Taking on a loan shouldn’t add to your financial stress, right?  Knowing the maximum interest rates licensed money lender in Singapore can charge is crucial for responsible borrowing. 

Let’s dive in and make sure you’re aware of your rights and limitations when seeking out a quick cash fix.

How much can you borrow?

Licensed money lenders in Singapore offer a quick source of cash, but the amount you’re eligible to borrow depends on several factors. The Moneylenders Act sets strict regulations to protect borrowers. Here’s the breakdown:

Factors impacting your borrowing amount:

  • Income: Your annual income is the primary factor determining your loan limit.
  • Citizenship Status: Singapore citizens and permanent residents have higher borrowing limits compared to foreigners residing in Singapore.

Borrowing Limits:

  • Secured Loans: If you are providing collateral (like property), there is no set borrowing limit. The loan amount will be a percentage of the collateral’s value.
  • Unsecured Loans: These loans don’t require collateral, and your borrowing limit is capped based on your income:
    • Income less than S$20,000 annually: Maximum loan amount of S$3,000
    • Income between S$20,000 – S$30,000 annually: Maximum loan amount of S$6,000
    • Income above S$30,000 annually: Maximum loan amount determined on a case-by-case basis, but generally capped at 6 times your monthly income.

Important Considerations:

  • Debt Repayment Capacity: Lenders will assess your existing debt and financial obligations to ensure you can handle the additional loan payments.
  • Creditworthiness: Your credit history and score will play a role in how much you can borrow.

What Kinds Of Fees Do Licensed Money Lenders Charge?

Below are the fees legal lenders can charge:

  • 10% Admin Fee: This is a one-time fee you pay upfront when you take out the loan (e.g., $500 for a $5,000 loan). They cannot charge this before approving your loan. This is a tactic illegal loan sharks (“Ah Longs”) use.
  • Maximum Late Penalty Fee of $60: This is only charged if your instalment is late. The amount stays the same ($60), regardless of how much your instalment is. It’s a late fee, not additional interest.
  • Court Fees (if applicable): The money lender can only charge you court fees if they sue you and win the case.

Is it possible for money lenders to charge a variety of interest rates?

It’s possible for money lenders in Singapore to charge a variety of interest rates. While the Ministry of Law sets a maximum cap of 4% per month, here’s why the actual rates you’ll encounter may differ:

  • Risk Assessment: Money lenders evaluate your individual financial profile, including your income, credit history, and debt levels. Borrowers deemed higher risk may be offered loans with higher interest rates to offset the lender’s risk.
  • Loan Type: Secured loans (those backed by collateral) often have lower interest rates than unsecured loans due to the lowered risk for the lender.
  • Competition: The licensed money lending market in Singapore is competitive. Lenders may adjust their interest rates to attract borrowers or to remain competitive with other lenders.
  • Negotiation: In some cases, you may be able to negotiate a slightly lower interest rate with the money lender, especially if you have a good credit history and stable income.

Read also: Licensed money lender Singapore lowest interest rate

The interest amount decreases every month because it’s calculated on the remaining balance, not the original loan amount.

  • Shorter Tenure Advantage: Opting for the shortest possible repayment period (tenure) will save you money on interest.
  • Late Interest Rates: Money lenders can also charge a late interest fee, capped at 4% of the missed instalment amount. This is not calculated on the original loan or your remaining balance.

Legal money lenders cannot charge late interest on the entire loan amount. They can only charge it for the missed instalment.

Pros and Cons of Banks and Licensed Money Lenders



  • Lower interest rates: Banks usually offer cheaper loans compared to money lenders. Interest rates typically lower, so you end up paying less in total.
  • Bigger loan amounts: Need a lot of cash? Banks can approve larger loans, especially if you got a good credit score.
  • Government protection: Your money is safe with banks. They’re regulated by the government, so you have peace of mind.


  • Stricter rules: Banks have a lot of paperwork and requirements. Must have a good credit score, stable income, then they may approve your loan.
  • Slow process: Sometimes it can take weeks for them to get back to you. Not so good if you need money fast-fast.
  • Less flexible: Banks got fixed loan packages and repayment schedules. Not so easy to customise to your needs.

Licensed Money Lenders


  • Get cash fast: Money lenders can approve your loan very quickly, sometimes even within the same day. Perfect for emergencies.
  • Easier to qualify: Even if your credit score isn’t the best, money lenders might still give you a chance.
  • Flexible repayment: Some money lenders let you tailor your loan repayment to your own situation.


  • Higher interest rates lor: Be prepared to pay more interest on your loan compared to a bank.
  • Smaller loan amounts: Money lenders usually can’t lend you as much money as a bank can.
  • Shorter repayment periods: You usually have less time to repay a loan from a licensed money lender.

So, which one should you choose?

It really depends on what you need the money for and your own situation:

Need a lot of money or the cheapest interest rate? Go with a bank.

Got bad credit or need money urgently? Licensed money lender online might be your better option.

Always borrow responsibly! Only take a loan if you’re confident you can pay it back on time. And make sure you’re borrowing from a licensed money lender, not an illegal loan shark! You can check the Ministry of Law’s website for a list of licensed lenders.

The Things That You Should Think About Before Obtaining a Loan From a Money Lender ​

  1. Understand the Fees and Interest: Know exactly what you’ll be paying on top of the loan amount.
  2. Compare Offers: Shop around to find the best interest rate and terms.
  3. Read the contract carefully. Make sure you understand all the details before signing.
  4. Know the Late Payment Penalty: Be aware of the extra charges for late repayments.
  5. Budget for Repayments: Ensure your monthly income can comfortably cover the loan instalments.
  6. Verify the Lender: Check the official list to avoid unlicensed loan sharks.

Next Steps to Take After Obtaining the Loan

  • Track repayments and pay on time. This avoids late payment fees and keeps your credit score healthy.
  • Create and stick to a budget. This ensures you can afford your loan repayments alongside your other expenses.
  • Build an emergency fund. This prepares you for unexpected costs without needing more loans.
  • Pay off the debt as soon as possible. This minimises the total interest you pay.
  • Organise your loan documents. Keep a dedicated folder for all loan-related documents like the contract, account statements, payment receipts, and any official communication with the money lender. This ensures you have everything readily available if needed.

Always be clear about the interest rates that money lenders charge

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Taking Out a Loan: What to Consider 

Borrowing money is a significant decision. Before choosing a licensed money lender in Singapore, it’s crucial to compare different lenders’ requirements and offers.

Look beyond just interest rates. Consider factors like:

  • Affordable Instalment Plans: Can you comfortably fit the monthly repayments into your budget?
  • Expertise and Support: Does the lender offer guidance and support throughout the loan process?

These aspects can be crucial when navigating financial difficulties.

Do your research. Many licensed money lenders in Singapore operate ethically and offer competitive rates. Take your time to compare options and find the best fit for your needs.