Need a personal loan but banks have rejected your application? In that case, your best bet is obtaining from a money lender.

There’s no lack of moneylenders in Singapore who would readily hand out a cash loan to people who can’t manage to obtain one from the bank. With that said, money lenders charge a higher interest rate—and that’s understandable because they are giving you a loan when others have rejected—so you should approach them only as a last resort.

Additionally, you should always deal with a licensed moneylender and not loan sharks. There are many reasons why you should do this. Money lenders who are licensed have to follow certain rules and regulations, so you are more likely to receive a higher level of service from them. With them, you also know what is allowed and what is not. More important, in case the money lender indulges in an unfair practice or draws out an unfair contract, you can contact the Registry with Ministry of Law, who will take up the matter further.

On the other hand, Ah Longs are not governed by any written rule; they are their own king and can do pretty much what they want.

Now that you’ve learned why you must take a loan from licensed lender only, let’s take a look at the answers to a few most frequently asked question of borrowing money from licensed lenders in Singapore.

Q#1 – How much can I borrow?

If your annual income is less than $20,000, most money lenders will let you borrow up to $3,000.

If your annual income exceeds $20,000 but is lower than $30,000, most money lenders will let you borrow up to two times your monthly income.

If your annual income exceeds $30,000 but is lower than $120,000, most money lenders will let you borrow up to 4 times your monthly income.

You can borrow any amount in case you earn $120,000 or more for money lenders.

Q#2 – What interest rates are charged by money lenders?

The law requires money lenders to show their clients the E.I.R (which is known as Effective Interest Rate) before they grant them a loan. The new Interest Rate as per 1st October 2015 is capped at 4 percent per month. This cap applies to all regardless of the borrower’s income. 

Q#3 – Will the money lender give me a copy of the loan contract?

Money lenders are mandated by the law to not only give you a copy of the loan contract but also explain all the terms of the loan in a language that you understand.

Q#4 – How can I be sure that whether an advertisement is a moneylender who’s licensed?

Licensed lenders are allowed to advertise via three ways only: (1) their official website (2) consumer or business directories, and (3) advertisements displayed inside their official business building or placed on the exterior of such a building.

All other forms of advertising are prohibited to them. In case you receive any other form of ads, you can be sure that the money lender is either not licensed or breaching the advertising restrictions placed on legal money lenders Singapore.