How to Use a Personal Loan from Licensed Money Lenders to Clear Debt in Singapore

Debt has this sneaky way of piling up before you realise what’s happening. One day you’re managing fine and the next thing you know, you’re juggling three credit cards, a personal loan, and maybe a renovation loan all at once.

If you’ve ever stared at your bank account wondering how you’ll make it through the month with all these different payments due, you’re not alone. Thousands of Singaporeans face this exact situation every single day.

So what’s the solution? For many people, the answer is debt consolidation through a personal loan from a licensed money lender in Singapore. These lenders offer faster approval, more flexible requirements, and can help you even if banks have turned you down. But before you rush into anything, you need to understand how it works, when it makes sense, and most importantly, how to choose the right licensed money lender.

By now, you’re probably asking yourself whether consolidating debt with a personal loan from a licensed money lender is actually worth it and how much money you could save. You might also be wondering if you qualify and what steps you need to take.

Let’s break this down in the simplest way possible. Debt consolidation means taking out one new loan to pay off all your existing debts. Instead of making payments to five different lenders each month, you only make one payment to one legal money lender.

The goal here is pretty straightforward. You want to simplify your financial life by having just one payment date to remember and ideally, you want to reduce the total amount you’re paying in interest each month.

Here’s how it actually works in real life. Let’s say you have S$8,000 on your credit card charging 26% interest, S$5,000 on your DBS card at 25% interest, and a S$10,000 personal loan at 12% interest. That’s three separate payments every month to three different places and you’re paying through the nose in interest charges.

Now imagine you take out a personal loan in Singapore from a licensed money lender for S$23,000. You use that money to pay off all three debts completely. Done. Now you only owe money to one lender and managing your finances becomes much simpler.

You might be wondering why you should consider a licensed money lender instead of just going to your bank. Here’s the reality.

Banks have extremely strict requirements for personal loans. If your credit score isn’t perfect or if you don’t meet their minimum income requirements, they’ll reject your application. Each rejection shows up on your credit report and makes it harder to get approved elsewhere.

For many Singaporeans dealing with debt, banks simply aren’t an option. Maybe you’ve missed a few payments in the past. Maybe you’re self-employed and don’t have regular payslips. Maybe you’re a foreigner on a work pass. Banks don’t care about your circumstances, they just look at numbers.

Licensed money lenders understand that life happens. They’re willing to look at your overall situation, not just your credit score. If you have steady income and a plan to repay, they’ll work with you.

More importantly, licensed money lenders are regulated by the Ministry of Law. They follow strict rules about interest rates, fees, and lending practices. This means you get protection without the rigid requirements that banks impose.

When you’re dealing with multiple debts, time matters. Banks can take days or even weeks to approve a loan application. Licensed money lenders can often approve your loan and give you the cash within the same day or within 24 hours.

This speed means you can stop the interest from piling up on your existing debts much faster. Every day you wait is another day you’re paying 25% interest on those credit cards.

Licensed money lenders actually talk to you based on your custom needs. You can discuss your situation, explain your repayment capacity, and work together to find a solution that fits your needs.

If you have questions or concerns during the loan tenure, you can easily reach out and get a response. Try doing that with a bank and you’ll be stuck on hold for an hour talking to a call centre.

Discover also: Top 10 Best Licensed Money Lenders in Singapore

go down this road with a licensed money lender.

Credit cards in Singapore are absolute killers when it comes to interest rates. Most charge between 24% and 26% per year and if you’re only paying the minimum amount each month, you could be stuck in debt for literally decades.

If most of your debt is sitting on credit cards, consolidation will help you. Licensed money lenders in Singapore can charge up to 4% per month, which works out to about 48% per year. While this sounds high compared to bank rates, remember that you’re comparing this to the 25% you’re already paying, plus late fees, plus the stress of managing multiple payments.

The real benefit here isn’t always lower interest. It’s the simplicity of one payment and the flexibility of working with a lender who understands your situation.

This is the big one. If you’ve applied to banks and been rejected, licensed money lenders are your next best option. They don’t have the same strict requirements and they’re more willing to help people who are actively trying to get their finances back on track.

Being rejected by a bank doesn’t mean you’re out of options. It just means you need to look elsewhere. Licensed money lenders exist specifically to help people who fall outside the narrow criteria that banks set.

Are you paying three or more different debts right now? Each with its own payment date, its own interest rate, and its own minimum payment amount? If your answer is yes, consolidation could be a lifesaver.

Multiple debts mean multiple chances to forget a payment. Each time you forget, you get slapped with late fees and your credit score takes a hit. It’s exhausting trying to keep track of everything and the mental stress alone is worth fixing.

