Are you running out of funds and looking to take out a loan from a trusted bank or financial institution in Singapore? It is an excellent idea, but before you can actualise it, there are a number of things that you need to know and carefully consider, including where to borrow money in Singapore.

Living in Singapore—one of the most expensive jurisdictions—paying bills such as medical charges, insurance, and education can be an uphill task, and getting a loan from an authorised financial institution could be a good way to alleviate your monetary stresses. However, you need to be careful to avoid the risk of falling into the hands of loan sharks. This post digs deeper into financial institutions and also highlights useful tips for borrowing money in Singapore.

The Main Difference between Financial Institutions and Unlicensed Loan Providers

In Singapore, there are a number of laws, like the MA of 2008 under the Ministry of Law, that are used to protect the interest of both loan providers and borrowers. The application of these laws is what differentiates the financial institutions and unlicensed loan providers in Singapore.

Financial Institutions

These are loan providers that strictly adhere to all the applicable laws in Singapore. Their goal is to ensure that clients get high value for money and only loans that they are able to repay. Take the example of a borrower who walks to a bank or online financial institution in Singapore to borrow a personal loan. In such a case, the loan provider has to review the borrower's credit score, and the interest rate cannot exceed 4%.

Another attribute of financial institutions is that they do not use harmful methods, such as abusive language or shaming borrowers if they are unable to repay. In case of loan default, they will simply report you to the credit bureaus, resulting in damage to your credit score. Lendela only partners with authorised financial institutions for all its loan comparison services.

Unlicensed Loan Providers (Loan Sharks)

Loan sharks are the direct opposite of financial institutions. They are not licensed and, therefore, not authorised to operate. However, they still manage to operate under wraps, taking advantage of the advanced technology to provide them with some cover. Loan sharks typically charge very high-interest rates. Even when they advertise low-interest rates, they attach very high processing fees.

Another attribute common with unlicensed loan providers is that they are very ruthless when recovering the money lent to clients. For example, they may humiliate borrowers to coerce them into paying the loans they borrowed. To help you steer clear of unlicensed loan providers, here are some red flags to look out for:

  • A loan provider willing to give loans without performing clients’ background checks. For example, most of them rarely ask for supporting documents such as financial statements.

  • Any loan provider who insists on closing the loan deal online or through the phone. When dealing with a legit dealer, the loan signing must be done physically in their offices or via a representative.

  • A loan provider who does not provide you with a loan agreement with the complete terms and conditions. Most loan sharks will only tell you the interest rates and date of payment, while hiding other fees.

If you notice any of the behaviour we have highlighted above, be extra cautious. To help other borrowers from falling into the same trap, make sure to also report the case to the authorities for further action.

Where to Borrow Money in Singapore: What Options Do You Have?

For most people in Singapore, the first thing that runs through the mind when considering borrowing funds is a bank. The chances are that you already have a bank account, but banks tend to be rigid compared to other financial institutions we are going to highlight below. Most banks are only willing to help borrowers with higher credit scores. Here are other borrowing options to consider:

Online Loan Providers (or Virtual Banks)

Financial Institutions

Credit Unions

Credit Card Companies

  • Although their operations are similar to that of traditional banks, most of the loan process is conducted online. However, signing the loan agreement is still done in person.

  • Loans can therefore be reviewed and approved more rapidly than conventional banks.

  • The main difference between financial institutions and banks is that they mainly deal with small amounts, often up to S$10,000.

  • Background checks are usually not as stringent as those applied by banks. Therefore, they are likely to approve loans that traditional banks are likely to decline.

  • Member-owned organisations that lend users the money contributed by other members.

  • Operates similar to a bank but differs in that the interest is lower, and only members are loaned.

  • It is considered an excellent alternative when one cannot secure credit from other conventional loan providers.

  • These loans are unsecured and allow you to withdraw cash in order to make an emergency purchase when a credit card is not accepted.

  • An interest, which may be higher than standard loans, is levied on the loan. A processing fee is also charged.

Factors to Consider when Looking for Where to Borrow Money

Apart from where to borrow money in Singapore, you also need to think about why you really need the funds. This is crucial to ensure you only borrow what you need to address the issue at hand and avoid being drowned in debt. Taking more than you need means higher interest by the time the loan is repaid in full. Other important things that you need to think about include:

Repayment Ability

Loan Interest

Loan Term

  • The rule of thumb when taking a loan is to borrow only what you can repay.

  • If you have other debts, make sure the new loan does not put the amount payable every month beyond 30-35%.

  • The best loan to select is the one that comes with low-interest rates.


  • Compare what different banks and financial institutions have to offer and go for the one that is more affordable.

  • Loan term is the period that you require to repay the loan. 

    Typically, the faster you can clear the bank, the better because the cost will be lower. However, you might want to consider a longer period because it comes with lower monthly payments.

Submit Your Loan Application With Lendela

There are a lot of different loan providers in Singapore to provide borrowers with enough options. However, deciding where to borrow money in Singapore is not easy because these companies all have varying conditions. Therefore, if you want to submit applications to different banks and financial institutions, you may have to take a lot of time carefully reviewing multiple terms & conditions. To speed up and simplify the process, Lendela can offer you the helping hand you need.

Lendela, a trusted loan comparison site, was created to help simplify the process of loan application and matchmake the borrower with the right bank or financial institution. What differentiates Lendela from other loan comparison services is that we only work with authorised banks and financial institutions. This makes it an excellent place to borrow money with no risk of falling into the hands of loan sharks.

Another unique feature is that Lendela directs your loan application to multiple banks and financial institutions. Therefore, you do not have to make multiple applications when targeting different banks and financial institutions. Lendela goes beyond this. Our personalised loan matching helps identify banks and financial institutions with higher chances of approving your loan. Here are the main steps involved when using Lendela to borrow money:

  1. Visit Lendela’s website to submit a short application.

  2. The application is forwarded to different banks and financial institutions that will review them and come back to you with pre-approved offers.

  3. Review the loan offers and pick the best one for you.

  4. Visit the bank's office for the signing of the loan agreement. Then, money is released to your account.

If you are thinking about where to borrow money in Singapore, it is important to be smart and only select between banks and licensed dealers. Furthermore, you need to ensure that the selected bank or financial institution has good terms and conditions, such as low-interest rates. Remember that once the loan has been approved, you have to repay it according to the signed agreement.

Key Takeaways:

  • When looking for where to borrow money in Singapore, it is important to first be able to differentiate authorised banks and financial institutions from unlicensed loan providers, who may charge high fees and cause you serious trouble down the line.

  • Legitimate options for taking out a loan in Singapore include traditional and online banks, financial institutions, credit unions, and credit card companies.

  • When getting a loan, you should consider whether you really need the funds, repayment ability, the loan term and loan interest.

  • As a trusted loan comparison website that works exclusively with authorised banks and financial institutions, Lendela can help you quickly and conveniently find all the best personalised loan offers.