How To Settle Debt With A Licensed Money Lender And Where To Get Help When Required

Written by Shannon Wong on September 12, 2022

If you’re struggling to repay your debts, know that you’re not alone.

With the rising cost of living, chances are you’ll need some extra cash on hand, especially in times of emergencies.

No matter how much you’ve saved, there are instances when you need extra help.

Fortunately, there are many options for Singaporeans available such as financial institutions or money lenders.

In this guide, you’ll learn everything you need to know about how to settle a licensed money lender in Singapore and where to get help with your debt when required.

What Are Licensed Money Lenders?

First things first, who are licensed money lenders?

A licensed money lender in Singapore is a lender that is legally approved to provide you with a loan.

These money lenders are regulated by the Ministry of Law (MinLaw). They provide loans to Singapore citizens, permanent residents, and foreigners with valid employment passes.

Licensed money lenders have a moneylending license and won’t use harassment methods to collect their payments.

As such, legal money lenders are a good option when looking for a quick loan with a less strict application process.

However, it’s important to differentiate them from illegal money lenders, also known as loan sharks, which work outside of Singapore’s regulations and laws.

Illegal money lenders pretend to be legitimate lenders and prey on desperate victims whom they later harass. They may even repossess collateral.

On the other hand, licensed money lenders follow guidelines and regulations.

These include the maximum amount borrowers can take depending on their income, the maximum interest rate they are allowed to charge, minimum age requirement, and any other extra fees.

The approval processes of licensed money lenders are often faster and are less strict compared to traditional financial institutions such as banks.

What Types Of Loans Can You Borrow From A Licensed Money Lender?

There are two different types of loans available from legal money lenders in Singapore – secured and unsecured loans.

As the name suggests, a secure loan implies that the loan is covered by collateral such as a property or vehicle.

If you fail to repay your loan, the money lender can seize your collateral to repay the debt.

Unsecured loans refer to loans that are not secured by any collateral and are the most popular among Singaporeans.

This is due to their ease of application and quick approval process. Let’s look at some examples of other loan types.

Payday Loans

Such loans are spread out over a month, meaning you have at least 30 days to repay the loan between the loan collection and repayment dates.

Usually, the repayment includes the interest on the loan. You can get up to six times your salary with a payday loan.

Personal Loans

A personal loan is a short-term loan that you can get from legal money lenders or banks. It’s pretty flexible and can be used to meet various types of needs.

However, it’s not always advisable to take many personal loans as doing so can make the loan more expensive than other credit sources because of their higher interest rates.

Personal loans have a repayment period of up to a year. They are paid with regular monthly payments.

Most personal loans available are unsecured loans that do not require any collateral or security to cover the loan.

It’s wise to take a personal loan from a legal money lender instead of a bank due to the latter’s fairly stringent requirements, and lengthy approval time.

A personal loan is often used to cover major one-time expenses such as hefty medical bills and automobile purchases.

Bridging Loans

A bridging loan is a short-term personal loan that “bridges” the financial gap between the sale of your previous home and the purchase of your new one.

This loan is designed to help borrowers get by until they receive the proceeds from the sale of their old homes. It allows them to make the required downpayments on their new home.

Home Renovation Loans

Legal money lenders in Singapore have more flexible renovation loans compared to banks.

For instance, some money lenders allow borrowers to buy electrical appliances and furniture with a renovation loan, which is not allowed by banks.

Wedding Loans

A wedding loan can be used to cover wedding-related costs. You can borrow up to six times your monthly salary.

Foreigner Loans

Depending on your income, a typical foreigner loan can range between $300 and six times your monthly salary.

Business Loans

The amount and tenure of a business loan depends and varies on a case-by-case basis.

Other types of loans include:

  • Debt consolidation loans
  • Study loans
  • Medical loans

Pros And Cons Of Borrowing From A Licensed Money Lender

It goes without saying that borrowing from a legal money lender has its advantages and disadvantages.

If you’re worried about how to settle a licensed money lender, here are the pros and cons of getting a loan from an authorised money lender in Singapore to help you make an informed decision.


  • Easy and fast access to funds
  • Flexible repayment plans to match your monthly income
  • The application process is quick and easy
  • Access to loans even with a bad credit rating
  • Most legal money lenders offer borrowers debt consolidation plans to help them restructure their loans when they have financial constraints
  • You can use the loan for any purpose


  • Loans come with a high monthly interest rate of up to 4%
  • The loans have a shorter repayment period with a term of up to 12 months, and may limit your monthly budget and income
  • The amount available depends on the borrower’s annual salary – so if your salary is low, the amount available might not be enough to meet your urgent needs
  • Failure to make monthly payments results in late payment penalties
  • Late repayments affect your credit score, and compromise your chances of getting another loan in the future
  • Frequent and small borrowings can get you into a cycle of debt

How Are You Protected By The Law When Borrowing From A Licensed Money Lender?

