How Much Can I Borrow From Licensed Money Lender?

Written by Shannon Wong on April 25, 2024

Key Takeaways

Borrowing from licensed money lenders in Singapore is regulated by strict guidelines to protect consumers. Individuals earning less than $10,000 annually can borrow up to $3,000, while those with higher incomes may borrow up to six times their monthly income. It’s crucial to understand loan terms, verify the lender’s license, and consider one’s repayment capacity before taking a loan to avoid financial strains. Licensed lenders provide clear contracts and capped fees, making them a safer alternative to unlicensed lenders.

There are many reasons why people would need to borrow money.

Perhaps you are in between jobs and your bills are starting to pile up, or perhaps you have a family emergency and need to cover some of the costs that are going to happen in the next few months.

Regardless of what your reason for borrowing money is, you must know how much you should be borrowing before you start looking at different lenders.

Find out more about how much you can borrow from licensed money lenders in this article.

What to Consider Before Taking Up A Loan

Before you take a loan, consider the following:

Decide On The Type Of Loan You Need

It’s important to evaluate your financial status and decide the kind of loan you need.

Consider how much you will need to cater to the emergency fully. Once you have decided on the type of loan you need, do research on the requirements and payment terms.

Check Your Credit Score And Eligibility

Most licensed money lenders will not approve credit if a borrower has a bad credit history.

You can buy your credit report from the Moneylenders Credit Bureau (MLCB) in Singapore. Check your credit status to ensure you are eligible for the loan you need.

If you have a poor credit history, try to improve it before applying for a loan. You also need to know how much you can access based on your income.

The table below shows the amount you can borrow from a licensed money lender depending on how much you earn yearly.

The annual income of the borrowerSingapore citizens and permanent residentsForeigners residing in Singapore
Less than $10,000$3,000$500
Between $10,000 to $20,000$3,000$3,000
Above $20,0006x the monthly income6x the monthly income

Prepare The Documents You Need Before You Visit A Licensed Money Lender

Once you have done enough research and settled on the type of loan you want, it’s time to visit your preferred money lender.

Before you visit the lender, make sure you have all the documents you need. These include:

  • Documents such as payslips to show proof of income
  • Your NRIC
  • Credit report
  • CPF statements
  • Proof of residency
  • Letters of employment, leases, and bank statements

Licensed money lenders approve loans mostly based on income rather than credit history. As such, they will require documents such as payslips to assess your financial health.

Consider Your Ability To Repay The Loan

Before you sign up for the loan, you need to consider if you can repay the loan. Bear in mind your income and financial obligations. As a borrower, you must abide by the contract terms once you sign the loan contract.

It’s important that you only borrow what you need and can pay back. Failure to pay back the loan will put more strain on your finances as you will incur additional interest and other charges.

Be very careful if you sign a contract that allows the money lender to lodge a caveat on the sale of your assets in the event of loan default.

When a caveat is lodged, the lender has the right to sell your property and recover their money in full.

Shop Around For The Best Money Lender

Make sure you shop around for the lender with the most favourable terms.

Although the interest rates and fees are capped by the Ministry of Law, look out for the lender with the best terms.

Before you sign up for the loan, make sure you are happy with the lending terms.

Difference Between Licensed And Unlicensed Money Lenders

Licensed money lenders follow the regulations set by the Ministry of Law, unlike unlicensed money lenders.

Here are the main differences between licensed and unlicensed money lenders:

The Loan’s Terms And Conditions

Licensed money lenders are required by law to offer the borrower a loan contract. They must ensure they can explain the terms and conditions to the borrower before they can take up the loan.

On the contrary, unlicensed lenders will not offer the lender a contract or explain their terms. They will send you PDF documents or SMSes with the terms of the loan, if at all.

Interest Rates And Fees

The Ministry of Law has set the interest rate per month at 4%.

In the event that a borrower defaults, licensed money lenders are allowed to charge only 4% interest on defaulted amounts. They should not charge more interest than the principal amounts.

Licensed money lenders are also allowed to charge the following fees:

  • Fees of no more than $60 per month if the borrower defaults
  • Administration costs and other costs that do not exceed 10% of the principal
  • Legal fees as directed by the court

Unlicensed money lenders may charge higher interest rates and even more interest when you default. They are very likely to include other costs as they are not regulated.


Licensed money lenders are allowed to advertise through these channels:

  • Business or consumer directories, either online or in print
  • Their websites
  • Advertisements placed within the premises of their offices

If you receive any type of advertisement from licensed money lenders, they are violating the law. This should be reported to the Registry of Moneylenders or Ministry of Law.

Unlicensed money lenders will use any means necessary to advertise their products.

Text messages, emails, flyers, and other forms of advertising will be sent to unsuspecting borrowers. If you receive a text message about a loan, you can bet the lender is unlicensed.

Loan Amount

When it comes to unsecured loans, the amount you can access from licensed money lenders is capped depending on your income.

If you are a Singapore citizen or a permanent resident earning $10,000 or below per year, you can borrow up to $3,000. Foreigners in this income range can borrow $500 from licensed lenders.

Anyone, including foreigners, earning an income of above $20,000 can get a loan of up to six times their monthly salary. For secured loans, you can get any amount.

On the contrary, unlicensed lenders will offer you the amount you need without assessing your ability to pay. There is no limit on how much the unlicensed lender is offering.

