How to Choose Between Bank Loans and Moneylenders in Singapore: What You Need to Know

Bank Loans Versus Moneylenders in Singapore Which Is Right For You

In Singapore’s dynamic financial landscape, individuals seeking loans are faced with multiple options, each with its own set of advantages and disadvantages. Understanding the differences between obtaining loans from banks and moneylenders can significantly impact your financial planning and decision-making process. This article aims to guide you through these differences, focusing on interest rates, approval times, eligibility criteria, and the regulatory environment, to help you make an informed choice.

Bank Loans vs. Moneylenders: An Overview

Bank Loans in Singapore

Banks are traditionally the go-to institutions for loans, offering a variety of loan products including personal loans, mortgages, and business loans.


  • Lower Interest Rates: Banks typically offer lower interest rates compared to moneylenders.
  • Longer Repayment Periods: They provide longer repayment terms, making monthly payments more manageable.
  • Comprehensive Services: Banks offer a wide range of financial services beyond loans.


  • Stricter Eligibility Criteria: Banks have more stringent requirements for loan approval, including credit score checks.
  • Longer Approval Times: The process can be lengthy, often taking weeks.

Moneylenders in Singapore

Licensed moneylenders provide an alternative to banks, offering fast loans and a more straightforward application process.


  • Faster Approval and Disbursement: Moneylenders can approve loans quickly, often within the same day.
  • Less Stringent Eligibility Criteria: They are more accommodating to individuals with lower credit scores.
  • Simplified Application Process: The process is generally faster and less cumbersome.


  • Higher Interest Rates: Interest rates are typically higher than those offered by banks.
  • Shorter Repayment Periods: Loans from moneylenders usually have shorter repayment terms.

Making the Right Choice

When deciding between a bank and a moneylender, consider the following:

  • Your Financial Situation: Assess your current financial health and determine which option aligns with your ability to repay.
  • Loan Purpose: Consider why you need the loan. For larger, long-term loans, banks may be more suitable. For emergency funds or short-term needs, a moneylender might be the better choice.
  • Credit Score: Your credit score significantly impacts your eligibility for bank loans. If your credit score is low, a licensed moneylender might be more accessible.

Understanding the Regulatory Environment

Both banks and moneylenders in Singapore are regulated by authorities to protect borrowers. Banks are regulated by the Monetary Authority of Singapore (MAS), while moneylenders are regulated under the Ministry of Law. It’s crucial to choose a licensed moneylender, as they are required to adhere to laws that protect borrowers from exorbitant interest rates and unfair practices.

Frequently Asked Questions

How do I check if a moneylender is licensed?

You can verify a moneylender’s license on the Ministry of Law’s website, which lists all licensed moneylenders in Singapore.

What are the typical interest rates for bank loans and moneylender loans?

Interest rates for bank loans are generally lower, often ranging from 3% to 6% per annum, while moneylender rates can be higher, capped at 4% per month by regulation.

Can I negotiate the terms of my loan with a bank or moneylender?

While banks have fixed terms for their loan products, you might have some room to negotiate with moneylenders, especially regarding repayment schedules.

What should I do if I face difficulties repaying my loan?

Contact your lender as soon as possible to discuss your situation. Both banks and licensed moneylenders are often willing to work out a feasible repayment plan.

Choosing between a bank and a moneylender in Singapore depends on your specific financial needs, goals, and situation. By understanding the pros and cons of each and considering your personal circumstances, you can make an informed decision that best suits your financial strategy.

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Abm Creditz