when you encounter a moneylender who offers you a much higher amount. An amount that’s above the regular loan given by moneylenders for your salary bracket. It’s likely that this lender could be a loan shark.

Reasonable Interest Rates Charged

There are particular guidelines in Singapore. This regards to maximum interests that moneylenders can charge borrowers. It then means they can’t freely impose the rates and fees. This is because the Singapore Law does this.

Since 1st October 2015, legal lenders are expected to adhere. They can charge 4% a month interest rates to their borrowers. This rate is in addition to the primary amount. It is this reason that you need to ensure that you work with the legal lender. The moneylender needs to be reliable and legitimate. Thereafter you will need to confirm the interests and costs specified in the agreement.

On the other hand, loan sharks don’t restrain. Especially as regards to demanding over 4% interests from the customers. Actually, they might charge more than 40%. That will never be done by legal moneylenders.

When you find out that the rates charged are beyond maximum interests, that is as indicated by the law. It may be time to consider that you might be dealing with a loan shark.

Loan Contract Issued

A legal moneylender knows that the contract is legitimate. This means that the agreement is binding and is only legal. And that is once the loan contract has been signed by both parties.

For this reason, you should only accept a contract prepared by the lawyer. This loan contract should include details such as repayment tenure, rates of interest, repayment options and, late payment costs.



You need to be cautious of lenders who hand you loan money. They do so without giving you with a loan contract. This also includes lenders who ask customers to sign an incomplete contract. They might even give them blank agreements to sign. These are some classic examples of who a loan shark lender is.

Avoid loan sharks and illegal moneylenders at all cost as they will bring you nothing but troubles and harassment. If you are unsure whether you are dealing with someone illegal, you can always check with the Registry of Moneylenders.