Why Do Money Lenders Get Such a Bad Reputation?

In Singapore, people are most familiar with banks when it comes to formal and legal loan options. On the other hand, we often get painted a not-so-nice picture when it comes to other avenues of money lending.

The thing is, not all money lenders in Singapore are the same. The great distinction is whether they’re authorised moneylenders or not! That’s the fine line between being involved in illegal activity, and getting a quick loan. On top of that, unlicensed money lenders can be dangerous to deal with, especially when it comes to repayment issues.

On the other hand, authorized money lenders in Singapore can be trusted to follow guidelines set by the government. These guidelines ensure that they offer fair rates to you, their clients. Authorized moneylenders offer various type of loans such as personal loans, foreigner loans, wedding loans, and so on. To better understand these differences, and keep yourself safeguarded, keep reading!

Ministry of Law approved

Any authorised money lenders in Singapore have to get a license from the Ministry of Law (MinLaw). Before taking out a loan you should check whether your money lender is listed as “approved” by the ministry or not. To find out, you can access the list of authorised money lenders from the MinLaw website.

The MinLaw updates their list regularly in case of new registrations, so you can be sure of up-to-date information. You won’t find any moneylenders on that list which are involved in illicit and illegal activities.


One major difference between unauthorised and authorised money lenders in Singapore is that authorised money lenders in Singapore follow a strict guideline of conduct. That is why they are transparent about everything with their clients.

This doesn’t just mean giving borrowers a contract detailing repayment periods, interest rates and other extenuating costs involved with a loan. It should also be presented to you, the borrower, in a way that is easy to understand. This is to make sure that you fully understand what you’re getting yourself involved in.

But this is not the case with unauthorised money lenders, who are known to hide important terms and clauses from you or charge you some hidden fee that you are not aware of. Because they’re not “governed” by the same laws and rules that protect borrowers from unethical behaviour, you can make yourself vulnerable to outlandish loan terms and exorbitant repayments.

The loan amount

Authorised money lenders in Singapore can only provide you with a limited amount of loan funds that are determined by your annual salary or monthly income. That’s why to be eligible for a legal loan in Singapore, you need to provide proof of employment and salary before you can be approved for a loan.

On the other hand, illegal money lenders may offer you big amounts of money without asking you for proof that you can repay them. In some minds, this can be seen as a convenience, but these measures are purely put in place to protect you from making financial mistakes, and landing yourself in an even greater debt situation. Finding yourself unable to repay illegal money lenders can be extremely dangerous and should be avoided at all costs.

Loan contract and interest rate

Your loan contract with an authorised money lender in Singapore must explicitly detail certain things such as your loan sum, interest rates and repayment periods–this goes back to the point of transparency.

But illegal moneylenders do not follow such procedures and they work on their terms. They may not even give you a contract if they so decide, which leaves you at the mercy of their claims in the future. If they decide to increase your interest rate or repayment sum, there is nothing to say that they are not permitted to.

Legally, the interest rate for loans in Singapore is set to a maximum of 4% per month by the MinLaw. No authorised money lenders in Singapore can charge more than that. But the companies who practice illegal activities do don’t recognise this law and can thus increase the interest rate according to their own whims and needs.

How do moneylenders get a bad reputation?

By looking at all these factors it is safe to say that unauthorised money lenders have justly earned their bad reputation. But in doing so, have managed to paint an unsavoury picture for other legal money lenders in Singapore.

The bottom line is, unauthorised money lenders never follow the guidelines and sometimes they can resort to illegal means to get their money back from you at any cost. Many people had been at the receiving end of their ruthless behaviour and that is why money lenders as a whole do not have a good reputation.

It’s important to remember that licensed money lenders in Singapore follow the MinLaw’s rules and regulations to a tee, to protect you and your best interests at the end of the day. So if you find yourself in need of a loan, leave us a comment below, or contact us on our hotlines: (+65) 62244746 (Yishun) and (+65) 62244749 (Tampines).