A licenced moneylender is a person who has been granted a license to operate in the business of giving out cash loans or selling goods in a manner that is in compliance with the Moneylenders Act.
Licensed moneylenders are regulated under the Consumer Credit Act 1995 and are subject to strict rules and regulations. These include a cap on the amount they can lend, and a limit to the interest rates they can charge.
They are also not allowed to acquire any personal information from you that can be used for identity theft, such as your Singpass account passwords, or the email address on your phone. In addition, they must issue you a receipt each time you make a loan repayment, as well as a statement of account showing the outstanding amount and date.
Unlicensed moneylenders, on the other hand, are not regulated by law and may use unsolicited telemarketing techniques to lure you into taking out a personal loan. These tactics are illegal and can harm neighbourhoods.
The maximum interest rate that licensed moneylenders can legally charge is 4% per month, regardless of the type of loan and whether it is secured or unsecured. This is to ensure that borrowers can afford to repay their loans on time.
The Ministry of Law also imposes caps on the loan amounts that moneylenders can give out, and these caps are meant to promote consumer confidence in the industry and avoid debt collection practices that may be human rights violations against borrowers. The Ministry also encourages licensed moneylenders to adopt professional debt collection techniques and debt assistance schemes. licenced moneylender