365 Credit Solutions Pte Ltd is a licensed moneylender (License No. 17/2024) listed in the Registry of Moneylenders, under the Ministry of Law in Singapore.​

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Legal Loans in Singapore: Everything You Need to Know

A man signing legal loan contract

In a time when inflation has been a concern, many Singaporeans still feel financial pressure. Channel News Asia reports that core inflation was 3.1 percent in January, down from last year’s peak. Given these financial difficulties, understanding how to borrow unsecured personal loans from legal financial institutions is crucial. 

Legal loans from licensed moneylenders are regulated by the Ministry of Law, ensuring fair practices and protection for borrowers. Unlike illegal loans, these offer clear terms, reasonable interest rates, and a structured repayment process, making them a safer choice for financial assistance.

In this article, we will explore the benefits, application process, and how to choose the right moneylender.

What are Legal Loans?

Legal loans are financial products offered by licensed moneylenders who are regulated by the Ministry of Law in Singapore. These loans are provided under strict guidelines to ensure fair practices and borrower protection. Legal loans offer transparency, clear terms, and conditions that are in compliance with the law.

Borrowing from licensed moneylenders is crucial to ensure that you are protected under the law. Licensed moneylenders follow the guidelines set by the Ministry of Law, ensuring: 

  • Fair treatment
  • Transparent loan terms
  • Lawful recovery practices

This protects borrowers from the predatory practices common among illegal lenders. To verify if a money lender is licensed, check the list of licensed moneylenders available on the Ministry of Law’s website. Always ensure that the moneylender you are dealing with is listed to guarantee they are operating legally.

How Much Can I Borrow From a Licensed Moneylender?

The amount you can borrow from a licensed money lender depends on your income. For Singaporeans and Permanent Residents, the limits are as follows:

Borrower’s annual income Singapore Citizens and Permanent Residents Foreigners residing in Singapore
Less than $10,000 $3,000 $500
At least $10,000and less than $20,000 $3,000
At least $20,000 6 times monthly income 6 times monthly income

How Much is the Maximum Interest Rate and Fees?

In Singapore, the maximum interest rate that licensed moneylenders can charge is capped at 4% per month, which translates to 48% per annum. This regulation ensures that borrowers are not subjected to exorbitant interest rates, providing a fair and manageable repayment structure.

Licensed moneylenders are permitted to impose certain fees and charges to cover administrative and legal costs. These include:

  • Late Repayment Fees: A fee not exceeding S$60 for each month of late repayment.
  • Processing Fees: A fee not exceeding 10% of the principal loan amount when the loan is granted.
  • Legal Costs: Any legal costs ordered by the court for a successful claim by the moneylender to recover the loan.

These fees are regulated to protect borrowers from excessive charges and to ensure transparency in the lending process.

What are the Differences Between Legal and Illegal Loans

Here are the key differences to protect yourself from potential pitfalls:

Feature Legal Loans Illegal Loans
Loan Amount Determined based on income and ability to repay, typically lower limits Often promises large sums without verifying borrower’s ability to repay
Interest Rates Capped by law (currently at 4% per month) Exorbitantly high, often not disclosed upfront
Repayment Terms Fixed and transparent terms, with legal recourse for disputes Unclear terms, often changed arbitrarily by the lender
Data Protection Borrowers’ personal information is protected by regulations Often misuses or sells borrower’s personal information
Loan Process Requires proper documentation and face-to-face verification May demand upfront fees without providing the loan, with no proper documentation

Other Red Flags to Watch Out For with Unlicensed Moneylenders

Dealing with unlicensed moneylenders can lead to significant financial and legal risks. By being aware of these warning signs, borrowers can protect themselves from predatory practices and ensure they only engage with licensed, trustworthy lenders.

  • Advertisements from moneylenders that do not comply with the permitted channels (business or consumer directories, their own websites, or their business premises) may indicate unlicensed moneylenders or licensed ones violating rules.
  • Be cautious of flyers, SMSes, emails, or other unauthorized advertisements and report them to the Registry at 1800-2255-529 or via their website.
  • Uses abusive language or threatens you.
  • Asks for your SingPass user ID and password.
  • Retains your NRIC or other personal IDs.
  • Requests you sign incomplete documents.
  • Fails to provide a copy of the loan contract or explain terms.
  • Approves loans without proper documentation or due diligence.
  • Withholds part of your loan amount without reason.

Recent news from the Singapore Police Force highlights the dangers of dealing with loan sharks. A 53-year-old man was arrested for loanshark harassment and will be charged under the Moneylenders Act 2008, underscoring the risks involved with unlicensed moneylenders.

What Can You Do When You Accidentally Borrow From an Illegal Moneylender?

If you realize you have borrowed from an illegal moneylender, stop making any further payments and report the matter to the police immediately. It’s important to seek help and guidance from legal authorities to resolve the situation safely.

