Before taking any loan, it is important to understand how the lending landscape works in Singapore. Borrowers need to know their rights so they can stay safe, avoid scams, and make clear decisions. In Singapore, the Ministry of Law sets firm rules that outline what lenders can do, and only companies approved under the Moneylenders Act are recognised as licensed moneylenders in Singapore. These lenders must follow strict guidelines on conduct, fees, and transparency. The Registry of Moneylenders keeps a close watch on the industry, maintains the official list of approved lenders, and steps in when rules are broken.
Choosing a licensed lender protects borrowers from harassment, unfair charges, and unclear contracts. It also ensures that every loan comes with transparency and accountability. Fast Money works strictly within this regulated framework and is committed to offering transparent, accessible loans.
This guide will help readers stay informed, avoid illegal operators, and borrow with confidence.
What Licensed Moneylenders Can Legally Do:
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Conduct credit checks.
Licensed moneylenders can verify your identity, income, and credit history before approving a loan. These checks help confirm that the loan is affordable and prevent overborrowing. This applies to all loan types, including instant loans in Singapore.
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Charge regulated fees and interest rates.
They can charge interest and fees, but only within the strict limits set by the Ministry of Law. These caps apply to interest rates, late interest, late fees, and administrative fees. All charges must be explained clearly before any agreement is signed.
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Provide approved loan contracts.
Every licensed loan must come with a written contract. It should outline repayment schedules, charges, and borrower responsibilities in simple, clear terms. This is especially important in the case of personal loans in Singapore for foreigners as well as locals.
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Send reminders and demand letters.
Licensed moneylenders can contact you about missed payments in a professional and respectful manner. They may also send formal demand letters if the debt remains overdue. If needed, they can engage licensed debt collectors who follow legal guidelines.
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Take legal action for non-repayment.
When a borrower repeatedly fails to repay, a licensed moneylender can take the matter to the proper legal channels. This may involve filing a claim with the Small Claims Tribunals or starting court proceedings, depending on the size and nature of the debt. This legal route provides structure and fairness for both borrower and lender.
What Licensed Moneylenders Cannot Do:
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Use harassment or intimidation.
Even when payments are late, licensed moneylenders in Singapore are not allowed to threaten, abuse, or stalk borrowers. They cannot make excessive or late-night calls, and they are not permitted to show up at workplaces to shame or pressure anyone. All communication must stay professional and respectful.
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Vandalise homes or property.
Damaging a borrower’s home or belongings is a criminal offence in Singapore. No lender or debt collector is allowed to splash paint, deface property, or leave threatening messages. Such acts immediately fall under police investigation.
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Retain NRICs, bank cards, or personal documents.
Lenders cannot hold on to NRICs, ATM cards, passports, or any personal documents. Doing so violates PDPA rules and government regulations designed to protect consumer data. Borrowers must always keep their personal identification in their own possession.
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Charge unapproved or hidden fees.
Legal lenders cannot add extra costs that are not stated in the law. This means no “processing fees”, surprise service charges, or penalties outside the approved limits. All pricing must be clear and disclosed before you receive any funds, whether it is a standard loan or an instant loan in Singapore.
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Mislead borrowers through false advertising.
Lenders cannot advertise guaranteed approvals, fake promotions, or pretend to represent government agencies. They are also barred from sending marketing messages through SMS or WhatsApp, which are illegal advertising channels for moneylenders. All promotions must be honest, traceable, and compliant with Ministry of Law guidelines.
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Operate without a license or outside permitted business hours.
Only legal moneylenders in Singapore with an active license are allowed to conduct lending activities. They must meet borrowers in person at their approved office and cannot solicit door-to-door. Lending outside permitted business hours or from unapproved locations is strictly prohibited.
What Borrowers Should Do If They Encounter Illegal Practices:
Stay calm and do not argue on the spot.
Try not to react emotionally or get into a confrontation. Your priority is to stay safe and gather information.
Stop all in-person contact if you feel unsafe.
If the lender or debt collector shows up at your home or workplace and behaves aggressively, do not engage. Leave the situation if you can and avoid opening the door or meeting them alone.
Record evidence of the behaviour.
Keep screenshots of messages, call logs, emails, and photos of any vandalism or harassment. Write down dates, times, and what was said or done. This will be useful when you report the case.
Do not hand over your NRIC, ATM card, or passwords.
Never surrender your identification cards, bank cards, Singpass details, or PINs. If you already did, contact your bank immediately and update your passwords or block your cards.
Check if the lender is licensed.
Visit the Ministry of Law’s website and look up the list of licensed moneylenders. If the company is not listed, it is likely an unlicensed lender, and you should stop dealing with them right away.
Report the incident to the authorities.
For harassment, threats, or damage to property, call the police. You can also report illegal practices or unlicensed lenders to the Registry of Moneylenders, providing all the evidence you have collected.
Do not make “extra” payments under pressure.
If someone demands additional cash, “settlement fees,” or penalties that are not in your contract, do not pay. Illegal demands should be reported, not complied with.
Seek advice from trusted channels.
Talk to official organisations such as Credit Counselling Singapore or legal advisors if you are unsure of your rights. They can help you understand your options and next steps.
Inform your family or someone you trust.
Let someone close to you know what is happening, so you are not dealing with the stress alone. They can support you emotionally and help you keep track of events.
Conclusion:
Understanding what licensed moneylenders can and cannot do helps you stay protected, spot red flags early, and avoid falling into unnecessary debt traps. When you choose a lender that follows the rules, you get clarity, fair treatment, and a loan you can manage with confidence. If you ever feel uncomfortable or pressured, you now know the steps to take and the authorities you can turn to.
If you are looking for a safe, transparent, and hassle-free borrowing experience, reach out to Fast Money, a licensed moneylender who puts your interests first.
