Getting a Loan in Singapore: The Good, The Bad, and The Ugly4 min read

A Pic Showing The Financial District In Singapore

Undoubtedly, the Covid-19 pandemic opened a Pandora’s box of economic and financial problems that impacted economic growth and threatened livelihoods. As the pandemic rampages on, triggering further pay cuts, and job losses, it is only natural for some people to turn to personal loans to pay their dues or to keep their business open. In fact, borrowing money has been proven to offer a number of benefits, such as tax benefits as well as teaching borrowers money management skills. The real question is, however, where can we apply for a personal loan in Singapore? So, get comfortable as we share with you several avenues to apply personal loans from, and how they compare:


Naturally, banks are the common go-to sources for personal loans as they are bounded by the law, governed by, and operating according to legal standards. In fact, banks are known to lighten borrowers’ financial woes through personal loans, as such a loan will enable applicants to use the money for personal matters such as paying for their children’s education. More than that, banks have also enabled entrepreneurs to kickstart and build their business that contributed in the facilitation of economic activity.

Evidently, though, disadvantages of borrowing from banks do exist. One of the major downsides of applying for personal loans with banks is that the applicant needs to have a high credit rating, on top of having a minimum annual income of SGD20,000. Even if the bank approves the personal loan, it will subsequently impact the borrowers’ credit ratings, especially when repayments are delayed or defaulting personal loans. This, in turn, will impede future borrowing possibilities as well as chances of getting favourable rates in the future.

With such risks, it is no wonder that some are hesitant to turn to banks for financial aid. Thankfully, they are not the sole legal avenue when applying for loans in Singapore.

Licensed moneylenders

While banks typically extend loans to Singaporeans and permanent residents (PR) who bank in an annual income of at least SGD20,000 coupled with a good credit rating, licensed moneylenders are more likely to approve personal loans, even with a less-than-stellar credit rating. This is due to the fact that licensed moneylenders offer a more flexible loan amount. Additionally, licensed moneylenders in Singapore are registered under the Registrar of Moneylenders. This entails that licensed moneylenders are legally required to adhere to the interest rates, the type of fees they can charge, as well as maximum amount they can lend to borrowers that have been stipulated by the Registrar.

Speaking of legal outlines, borrowing money from licensed moneylenders will guarantee borrowers a harassment-free repayment period as they are legally required to adhere to the strict rules that have been outlined by law. Therefore, licensed moneylenders will do their utmost best to ensure a legal, safe, and secure loan process on top of offering expert advice on how to manage your finances properly as well as repayment plans that are tailored to fit every borrower’s financial situation.

There is no denying that applying for loans from licensed moneylenders is convenient with a simple application process. However, unscrupulous individuals, such as illegal moneylenders, are notorious for using the license numbers of registered moneylenders to trick woeful borrowers to fall for their scam. Speaking of loan sharks…

Illegal lenders

It cannot be denied that, for some, illegal lenders represent a viable channel for borrowing money, and speed and convenience are some factors why some turn to such sources, like loan sharks or “ah longs”, when they apply for personal loans in Singapore. However, what often slipped the minds of many are the risks involved that make illegal lenders an avenue that should never be considered. First and foremost, it should go without saying that borrowing money from illegal lenders is, well, illegal! Then, there is the fact that loan sharks charge high penalty fees, high repayment amounts in a short period, which will contribute to high stress levels and pressure experienced by the borrowers.

What sets loan sharks apart from licensed moneylenders is the manner in which they conduct their business. While banks and moneylenders are legally obligated to adhere to the law, standards, and requirements that have been outlined by regulatory bodies, and the government, loan sharks often resort to harassment, intimidation, and threats. In worst case scenarios, loan sharks turn to illegal means or violence to recover the debt.

In fact, Channel News Asia reported that illegal lenders have resorted to aggressive tactics to push forward their loansharking activities, especially when the pandemic is still at large. To top it all off, Neighbourhood Police Centers indicated that loan shark harassment cases negatively impact a residential area’s value as well as threaten the safety of the neighbourhood. Therefore, it needs to be emphasised that borrowing money from loan sharks pose a threat to our families, and potentially our neighbour.

With that thought in mind, it is monumentally important for potential borrowers to check with the Registrar of Moneylenders in Singapore to ensure that the moneylenders are licensed and registered. One of the tell-tale signs of a loan shark include doing business without a contract; operating without a legal license number or an office; and offering huge amounts of money to lend.



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