How To Settle Debt With A Licensed Money Lender And Where To Get Help When Required


In Singapore, it is a legal requirement for money lenders to be licensed. 

This protects borrowers from unscrupulous practices and allows them to seek help if they find themselves in a difficult situation with their debt. 

If you want information on how to settle debt with a licensed money lender, look no further. 

In this article, we will provide you with all the information you need to know about how to reach an agreement and get started on your repayment plan.

What Are Licensed Money Lenders? 

Licensed money lenders are legal entities that are allowed to lend money to needy individuals. They must obtain a moneylending license from the Ministry of Law to operate. 

There are many benefits to using a licensed money lender, such as the fact that they are regulated by the government and must adhere to strict guidelines. 

This means you can be sure you are getting a fair deal and that your loan will be repaid on time. 

In general, licensed money lenders also have a sound reputation and are known for providing good customer service. 

If you are considering taking out a loan, it is always best to use a licensed money lender and do some research to get the best money lender offering the lowest interest. 

You can download your credit report from the Moneylenders Credit Bureau to know your credit rating before visiting a licensed money lender.

What Types Of Loans Can You Borrow From A Licensed Money Lender?

Legal money lenders in Singapore are required by law to have a moneylending license to operate. 

This license is issued by the Registry of Moneylenders, and specifies the maximum interest rate the money lender is allowed to charge.

There are two main types of loans that you can borrow from a licensed money lender: secured and unsecured loans.

Secured Loans

A secured loan is a type of loan where you use your property as collateral. The money lender can take your property if you can’t repay the loan. 

Such a loan from a licensed money lender can be a good option if you need to borrow money quickly and do not have access to other forms of credit. 

One advantage of secured loans is that they typically have lower interest rates than unsecured loans since they pose less risks to the lender. 

You should also be aware of the terms and conditions of the loan before signing any agreements. 

Read the contract carefully and ask questions if anything is unclear. You can make the best decision for your financial needs by researching and being informed.

Unsecured Loans

An unsecured loan is a type of loan that is not backed by collateral. 

This means that if you default on the loan, the lender will not be able to seize your assets to recoup their losses. 

However, this also makes unsecured loans riskier for lenders, and as a result, they typically charge higher interest rates than secured loans.

Pros And Cons Of Borrowing From A Licensed Money Lender

When people need quick cash, they often turn to licensed money lenders. There are many benefits to borrowing from a legal money lender Singapore.


  • One of the biggest advantages of borrowing from a licensed money lender is that you can quickly get the cash you need. In most cases, the money can be in your account within 24 hours.
  • Licensed money lenders are typically more flexible than banks regarding repayment terms. This means that you can tailor your repayments to suit your financial situation.
  • Most licensed money lenders have an online application process that is quick and simple. You can apply for a loan from the comfort of your own home.
  • The government regulates legal money lenders. They must adhere to certain laws and regulations. This protects borrowers from shady lenders that might charge excessive interest rates or fees.
  • Licensed money lenders typically have lower interest rates than unlicensed lenders. This makes borrowing from a legal money lender Singapore more affordable in the long run.
  • Borrowers can be confident that their personal information will be safe when dealing with a licensed money lender. Legal money lenders must keep borrower information confidential and will face stiff penalties if they fail to do so.
  • Licensed money lenders must have a moneylending license to operate. They have to undergo training and vetting in order to be approved as a lender. This means borrowers can be confident they are dealing with a professional and reputable lender.


  • One of the main disadvantages of borrowing from a licensed money lender is that they can be more expensive than other types of lenders. This is because legal money lenders are allowed to charge higher interest rates than banks and other financial institutions.
  • Another downside of borrowing from a licensed money lender is that you may be required to provide collateral. If you fail to repay the loan, the lender can seize your assets.
  • Your annual income will determine how much you may borrow. If you need a large sum of money, you may not be able to get it from a licensed money lender.

How Are You Protected By Law When Borrowing From A Licensed Money Lender?

The Moneylenders Act protects borrowers in Singapore by setting out the rules and regulations that licensed money lenders must follow. 

This includes capping the interest rates that they are allowed to charge.

Under the Moneylenders Act, licensed money lenders are not allowed to:

  • Charge more than 4% per month on the outstanding loan amount
  • Charge more than 4% of the total loan amount as a late payment fee
  • Charge any other fees unless they are specifically allowed by law

If you are concerned that a licensed money lender has violated any of the above rules, you can file a complaint with the Registry of Moneylenders. 

The Registry will investigate the complaint and take appropriate action if necessary.

What If You Are Unable To Pay Back the Loan?

How do you settle an issue with a licensed money lender if you are unable to pay the money lender?

This is a question most people ask when they are in debt. 

If you find yourself in this situation, it is important to take action quickly to try and resolve the issue. 