When you consolidate with a licensed money lender, you get one payment date per month. One amount. One lender. Simple. You can set up a reminder and actually get some peace of mind.

If you’re about to miss payments on your existing debts, you need to act quickly. Banks won’t help you in time. Licensed money lenders can approve and disburse your loan within hours, allowing you to pay off those debts before late fees and penalties pile up.

Time is money when you’re dealing with debt. The faster you consolidate, the faster you stop paying interest on multiple high-rate debts.

This is crucial. Licensed money lenders want to see that you can afford the monthly payments. They’re flexible about credit scores and past mistakes, but they need to know you have income coming in.

Understanding how much you can borrow depends on your income. For most licensed money lenders in Singapore, you can borrow up to 6 times your monthly income if you earn at least S$20,000 per year.

If your income is irregular right now or you’re between jobs, wait until your situation stabilises. Taking on a new loan when your income isn’t steady will just make things worse.

Not all licensed money lenders are created equal and choosing the wrong one could cost you. Here’s what you need to know when choosing a licensed money lender.

This is non-negotiable. You must verify that the money lender is licensed by the Ministry of Law. Visit the Registry of Moneylenders website and check the official list. If they’re not on that list, walk away immediately.

Licensed money lenders are completely different from loan sharks. Loan sharks or ah longs are illegal, dangerous, and will destroy your life. Licensed money lenders are regulated, safe, and operate within the law.

Never deal with anyone who contacts you through WhatsApp or SMS offering loans. Never work with anyone who asks for your SingPass details upfront. These are classic signs of illegal lenders.

Licensed money lenders in Singapore can charge up to 4% interest per month. That’s the maximum allowed by law. Some charge less, especially if you have good credit or steady income.

Four percent per month works out to roughly 48% per year. This sounds extremely high if you’re comparing it to bank rates of 8% to 12%. But remember, if banks were willing to lend to you, you probably wouldn’t be looking at licensed money lenders in the first place.

The key question is whether the licensed money lender’s rate is lower than what you’re currently paying across all your debts combined. If you’re paying 25% on three credit cards plus fees and penalties, a consolidation loan at 4% per month might actually save you money and stress.

Besides interest, you need to know about other charges. Licensed money lenders can only charge specific fees set by law.

The administrative fee can be up to 10% of your principal loan amount. Late payment fees are capped at S$60 per month for each month you’re late. And that’s it. They can’t charge you anything else except legal costs if they have to take you to court for non-payment.

Before you sign anything, make sure you understand the total cost. Ask for a breakdown of all fees. If they’re trying to charge you anything beyond what’s legally allowed, that’s a massive red flag.

Look for reviews from actual borrowers. What do people say about their experience? Are customers complaining about hidden fees or aggressive collection practices? Or do they praise the lender for being helpful and fair?

Be careful though. Some reviews are fake, written by competitors or by the company themselves. Look for detailed reviews that mention specific experiences rather than generic praise or complaints.

By law, licensed money lenders must have a physical office location. Visit that office before you commit to anything. This serves two purposes.

First, it confirms they’re legitimate. Loan sharks don’t have proper offices. Second, it lets you meet them face-to-face and get a sense of whether they’re professional and trustworthy.

If they pressure you to sign documents immediately or make you feel uncomfortable in any way, leave. There are plenty of other licensed money lenders who will treat you with respect.

Don’t just work with the first licensed money lender you find. Get quotes from at least 3 to 5 different lenders. Compare their interest rates, fees, and terms.

The difference between lenders can be significant. One might charge 4% per month while another charges 3% for the same loan amount. On a S$20,000 loan, that 1% difference could save you hundreds of dollars.

Lender SG makes this comparison process much easier. Instead of visiting multiple offices and filling out multiple applications, you can get matched with offers from several licensed money lenders at once.

Ready to actually do this? Follow these steps in order and don’t skip any of them.

Get a piece of paper or open a spreadsheet and write down every single debt you have. Include the lender name, how much you owe, what interest rate you’re paying, and what your minimum monthly payment is. Don’t forget the payment due date for each one.

If you’re not sure about all your debts, get your credit report from Credit Bureau Singapore. It costs about S$6 for a one-time report and it’ll show you everything that’s on your record.

Add up all your debts to get your total. This is the amount you need to borrow for consolidation. Make sure you include everything you want to pay off. Missing even one debt defeats the purpose.

Add up all your minimum monthly payments across all your debts. This is what you’re currently paying each month just to keep your head above water.

Now calculate what your monthly payment would be on a consolidation loan. Most licensed money lenders offer loan tenures between 6 and 12 months. Divide your total debt by the number of months to get a rough estimate of your monthly payment.

