How To Tell If A Moneylender Is Licensed And Reliable


$6.8 million was what fraudsters in Singapore were able to make through loan scams occurring between January and November of last year. In 2018, the amount was just above $2 million. With the Circuit Breaker in effect, more people are vulnerable or suffering from financial difficulties and have been cheated because of it. How can you combat this? What can you do to prevent yourself and your loved ones from falling into easy cash loan scams just like these?

The most important thing is to understand how to differentiate between licensed moneylenders, illegal moneylenders, as well as loan scammers. Here are a few differences between the three so that you can keep your family, friends and loved ones protected from these loan scams.

1. Licensed moneylenders are not able to advertise their services

Did you know that licensed moneylenders in Singapore are not able to promote their products anywhere that they choose? In addition, loan scams such as SMS or WhatsApp chat where the loan process is completed, are places where licensed moneylenders do not handle their deals.

With new rules by the Ministry of Law, licensed moneylenders are only able to advertise their business under the following:

  • Yellow pages, in print and digital format
  • The official website established by the licensed moneylender
  • Advertisements posted on doors, winders, gates or walls of the licensed moneylender’s office.

Here are a few channels that licensed moneylenders are not able to advertise through:

  • SMS or e-mail advertisements
  • Events marketing
  • Banners or posters in areas far from licensed moneylender’s office
  • Newspaper ads as well as print mediums

Understanding what and where licensed moneylenders are able to promote their service ensures that you can stay safe and vigilant at all times. If you receive an alert with loan offers like an equity term loan, they are not licensed moneylenders and are in fact loan sharks or scammers.

2. Licensed moneylenders do not require deposits for their loans

Many loan scammers utilise SMS and messaging apps to target individuals and collect information. Once that is done, they require the individual to make deposits between $1,500 to $1,900 before they are able to receive their requested loan. Licensed moneylenders, on the other hand, do not require any customer or client to make a deposit after their loan application is approved.

In Singapore, a licensed moneylender is only approved to charge 3 certain types of fees. They are:

  • Up-front administrative  fees (that do not exceed up to 10% of the loan amount)
  • Legal fees that may arise due to a court challenge
  • Late payment fees in the event of a loan default

As such, licensed moneylenders do not charge fees that are higher than the above. This is the same for any interest rates that are above the market, such as 4% of the maximum interest rate set by Singapore guidelines. Licensed moneylenders offering loans such as a consolidation loan do not have interest rates that are above 4% per month. If you spot any advertisements or lenders doing these, they are most likely a loan scammer or a loan shark and should be avoided immediately.

3. Licensed moneylenders are listed on the website of Ministry of Law

One of the easiest ways to spot if you’re dealing with a loan scammer or an illegal moneylender is to check the Ministry of Law’s Registry of Moneylenders website. The list of moneylender on the website is being updated monthly. If the lender declines to offer a website link, or if you are unable to find any website or name of the lender on the registry, there is a chance you are dealing with an illegal moneylender.

4. Licensed moneylenders have an office you can go to

In addition to their listing on the Registry of Moneylenders, licensed moneylenders in Singapore are required to have an office that should be the same as the Ministry’s website. All licensed moneylenders typically conduct their meetings and businesses in their office, just like how a lawyer or an accountant would. It is also the place where loan approvals and contract signings are concluded, with licensed moneylenders maintaining contact through e-mail or phone after.

For loan scammers and loan sharks, they do not have to follow the law, and may not have an office for individuals to go to. They prefer to conclude their deals through SMS or WhatsApp rather than in their office as it does not apply to them or they do not have one. Always cross-check the address and license information so that you are dealing with a licensed moneylender, and not a loan scammer or a loan shark.

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