The difference between licensed and unlicensed moneylenders in Singapore lies in their legal status and regulatory oversight. Here are the key distinctions:

1. Legal Status: Licensed moneylenders in Singapore operate under a valid license issued by the Registry of Moneylenders. They comply with the regulations and guidelines set forth by the government and are authorized to provide loans to borrowers. Unlicensed moneylenders, on the other hand, do not have a valid license and operate outside the legal framework.
2. Regulatory Oversight: Licensed moneylenders are subject to strict regulations and are monitored by the Registry of Moneylenders, a department under the Ministry of Law. They must comply with rules regarding interest rates, fees, advertising practices, debt collection, and more. Unlicensed moneylenders operate without regulatory oversight, which exposes borrowers to potential risks and unethical practices.
3. Interest Rate Caps: Licensed moneylenders in Singapore are subject to interest rate caps set by the Registry of Moneylenders. The interest rates for licensed moneylenders are capped at 4% per month. Unlicensed moneylenders are not bound by these regulations and may charge significantly higher interest rates, leading to financial difficulties for borrowers.
4. Consumer Protection: Licensed moneylenders are required to adhere to specific consumer protection measures outlined by the government. These measures aim to safeguard the interests of borrowers and ensure fair lending practices. Unlicensed moneylenders do not provide the same level of consumer protection, putting borrowers at greater risk of exploitative practices, harassment, and unscrupulous debt collection methods.
5. Legal Recourse: If borrowers face any issues or disputes with licensed moneylenders, they have legal avenues to seek redress. They can approach the Registry of Moneylenders for assistance. However, dealing with unlicensed moneylenders can pose significant challenges, as they operate outside the legal framework, making it difficult to enforce any rights or seek recourse.

It is crucial for borrowers in Singapore to borrow from licensed moneylenders to ensure legal protection, fair terms, and proper recourse mechanisms. It is advisable to verify the license status of a moneylender before entering into any loan agreements and to exercise caution to protect one’s financial interests.