Money Lending 101: The Basic Guide

Money lending is the act of lending cash to others where the lender usually has higher interest rate than the market rate or the rate charged by banks. The processing of it is faster compared to banks because it normally caters to small personal loans.

To start on your career as a moneylender, you need to know some few basics. Check some Q&A’s below to get you started on the world of money lending.

Is money lending legal?

Yes, it is under Consumer Credit Act 1995 and the Consumer Protection Code for Licensed Moneylenders. It is in the constitution. As long as you have a license and proper written agreement with each of your transactions, you can rest assured you are doing the right thing.

Is there illegal ways to do money lending?

Basically, a money lender who operates without a license given by the Central Bank is not allowed by the law to finance loans. Therefore, it is illegal.

Who can take advantage of money lending services?

Moneylenders generally offer loans to people who are experiencing difficulty to get approved by banks or other lenders. Since these types of personal loans are unsecured, higher interest rate is charged.

What kinds of credit does a money lender offer?

Money lenders with license offer different kinds of credit. There are cash loans, goods on credit and vouchers or cheques to buy items or finance an individual to order a product from a catalogue.

How much is the interest rate of a money lender?

It varies from each money lenders but they can charge as high as 187% yearly. The interest rate set by the lender cannot be changed which means no matter how long the borrower took his time to pay, he will be paying the same.

How much can loan can I ask from money lenders?

For lender’s security, you can borrow maximum of $3,000 if your yearly income is below $20,000 and no limit if your yearly income is $120,000.

How do I find out if an advertisement is from a licensed money lender?

A licensed money lender Singapore are only allowed to post advertisements on (a) their website, (b) their office and (c) business or consumer directories. If you have spotted flyers, posters and banners around the street going to work or received emails from them, don’t pay attention because they are unlicensed money lenders fishing for borrowers.