What Licensed Moneylenders Cannot Do and How You Can Protect Yourself

Borrowing from a licensed moneylender in Singapore can be a practical option when you need quick access to funds, but it is crucial to understand your rights and the limits imposed on lenders. With regulations in place under the Moneylenders Act and oversight by the Ministry of Law, borrowers are protected from unfair practices — but only if they know what to look out for. Here’s a guide to help you recognise what licensed moneylenders can and cannot do, and how to safeguard yourself if issues arise.

The first step is always to check if your moneylender is licensed. You can verify this on the Ministry of Law’s official List of Licensed Moneylenders.

Watch out for red flags: unsolicited SMS, WhatsApp messages or flyers; requests for your Singpass login; retention of your NRIC or ATM card; blank or incomplete contracts; and offers of “instant approval” without asking for documents. These are tell-tale signs of illegal lenders.

Know the legal caps, too. Interest rates cannot exceed 4% per month, late interest is capped at 4% per month on the overdue amount only, late fees cannot exceed S$60 per month, and administrative fees are capped at 10% of the principal. Importantly, total charges (interest, fees and penalties) cannot exceed the loan principal.

You should also always receive receipts for each repayment, as well as loan statements issued at least twice a year in January and July.

The Moneylenders Act is the primary legislation governing licensed moneylenders in Singapore. It sets out strict limits on what lenders can charge, how they must conduct business, and the protections that borrowers are entitled to.

Key protections for borrowers include:

• Monthly interest rates capped at 4%

• Late interest capped at 4% per month on the overdue amount only

• Late fees capped at S$60 per month

• Administrative fees capped at 10% of the principal

• Total charges (interest, fees, penalties) cannot exceed the loan principal

• Mandatory issuance of receipts for every repayment

• Bi-annual loan statements in January and July

Moneylender behaviour regulated under the Act:

• All lenders must be registered with the Ministry of Law and listed on the official Registry

• Contracts must be explained clearly in a language you understand, with a copy provided to you

• Only three advertising channels are permitted: 

• Business/consumer directories

• The licensed moneylender’s official website

• Signage at their premises

• Retention of NRIC, ATM cards, or Singpass credentials is prohibited

• Harassment, intimidation, or criminal conduct in debt recovery is strictly forbidden

By laying down these rules, the Moneylenders Act protects borrowers from predatory practices while maintaining an accessible avenue for legal short-term credit. Always ensure your lender is licensed and operating under the Act to safeguard your financial well-being.

» MORE: Guide to the moneylender’s act in Singapore 2025

Assess and grant loans within legal limits

Unsecured borrowing limits depend on your annual income and residency status. For example, Singapore Citizens and Permanent Residents earning at least S$20,000 a year can borrow up to six times their monthly income. There is no statutory cap for secured loans. Moneylenders must explain the contract in a language you understand and give you a copy to keep.

Charge only permitted interest and fees

Licensed lenders can charge up to 4% interest per month, late interest of up to 4% per month on overdue amounts, an administrative fee of up to 10% of the principal, and late fees of up to S$60 per month. They can also recover legal costs if ordered by the court. However, the total charges across the loan cannot exceed the principal borrowed.

Disburse principal properly and document payments

Moneylenders may deduct up to 10% in administrative fees from the principal upfront. Otherwise, the loan must be disbursed in full. They are required to issue receipts for all payments and provide statements twice a year.

Reasonable debt recovery

Moneylenders may contact you to request repayment and can take civil action to enforce the contract. Visits to your home or workplace are not automatically unlawful, but they become harassment if accompanied by threats, vandalism or violence.

Offer self-exclusion support

Borrowers may apply for self-exclusion via the Moneylenders Credit Bureau. Once active, licensed moneylenders cannot extend unsecured loans (except debt consolidation). Typical exclusion periods range from one to two years, with foreigners subject to a default period of two years.

Prohibited advertising

Licensed moneylenders are allowed to advertise only in business and consumer directories, on their own websites, and through signage at their premises. Any other advertising — such as SMS, social media, or unsolicited flyers — is illegal.

Unfair or unsafe onboarding practices

They cannot ask for your Singpass login details, retain your NRIC, ATM card or employment pass, or get you to sign incomplete or blank contracts. Approving loans without proper checks or withholding the principal beyond the permitted admin fee is also unlawful.

Harassment, threats, and crimes

Moneylenders are not allowed to engage in violence, threats, stalking, vandalism, or other criminal behaviour. If this happens, call the Police at 999 or use the Emergency SMS 70999 service.

Over-charging

Any fees or interest that go beyond legal caps, or interest calculated wrongly (such as not based on the remaining principal), are prohibited.

Under the Protection from Harassment Act (POHA), you can also apply for legal remedies if you are subjected to harassment.

Legitimate actions include making phone calls, sending SMS messages, sending letters requesting payment, filing a claim in court, and making peaceful visits.

Harassment or illegal behaviour includes repeated calls at odd hours, threats of harm, doxxing, vandalism, property damage, online shaming posts, or intimidating groups showing up at your home. Such behaviour can be challenged under POHA.

1. Prioritise safety: If you are in immediate danger, call 999 or use 70999 for SMS emergencies.

2. Preserve evidence: Take screenshots, save call logs and voicemails, and photograph vandalism or injuries.

3. Log everything: Record dates, times, details of incidents, and witness accounts.

4. Report to Police: For criminal conduct, lodge a report and get a police report number.

5. Inform the Registry of Moneylenders (ROM): Submit a complaint via the portal or call 1800-2255-529.

6. Apply for Protection Orders under POHA: Seek an Expedited Protection Order (EPO) for urgent cases or a Protection Order (PO) for ongoing relief.

7. Consider civil and debt solutions: File a claim under the Consumer Protection (Fair Trading) Act, renegotiate payments, or seek help from social service agencies such as Credit Counselling Singapore.

You should lodge a complaint with the Ministry of Law if a moneylender engages in over-charging, harassment, improper onboarding, prohibited advertising, or unfair terms.

Prepare supporting documents such as contracts, receipts, statements, and screenshots. Include the police report number if applicable. Complaints can be filed via the ROM online portal or by calling 1800-2255-529. Your details will remain confidential without your consent.

Falling behind on loan repayments can feel overwhelming, but you are not without options. Singapore has structured pathways that help borrowers regain control of their finances before things spiral further. 

Negotiate early

Propose realistic repayment plans and confirm them in writing. Avoid informal roll-overs that come with hidden costs.

Self-exclusion (MLCB)

Apply for self-exclusion from unsecured loans through the Moneylenders Credit Bureau. This blocks new loans for a set period (typically one to two years, or two years by default for foreigners).

Debt Repayment Scheme (DRS)

If you have unsecured debts of up to S$150,000 and a regular income, you may qualify for the DRS. This allows repayment over a period of up to five years while avoiding bankruptcy.

Bankruptcy (last resort)

If debts exceed S$15,000 and repayment is not feasible, bankruptcy may be an option. This comes with significant implications for your financial future, so seek legal and financial advice first.

Licensed moneylenders play a role in Singapore’s financial system, but strict rules are in place to ensure borrowers are treated fairly. Understanding what lenders can and cannot do gives you the confidence to borrow safely, while knowing the steps to take if you encounter harassment or illegal practices ensures you stay protected.

» MORE: Licensed moneylenders vs. banks: Best place to get personal loans in Singapore