If you suspect or know someone involved in loansharking activities, it is advisable to call the Police at ‘999’ or the X-Ah Long hotline at 1800-924-5664.

Choosing the Right Moneylender

Selecting a reputable moneylender is crucial to ensure a fair and secure borrowing experience. Here are key factors to consider:

  • Interest Rates: Ensure the rates are within the legal limit and competitive. Note that licensed moneylenders can only charge up to 4% interest rate per month.
  • Repayment Terms: Look for flexible terms that suit your financial situation. Most licensed money lenders offer a loan tenure up to 12 months for a personal loan and 24 months for a business loan.
  • Customer Reviews: Check reviews and testimonials to gauge the lender’s reputation.

Again, always verify the moneylender’s license by checking the official list of licensed moneylenders available on the Ministry of Law’s website. Only borrow from those listed to ensure legal protection and fair practices.

Good to Know: Common Misconceptions About Licensed Moneylenders

1. Myth: Legal loans have excessively high-interest rates

Fact: Legal loans are regulated by the Ministry of Law in Singapore, ensuring that interest rates remain fair and manageable. The maximum interest rate that licensed moneylenders can charge is capped at 4% per month, significantly lower than the exorbitant rates charged by illegal lenders.

2. Myth: The loan application process is complicated and time-consuming

Fact: The application process for legal loans is designed to be streamlined and efficient. Many licensed moneylenders offer online applications that can be completed in minutes. Approval is often quick, with some lenders providing a response within an hour.

3. Myth: Only individuals with excellent credit scores can get legal loans

Fact: Licensed moneylenders assess various factors beyond credit scores when evaluating loan applications. While a good credit score can help, many lenders also consider income stability and ability to repay, making legal unsecured loans accessible to a broader range of borrowers.

4. Myth: Legal loans require a lot of paperwork

Fact: The documentation required for legal loans is straightforward and minimal. Typically, borrowers need to provide identification, proof of income, and residency documents. This ensures a smooth and hassle-free application process.

5. Myth: Legal moneylenders are not trustworthy

Fact: Licensed moneylenders in Singapore are regulated by the Ministry of Law, which ensures they adhere to strict guidelines and fair practices. Borrowing from a licensed money lender offers protection under the law, safeguarding borrowers from predatory practices and ensuring transparency.

Application Process

The application process for legal loans in Singapore is straightforward and designed to be as efficient as possible. Take a look at this basic step-by-step application process:

  • Submitting an Online Application: Begin by registering an account on the moneylender’s website or mobile app. For example, at Lending Bee, you can fill out the loan application form in just three minutes. This initial step gathers essential information to assess your loan eligibility.
  • Receiving Application Status: Once your application is submitted, you will receive the status of your loan, including the maximum loan amount and tenure, typically within an hour. This quick response helps you understand your borrowing capacity promptly and plan accordingly.
  • Face-to-Face Verification and Disbursement: After receiving approval, head to your chosen Lending Bee® branch for face-to-face verification. During this visit, you’ll sign the loan contract, and the funds will be disbursed to you instantly. This step ensures all documentation is verified and the loan agreement is understood.

Required Documents

To apply for a legal loan, borrowers must provide certain documents that verify their identity, income, and residency. These documents help ensure that the loan application is processed smoothly and accurately.

For Singaporeans/PRs

  • NRIC: Your identification card is essential for verification.
  • Proof of Income: Submit proof of income for the preceding three months, such as CPF contribution history statements, the latest Income Tax Notice of Assessment, recent bank statements with proof of income, or the latest computerized payslips.
  • IRAS Notice of Assessment: Self-employed individuals need to provide the latest IRAS Notice of Assessment to verify their income.

For Foreigners

  • Passport: Your passport is required for identity verification.
  • Work Pass or Permit: Provide your work pass or permit to demonstrate legal employment in Singapore.
  • Latest Payslips: Submit payslips for the three months before the loan application to verify your income.
  • Proof of Address: A tenancy agreement or billing proof of address is needed to confirm your residency.


Understanding legal loans in Singapore can help you make informed borrowing decisions and avoid the pitfalls of illegal lenders. By choosing licensed moneylenders, you benefit from regulated interest rates, fair practices, and borrower protections. Always verify the lender’s credentials and be aware of your rights to ensure a safe and secure loan experience.

Key Takeaways:

  • Legal loans are regulated by the Ministry of Law, ensuring fair practices and borrower protection. Licensed moneylenders offer clear terms and capped interest rates, making them safer than illegal lenders.
  • The application process is quick, often allowing for online applications and same-day approval. This ensures borrowers can access funds promptly.
  • Always verify a moneylender’s license through the Ministry of Law’s official list to ensure legality and safety.

Ready to secure a legal loan with fair terms and fast approval? Experience hassle-free application with 365 Credit Solutions, a trusted licensed moneylender in Singapore. Visit our website and request a free loan quote today!

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