In today’s dynamic financial environment, borrowing from money lenders has become commonplace for those seeking quick access to funds. Whether considering the reliability of a private money lender in Singapore or contemplating unlicensed alternatives, the primary focus should be on ensuring the safety of your financial transaction.
In this article, we’ll explore the differences between licensed and unlicensed lenders, how much you can borrow from a money lender and how to suss out safe money lenders. To give you a leg up, we’ll provide essential post-loan steps, guiding you through the landscape of responsible borrowing.
Differences between licensed and unlicensed money lenders
The primary difference between licensed and unlicensed money lenders is their legal status. Licensed lenders, having undergone proper registration with the Ministry of Law (MinLaw) and are publicly listed on the MinLaw website, conduct their operations in compliance with the law.
On the contrary, unlicensed money lenders, commonly referred to as ‘Ah Long’ or loan sharks, operate illegally and are not part of this listing.
Opting for safe money lenders ensures a borrowing experience that is both efficient and secure. The table below provides a detailed comparison between the two options.
| Licensed Lenders | Unlicensed Lenders | |
| Loan Amount | Unsecured Loans: Up to 6 times annual income provided you earn at least $20,000 per year
Secured Loans: No cap |
May promise unlimited loan amounts without considering your financial capacity for repayment |
| Interest Rates and Additional Fees |
|
|
| Upfront Payment | None | They may charge an upfront payment to ‘secure’ your loan |
| Face-to-Face Verification | Yes. You are required to head down to the money lender’s physical office for a verification prior to loan approval | They will avoid face-to-face verifications and will communicate solely online or via messages |
| Documents Required | You are required to provide your identity card, salary statements, etc
Note: Licensed lenders will never ask for passwords to your user accounts (e.g. Singpass, Internet Banking, etc) |
They usually ask for your Singpass ID and passwords to retrieve your information on their own to avoid leaving any trace |
| Loan Contract | Before you sign, a comprehensive loan contract with all the terms and conditions will be given to you and explained in a language you understand
Note: The contract signing must be conducted in the lender’s registered office |
Will grant you a loan without a copy of the contract, or ask you to sign a blank or an incomplete contract without explaining the terms and conditions of the loan
Contract signing could be done online, or in public, but not at their place of operation |
| Advertising Channels | Licensed lenders are only permitted to advertise through the following channels:
|
They make use of SMSes, flyers, emails, social media channels, WhatsApp and Telegram chats to solicit loans |
How much can I borrow from a money lender?
How much you can borrow from a licensed money lender depends on various factors, including your income, nationality, and existing debts. For unsecured loans, the limit is 6 times your annual income if you earn at least $20,000. Note that the limit applies across all licensed lenders. As for secured loans, there is no fixed cap..
What’s the maximum amount I can borrow from a money lender?
Take note that lenders will assess your ability to repay, check your credit history through the MLCB Loan Information Report, and make a note on how much you’ve already borrowed from other money lenders, if any, at the time of your loan application with the lender.
This is why the actual amount that you can borrow from a money lender might not be 6 times your annual income even if your annual salary qualifies
Licensed lenders do offer loans for bad credit, so folks with a bad credit history can still get the loan they need. Just so you know, timely repayments help to improve credit scores over time, enabling you to enjoy higher loan amounts at lower interest rates in the future.
Is it safe to borrow from licensed money lenders?
In general, borrowing from licensed money lenders is safe, but conducting thorough research is crucial. You’ll need to do your research and suss out safe money lenders who have a proven track record.
Explore various lenders, compare loan quotes, verify the legitimacy of the lender, and read reviews from anyone who has taken a loan from a licensed money lender.
While a licensed money lender is safe to borrow from, you must stay vigilant against scammers and unlicensed money lenders posing as legitimate entities to deceive victims into taking loans.
What are the important steps to consider after taking a loan?
Anyone who has taken a loan from a licensed money lender should do the following:
- Verify the principal amount received
- Pay instalments on time to avoid late fees and interest
- Obtain a receipt for every repayment and check for accuracy
- Receive a statement of account every January and July, verifying its correctness (e.g. name, amount, date of payment)
- Retain all statements and receipts as evidence of payment
What happens if I can’t repay?
Unforeseen circumstances may arise, and you might find that you can’t repay your loans on time. If that happens, don’t worry, communicate with your lender immediately to negotiate a payment extension or a more feasible repayment plan.
Ignoring the issue won’t make it disappear and may lead to additional fees and legal consequences. Anyone who has taken a loan from a licensed money lender knows that established, reputable lenders are flexible, easy to work with, and always willing to work out a reasonable repayment plan if you approach them transparently.
Bottom line
Now that the question “how much can I borrow from a money lender” has been answered and clearly explained above, be sure to only borrow what you need and can repay.
Ensure prompt repayment as much as possible. Make paying down your debts your priority if and when you do take out a loan, no matter how much you’re borrowing from your money lender.
Choosing licensed lenders for loans can provide a secure financial transaction experience if you opt for a safe, highly reviewed lender like 96bm Credit. Always remember, a well-informed borrower is a financially empowered one. Need an easy loan solution soonest? Apply for a loan now in a matter of minutes!