Moneylenders Act and Rules, Singapore

The Moneylenders’ Acts and Rules are aimed at protecting both the borrower and the lender. We have summarised the money lenders’ rules:

Maximum Interest Rate And Late Interest

As per the act, a licensed lender is allowed to charge a maximum interest of 4% per month. The interest should be computed based on the outstanding principal amount.

The maximum late interest a lender can charge is 4% per month on the outstanding amounts.


Below are the fees you can expect from a licensed lender:

  • The lender can charge a fee for late payment of principal or interest that should not exceed $60 per month
  • Fees should not exceed 10% of the principal amount
  • Legal fees incurred during the recovery of the loan

Lender’s Obligation To Inform The Borrower Of The Terms And Conditions

Before granting any loan, the licensed money lender must ensure the following borrower understands the following:

Interest Rate For The Loan

This refers to how the interest is computed. In this case, the interest is computed on the outstanding amount. As a borrower, ensure that you know:

  • Date when the principal and interest are due
  • Interest rate for late payment
  • Fees charged for late payment

Loan Application

The lender should not grant the borrower a loan until they complete an application form with the following information:

  • Borrower’s details, including date of birth, personal identification, nationality, and residential address
  • Income of the borrower for the last three months before making the loan application.

Difference Between Borrowing From Licensed Moneylender And Bank

Before you decide whether you want to borrow from a licensed lender or a bank, here are the main differences you can expect.


Licensed money lenders offer small loan amounts as compared to banks. They peg their loans on how much you earn. You can get up to $3,000 if you earn less than $10,000 per year from licensed money lenders.

On the other hand, you can get as much as $10,000 from banks even with a yearly income of $20,000. Banks can offer a longer repayment tenure as compared to licensed money lenders.

Credit History Check And Loan Offer Timelines

The main advantage of a licensed money lender is that they offer you the money you need instantly without much scrutiny of your credit history. This is unlike banks, which will do a hard check on your credit history.

Interest Rates

Banks offer a much lower interest rate as compared to licensed money lenders. If you opt to take the loan from a licensed lender, you will pay up to 30% interest per year.

How To Tell If A Money Ender Is Licensed

There is no denying licensed money lenders come in handy in times of crisis. Here is how to tell if a lender is licensed.

Licensed Money Lenders Will Explain The Terms Of Their Loan Contract

Before the licensed lender offers you the loan, they will explain the terms of the loan contract until you understand.

The Moneylenders Act requires that the lender explain the terms on offer in a way you can understand easily.

If the lender is unwilling to explain the terms you don’t understand, then they are probably illegal.

There Will Be A Contract To Sign Before They Offer You The Money

Licensed money lenders are required to carry out a verification of the borrower in person before they can offer the loan.

The contract must have clear terms on the interest rate per month, fees, loan tenure, and repayment dates.

Interest Rates And Fees

The Moneylender’s Act prohibits licensed lenders from charging an interest rate above 4% per month. Any lender who charges anything above 4% is unlicensed or flouting the rules.

Licensed lenders can only charge 4% per month for any outstanding defaulted amounts. Their administration and other fees should not exceed 10%.

However, licensed lenders are allowed to charge legal costs incurred when trying to recover their money.

Licensed Lenders Will Appear On The Registry Of Money Lenders

All the licensed money lenders are listed on the Ministry of Law’s website. The website is updated regularly.

Before you choose your preferred lender, make sure you check whether they appear on the list. Check their address, phone number and the license number from the Ministry of Law list.

If a preferred lender does not appear on the list and they are licensed, call the Ministry of Law officials to confirm.

Can I Borrow from Multiple Money Lenders?

Yes, you can borrow from several lenders. However, lenders are required to analyse your ability to pay before they can give you more loans. You must consider if you can repay multiple loans before you proceed.

Moreover, the Monetary Authority of Singapore has set a cap on how much a borrower should access. If your total debts are 12 times your salary, you are not allowed to take more unsecured loans.

Such measures prevent borrowers from overburdening themselves with debts.

What Is The Maximum Loan A Person Can Take?

The maximum amount of a loan one can take from a licensed lender depends on how much they earn, as explained in the table earlier.

There is no limit on secured loans as that depends on the collateral available, your ability to pay, and your needs.

What To Do Once The Loan Is Approved

Once the lender has approved your loan and you receive the principal amount, make sure the fees charged are correct.

Ensure the fees charged don’t exceed 10% of the principal. Keep the following documents for reference.

  • A copy of the loan contract
  • Receipts for every payment you make
  • Loan statements
  • Copies of other relevant documents

What Happens if I Can’t Pay Back the Loan?

When a borrower defaults on their payment, the lender may opt to hire debt collectors to help recover their money. In such a case, you can do the following:

Request For An Extension

Talk to your lender and negotiate for an extension. Consider visiting social services and seeking help with credit counselling and debt management agencies.

File For Bankruptcy

You can file for bankruptcy if your debts are more than $15,000 and you are unable to pay.

When a borrower files for bankruptcy, the lender stops charging interest and they can’t take any legal action.

Get an Unsecured Loan In Minutes

Licensed money lenders are a great option if you need to borrow money quickly and don’t have time to go through a bank.

However, you must work with the best money lender. This will help ensure that you get the most favourable loan terms.

With a little research, you can easily find a licensed money lender that will be able to help you get the money you need without putting your finances at risk.

1AP Capital is one of the most reliable licensed money lenders in Singapore. It offers instant loans with no hidden fees.

If you are looking for a loan that meets your needs, visit 1AP Capital for on-the-spot loan disbursement.

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