Make sure you can afford this payment. If the consolidation loan payment is higher than what you can realistically pay each month, you need to either borrow less or reconsider whether consolidation is right for you.

Your credit score affects what terms you’ll get, but unlike banks, licensed money lenders don’t automatically reject you for a low score. They’re more interested in your current income and ability to repay.

Get your credit report from Credit Bureau Singapore. Look at your score but don’t panic if it’s low. Licensed money lenders work with people who have bad credit all the time.

Make sure you have proof of steady income. Licensed money lenders need to see payslips, bank statements showing salary deposits, or for self-employed people, income tax documents or business records.

Licensed money lenders in Singapore have legal limits on how much they can lend you. If you earn less than S$10,000 per year, you can only borrow up to S$3,000. If you earn between S$10,000 and S$20,000 per year, you can still only borrow S$3,000.

If you earn at least S$20,000 per year, you can borrow up to 6 times your monthly income. For foreigners, the requirements are slightly different.

Make sure your total debt amount falls within these limits. If you need to borrow more than what’s legally allowed, you’ll need to either pay off some debts yourself first or look at other options.

Get quotes from at least 3 to 5 different licensed money lenders. Don’t just accept the first offer you see.

When comparing, look at the total cost over the full loan term. Don’t just compare monthly payments. A lower monthly payment over a longer term might actually cost you more in total interest.

Check the interest rate each lender is offering. Remember the maximum is 4% per month but some lenders charge less. Check the administrative fees. Some lenders charge the full 10% while others charge 5% or even waive it during promotions.

Using Lender SG saves you time here. Instead of visiting multiple offices, you can get matched with offers from several licensed money lenders quickly.

Once you’ve chosen a licensed money lender, prepare your documents. You’ll typically need:

• NRIC (front and back)
• Latest 3 months of payslips or income proof
• Latest 3 to 6 months of bank statements
• Proof of address (utility bill or bank statement)
• Employment letter or business registration documents

Different lenders might ask for different documents. Check with your chosen lender to make sure you have everything they need. Having all your documents ready speeds up the approval process.

By law, you must visit the licensed money lender’s office in person to complete the loan. They need to verify your identity and you need to sign the contract in their presence.

Before you sign anything, read the entire contract carefully. Make sure you understand the interest rate, the fees, the repayment schedule, and what happens if you miss a payment. Ask questions about anything you don’t understand.

Never sign blank documents. Never let them keep your NRIC. These are illegal practices. If they ask you to do either of these things, leave immediately and report them to the Ministry of Law.

As soon as the loan money hits your bank account or is given to you in cash, pay off all your existing debts that same day. Don’t wait, don’t spend any of it on anything else, just pay off the debts.

Pay the full outstanding balance on each debt. Keep confirmation receipts or take screenshots of every payment you make. You need proof that you’ve cleared everything.

For credit cards, you can keep the accounts open with zero balance. This actually helps your credit score. Just don’t use them again until you’ve finished paying off the consolidation loan. If you don’t trust yourself, cut up the cards.

Unlike bank loans where you can set up automatic payment, licensed money lenders typically require you to make payments manually. This means you need to be disciplined about tracking payment dates.

Set up multiple reminders on your phone. Put the payment date in your calendar. Whatever system works for you, use it. Missing payments will cost you S$60 in late fees per month plus damage your relationship with the lender.

Budget for this payment like it’s rent or utilities. Something you absolutely cannot skip. Track your progress and watch your debt go down month by month.

Using a personal loan from a licensed money lender to consolidate your debts can genuinely simplify your financial life. You’ll have just one payment to worry about, one lender to deal with, and a clear path to becoming debt-free.

Licensed money lenders offer flexibility that banks simply don’t provide. They understand that people go through tough times. They’re willing to work with you even if your credit score isn’t perfect. And most importantly, they can approve and disburse your loan quickly so you can stop the bleeding right away.

The key is doing it properly. Choose a licensed money lender carefully. Verify they’re on the official registry. Understand all the terms and fees before you sign. Make absolutely sure you can afford the monthly payments. And commit to not creating new debt while you’re paying off the consolidation loan.

With the right approach and some discipline, you can clear your debts and get your financial life back on track. One payment per month. One lender. A clear timeline for when you’ll be debt-free. That’s what debt consolidation with a licensed money lender gives you.

If you’re ready to take action, don’t waste time visiting multiple licensed money lenders one by one. Lender SG helps you compare offers from multiple licensed money lenders in Singapore all at once. It’s free, quick, and completely confidential. Get matched with the right lender for your situation and start your journey to becoming debt-free today.