Are you protected by the law when borrowing from a licensed money lender? The simple answer is yes.

The Moneylenders Act and Regulations consists of a set of money lender rules put in place by the Singapore government to protect borrowers from predatory lending practices.

The Act specifies that no individual or business can operate any form of moneylending without first acquiring a valid moneylending license.

This rule requires a moneylending license for each branch of the money lender that operates loan activities.

The Act is the fundamental part of legislation governing licensed money lenders in Singapore. It aims to protect borrowers from illegal and unscrupulous lenders.

It states the processes that every money lender must follow, as well as the interest rates, and fees that can be charged.

Before providing a loan or entering into a loan agreement with a borrower, a licensed lender must take the required precautions to ensure that the borrower can actually repay the loan –whether secured or unsecured.

Legal money lenders have to explain their terms and conditions of the loan contract. The interest they are allowed to charge is capped at 4%.

They are also not allowed to advertise except in business directories, their websites and offices, nor intimidate or harass borrowers.

What If You Are Unable To Pay Back The Loan?

In the event that you don’t know how to settle a licensed money lender because you are unable to pay for monthly installments, talk to your lender about it.

Try to negotiate for an extension of the loan period, or opt for a refinancing plan with the money lender.

However, this comes at an extra cost. To avoid late repayment penalties, it’s advisable to make repayment before the next loan installment is due in the case of a term loan.

However, if you are unable to repay a loan amount of at least $15,000, you can file for bankruptcy. Once you do so, the money lender cannot take legal action against you.

However, doing so has serious implications, as your assets and property can be liquidated to settle your loan obligations.

Therefore, it should only be considered as a last resort.

What Happens If You Default On The Loan?

As previously mentioned, defaulting on a loan will negatively affect your credit score and rating, which will make it harder for you to get approved for a future loan.

Although a legal money lender doesn’t always look at your credit score, every loan application has to go through the Moneylenders Credit Bureau (MLCB).

This bureau gives information about your delinquent loans, borrowing limit, and repayment history with other authorised money lenders.

Moreover, the loan contract signed with a legal money lender in Singapore is legally binding, meaning the money lender can sue you in a court of law.

If you take a secured loan with a legal money lender and can’t repay your loan, you can lose your collateral such as your property or automobile.

If you took a secured loan, the money lender has the right to repossess your collateral to recover its money.

How Credit Counselling Singapore Can Help

When you can’t settle a licensed money lender in Singapore or bank loan, you can get help from Credit Counselling Singapore (CCS).

CCS can help you develop a debt restructuring plan. Previously, CCS only helped customers with bank loans and credit card debt.

That has now changed. The institution now helps borrowers who have debts with banks and authorised money lenders

To get CCS support, you have to first attend a mandatory Debt Management Info Talk.

CSS will give borrowers a monthly payment plan that comes with a fixed interest rate that can be extended from five to 10 years if the organisation deems a borrower to be a good fit for the plan after the counselling session.

The right period is determined by a borrower’s expenses and income. However, if you fail to honour your repayment scheme’s monthly payment plan, the lenders or creditors can pursue legal action against you.

Your repayment plan will also be cancelled, after which your Official Assignee will give you a Certificate of Failure.

Other Ways To Get Help

You can also seek help from various social service institutions that can help you negotiate for a money lender debt repayment plan.

They can also provide other services such as support group therapy and addiction counselling.

You can sell your assets or property to repay your outstanding loans. Or you can ask a friend or relative for an interest-free loan to repay your debts.

But more importantly, if you encounter a situation where you’re totally unable to repay your loan with an authorised money lender, contact it as soon as you can.

Explain your financial predicament and work out a repayment plan that can work for you.

A money lender is likely to help you repay the loan, so don’t be afraid to reach out to your lender for help.

There Are Many Ways To Settle A Licensed Money Lender

There are several ways of repaying your debts. The ideal option will depend on your personal needs and situation.

If you’re having a hard time making multiple monthly repayments, it’s advisable to consolidate your debts into a new loan to help you reduce the interest payments you make, saving you money in the long run.

However, make sure you understand the terms and conditions of the new loan before you consolidate your loans, as it can worsen your financial situation if you’re not careful.

1AP Capital can help you, as we are one of the best money lenders in Singapore. We offer loan packages tailored to your income and with the best interest rates in the market.

With our repayment period, you will have ample time to organise your finances. Regardless of your financial situation, we’ll make sure you attain your financial goals and dreams.

Contact us today or apply for a loan now.

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