Contact Your Lender And Explain Your Financial Situation

Many lenders will be willing to work with you to create a repayment plan that fits your budget. If your lender is not willing to work with you, you may need to consider other options.

Try A Debt Repayment Scheme

If you still cannot repay the loan after negotiating with the lender, you can consider taking out a Debt Repayment Scheme (DRS). 

Under the DRS, you will repay a government-approved debt management company monthly. Your creditors, including the licensed money lender, will then distribute these repayments to your creditors.

The DRS is only available to borrowers who:

  • Owe money to three or more unsecured creditors, including licensed money lenders
  • Only debtors with unsecured debts of less than $150,000 will be allowed to opt for a money lender debt repayment plan

Have A Debt Consolidation Plan 

If you have multiple debts from different money lenders, you may be able to consolidate them into one loan with a lower interest rate. 

This can make repayments more affordable and help you get out of debt more quickly. 

You can apply for a debt consolidation plan through a bank, credit union, or licensed money lender.

 When choosing a debt consolidation plan, it is important to compare different lenders’ interest rates and fees. 

You should also make sure that you will be able to afford the monthly repayments.

Contact A Credit Counsellor

If you are struggling to manage your debts, you may be able to get help from a credit counsellor. 

Credit counsellors can advise you on how to budget and negotiate with creditors. They can also help you create a debt management plan.

Reach Out To Friends And Relatives

As a last resort, you may be able to borrow money from family members or friends. This can be a risky option, as it can damage personal relationships if you are unable to repay the debt.

You should only consider borrowing money from family or friends if you are confident that you will be able to repay the debt. 

You should also draw up a written agreement that sets out the terms of the loan, such as how much you will borrow and when you will repay it.

File For Bankruptcy

If you cannot repay your debts, you may be declared bankrupt. This is a legal process that allows you to have your debts forgiven. 

However, it will have a major impact on your financial situation and should only be considered a last resort.

You should speak to a licensed insolvency practitioner if you are considering bankruptcy. They will be able to advise you on whether bankruptcy is the right option for your situation.

What Happens If You Default On The Loan?

If you default on your loan from a licensed money lender, this will negatively impact your credit score. This can make it more difficult to borrow money in the future. 

The licensed money lender may also take legal action against you. This could result in wage garnishment, which refers to when the money lender seizes a portion of your monthly wages to repay the debt.

If you fail to repay the loan, the licensed money lender may also take possession of your collateral or assets. 

If you are having trouble making payments, contact your lender as soon as possible to discuss your options.

More on this Topic: 

24-hour Money Lender Guide: Legal Personal Loans from Licensed Moneylenders in Singapore

Complete Guide To Short-Term Loans In Singapore

What Is A Term Loan & The Repayment Schedule?

How Credit Counselling Singapore Can Help

Credit Counselling Singapore (CCS) can help if you are struggling with debt. 

CCS is a non-profit organisation that provides free counselling to borrowers in financial difficulty. 

CCS will work with you to create a budget and develop an affordable repayment plan for your situation. They will also negotiate with your creditors on your behalf and provide advice on how to improve your financial situation.

You can contact CCS by phone or email:

Other Ways to Get Help

If you are struggling to repay a loan from a licensed money lender, other organisations can help. These include:

  • The Singapore Association of Social Workers: This provides free counselling services to individuals and families in financial difficulty.
  • The Samaritans of Singapore: The 24-hour hotline provides emotional support to distressed people.
  • ComCare: A government assistance scheme that provides financial and social support to low-income families and individuals.
  • The Moneylender Association Singapore (MLAS): This self-regulatory body acts for the money lending industry. It provides free counselling services for borrowers struggling to repay their loans.

Frequently Asked Questions

How Can I Clear My Debt in Singapore?

You can clear your debt in Singapore by contacting Credit Counselling Singapore. It will provide you with the necessary advice to resolve any financial problems, such as applying for a debt consolidation plan if needed.

It can also help simplify repayments on multiple debts through one loan from an agreed-upon bank with lower rates than what is currently being offered by each lender.

How Do I Report A Money Lender In Singapore?

If a licensed money lender is harassing you, please report it to the Registry of Moneylenders at 1800-2255 529. 

You can also take action if you see illegal ads for lenders or receive suspicious requests to pay fees with your credit card immediately.

Are Money Lenders Allowed To Advertise?

Money lenders can advertise in print or online media, such as through a business and consumer directory. They can also do so on their websites.

When settling debt with a licensed money lender, you must take the necessary precautions and understand your rights. 

BST Credit can assist you if you feel overwhelmed or need help navigating this process. 

We have years of experience working with borrowers mired in difficult financial situations and can provide you with the guidance and resources needed to get back on track. 

Contact us today for more information on our services or to speak with one of our representatives.

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