moneylenderact singapore

How Does the Moneylenders Act Singapore Protect Borrowers

Filife Team

    If you’re relocating to Singapore and need to borrow money, there are tons of licensed moneylenders in Singapore that can lend money to you and offer much-needed loan services. Better yet, so long as you turn to a licensed moneylender, you’ll be protected by the Moneylenders Act Singapore, too. Read more on our guide to taking a loan from a licensed money lender in Singapore.

    Regardless of whether you’re a foreigner living in the city-state or a Singapore Permanent Resident, licensed moneylenders can help. What’s more, there are tons of different types of financial products on the market, and most money-lenders will allow you to tailor the loan quantum, interest, tenure and more to suit your tastes.

    But before you get borrowing, it’s important to understand what the Moneylenders Act is and how it protects you. Enshrined in Singapore law in 2008, the Act regulates licensed moneylenders and helps you to avoid predatory loan sharks and unfair practices. But how? Let’s find out.

    What is the Moneylenders Act

    It was an Act that was passed in 2008 to regulate moneylenders in Singapore and prevent unfair working practices or fees. Under the Act, no person or company in Singapore can carry out the business of money lending unless they hold a moneylender’s license. The only exceptions to this rule are those with “excluded” or “exempt” moneylender status.

    In short, the Act Singapore helps you avoid scams and ensure you are protected against extortionate costs, harassment and excessive debts – so long as you avoid unlicensed moneylenders and always stick to licensed moneylenders when borrowing.

    Who is Allowed to Lend Money in Singapore

    Only licensed moneylenders and those with “excluded” or “exemption” status can, according to legislation, lend people money in Singapore. The Ministry of Law operates a frequently updated list of licensed moneylenders here – which you should always cross-reference with any lenders you find elsewhere.

    How the Act Protects Customers and Regulates Licensed Money Lenders

    The Act protects you as a borrower in several ways, such as:

    • You are prevented from taking on too much overall debt
    • Interest rates and costs are capped
    • Your borrowing limits are pegged to your income level
    • Late interest, late payments, admin, and other fees are also capped

    Licensed Money Lender Loan Features

    So long as you are using a licensed moneylender to get your loan, you’ll get to enjoy the protection of the Act, as follows:

    Loan Amount or Principal

    Moneylenders in Singapore are required to carry out a certain level of due diligence when you borrow cash. There are specific limits set on how much you are allowed to borrow – and these limits are pegged to your income level. For example, Singapore residents and foreigners earning $20,000 or more can borrow up to six times their monthly income, while those earning between $10,000 and $20,000 are restricted to a maximum principal of $3,000.

    Interest and Late Interest

    Licensed moneylenders can only charge interest of up to 4% per month on your total loan quantum. What’s more, late interest is capped at up to 4% of the loan principal amount per month for every month of late payment.

    Charges and Fees

    The maximum late payment fee licensed moneylenders can charge is $60. In addition, admin fees are capped at up to 10% of your total loan amount borrowed. What’s more, no lender that holds a license can charge you total fees and interest exceeding that total quantum amount. That said, lenders are allowed to charge legal costs ordered by a court for a successful claim by the moneylender for loan recovery.


    You may choose the loan tenure you desire at the point of creating your contract for the loan, but regulations are in place to ensure that moneylenders explain the terms and conditions to you in an easily understandable way. Don’t forget that longer tenures will typically incur more interest payments, and that no matter what, you’ll always be obligated to fulfil the terms of your contract for the loan.

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    How to Avoid Scams and Non Licensed Money Lenders

    Unlicensed moneylenders are everywhere, and you need to take care to avoid disreputable providers whenever you borrow money in the city-state. Here’s what you can do to avoid scams:

    1. Always Check for a License and PTE LTD Status

    Always use the Ministry of Law list of licensed moneylenders to double-check the legitimacy of any business or person you are considering borrowing from. Make sure they’ve been granted a license and remember that most reputable lenders will be PTE LTD companies.

    2. Ignore Loans Offers in SMS Messages, Fliers, and Unsolicited Calls

    These are the most common ways scammers target potential victims with their dodgy loans. The Act stipulates that licensed lenders can only advertise via business or consumer directories, their own websites or on their premises – so be wary of this.

    3. Ask For Your Note of Contract

    Legit lenders should provide you with a copy of the NoC for the loan taken out – and should never ask you to sign any blank documents. Trusted moneylenders should also properly explain to borrowers what loans involve in a full and clear way before any financial products are granted.

    If you think you may have encountered a loan shark or person offering unlicensed financial products or advice, you should report suspicious lenders to the Registry of Moneylenders. You should report the lender’s PTE LTD name, what products it is offering and its contact details by clicking here.

    Things to Consider when Choosing a Licensed Money Lender to Borrow From

    Here are a few things you should double-check or keep in mind when selecting an appropriate lender:

    • Make sure the lender is properly licensed
    • Double-check they are a recognised, PTE LTD Company
    • Read up on past customer reviews
    • Make sure you understand your obligations
    • Understand any legal costs you may incur in the event of a successful claim against you
    • Confirm what documentation you’ll need to provide to get your loan granted

    Frequently Asked Questions (FAQs) About the Moneylenders Act

    1. What Are Excluded Moneylenders?

    Excluded moneylenders include pawnbrokers acting lawfully under the Pawnbrokers Act, and credit agencies or societies operating under the Co-operative Services Act.

    2. What Are Exempted Moneylenders?

    Exempted moneylenders are those that have been granted an official exemption from the obligation to hold a license.

    3. Can a Licensed Moneylender be Called a Banker?

    Banks and moneylenders in Singapore are classed as different kinds of financial institutions. Borrowers should note that the laws we have explored in this article apply to money-lenders who are properly licensed and regulated.

    Final Word – Know the Moneylenders Act and Stay Safe When Borrowing

    Borrowers have tons of options when it comes to taking out loans in the city-state, but it’s crucial you stick to moneylenders that hold a reputable license to ensure you are properly protected. When choosing between moneylenders in Singapore, don’t forget to:

    • Check the Ministry of Law website here to ensure the lender you are dealing with holds the appropriate license.
    • Ensure your lender explains the products on offer to you clearly and carefully, ask for a copy of the loans NoC and never sign any blank documents.
    • Make sure you meet the annual income and other requirements loans demand, and never allow lenders to retain your NRIC card, personal ID, ATM card and account details for longer than necessary.
    • Get to know the Moneylenders Act, Pawnbrokers Act, and other relevant legislation so that you 100% understand your rights.

    Here at FiLife, we help borrowers, and savers get more out of their financial lives. Subscribe to our newsletter to stay updated on the latest financial tips!