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Learn MoreWhat is a Licensed Moneylender?
A licensed moneylender is a company legally approved by the Ministry of Housing and Local Government (KPKT) to operate a moneylending business in Malaysia, governed under the Moneylenders Act 1951 (Act 400).
This is different from:
- Banks & Financial Institutions: Regulated by Bank Negara Malaysia (BNM).
- Cooperatives (Koperasi): Regulated by the Malaysia Co-operative Societies Commission (SKM).
- Loan Sharks (Ah Long): Unlicensed, unregulated, and operating illegally.
Every licensed moneylender is required to display a valid KPKT license certificate, which can be independently verified by following the steps below.
How to Check If a Moneylending Company is Licensed
Steps to Verify a KPKT License:
- Download the official i-KrediKom app (by KPKT) from Google Play or the App Store.
- Search for the company’s name or license number in the app.
- Confirm that the license status is active (not expired or suspended).
- Request to see the company’s original KPKT license certificate during the briefing—it must be displayed at their premises.
- Ensure every loan agreement is provided in writing, and that you receive a copy for your own records.
Direct Lending Tip: Legitimate licensed moneylenders will NEVER ask for upfront fees before approving a loan, nor will they withhold your ATM card or NRIC. If asked to do so, consider it a red flag.
Differences Between Licensed Moneylenders and Loan Sharks (Ah Long)
| Feature | Licensed Moneylender | Loan Sharks (Ah Long) |
|---|---|---|
| Licensing | Valid KPKT license—verifiable via i-KrediKom | Unlicensed with no official record under KPKT |
| Interest Rate | Capped under the Moneylenders Act 1951 | Excessive interest rates that change arbitrarily |
| Agreement | Written, transparent loan contract | No written contract or non-transparent terms |
| Upfront Fees | No upfront payment required | Frequently demands "processing fees" before release |
| Receipts | Official receipts issued for every payment | No receipts; unclear payment records |
| Recourse | Complaints can be submitted directly to KPKT | Threats, cyberbullying, or vandalism for late payments |
Allowed Interest Rates & Terms
Licensed moneylenders generally charge a fixed interest rate of up to 1.5% per month (equivalent to 18% per annum) for unsecured loans. Different caps apply for secured loans, subject to limits set under the Moneylenders Act 1951 and its regulations.
Any rate exceeding these legal limits is unauthorized by KPKT and categorized as illegal lending. Actual rates can vary by company and should always be verified in the written loan contract before signing, rather than relying solely on advertisements.
Your Rights as a Borrower
- Right to receive a full copy of the loan agreement.
- Right to make an early settlement with a fair interest calculation.
- Right to receive an official receipt for every payment made.
- Cannot be forced to surrender your ATM card, NRIC, or bank account book as collateral.
- Right to lodge a formal complaint with KPKT in the event of harassment, threats, or misconduct.
Need a Cash Loan?
Direct Lending no longer offers personal cash loan services with licensed moneylender panels for private sector employees. Direct Lending provides bank and cooperative personal loans exclusively for civil servants, as well as installment plans for car servicing, car takaful, and medical expenses (Lenda Pay) for all Malaysians (civil servants and private sector employees).
To find a legitimate licensed moneylender near you:
- Download and use the official i-KrediKom app (KPKT) to locate and verify licensed companies in your area.
- Visit the official KPKT portal (www.kpkt.gov.my) for guidelines and complaint channels.
- Use the "How to Check a License" and "Licensed vs. Loan Shark" checklists above before signing any agreement.
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Frequently Asked Questions
A licensed moneylender is a lender that is licensed by Ministry of Local Government Development (KPKT) under the Moneylenders Act 1951. All licensed moneylenders will receive a valid license detailing the company name, address, license number and the validity of the license.
Under the Moneylenders Act 1951, the interest rate for unsecured loans is not more than 18% p.a. while secured loan is not more than 12% p.a.
The amount of financing that you are eligible to borrow would depend on a few factors such as your income, current debt commitment and credit history. Depending on the lenders, the maximum loan amount is up to RM20,000 with flexible loan tenors between 1 year and 4 years.
Planning to apply for a loan? Use this personal loan calculator to estimate your monthly instalment.
No, all the licensed moneylenders on Direct Lending platform do not take your ATM card when you apply a personal loan through us.
- Licensing: A licensed moneylender is governed and regulated by the Ministry of Local Government Development (KPKT) whereby they have to comply with the Moneylenders Act 1951 whereas an illegal lender (loan sharks) are not regulated or licensed by any party. Basically they set their own rules.
- Interest rate: A licensed money lender can only charge maximum 12% p.a. for secured loans and 18% p.a. for unsecured loans according to the Moneylenders Act 1951. As for an illegal money lender, they usually charge 30% interest monthly. However, do bear in mind that illegal money lenders do not follow any law so they can charge as they like.
- Loan amount & tenure: The loan amount a licensed money lender could offer is from as low as RM1,000 to maximum RM20,000 between 1 year to 4 years depending on the lenders itself. Some licensed money lenders could offer a higher amount with collateral. On the other hand, an illegal lender sets their own rules so the loan amount and tenure is set as according to their convenience. For example, it could be a very huge loan amount but the loan tenure is set to be very short.
- Credit criteria: Licensed moneylender will do proper credit analysis before granting you a loan. As for unlicensed money lender, there is no credit criteria as it is not governed by any party. But do note that because of this, they might hold on to your personal belongings such as IC, passport, ATM card as a form of security deposit.
- Other charges: When applying a personal loan with a licensed money, if your loan is approved there would be a loan agreement validated by a third party like a lawyer, legal officer or Commissioner for Oaths. That is why besides paying the monthly instalment, you will need to pay attestation and lawyer fees, credit check fees and stamp duty. The fees will be deducted from the loan proceeds. As for illegal moneylender, there is no loan agreement involved so there could be other hidden costs that they could charge you as they like.
You are eligible to borrow if you are currently a Malaysian citizen and:
- Aged between 20 and 60 years old
- Have a permanent job with at least 3 months of service (with payslips and salary is credited into bank account)
- Minimum gross monthly fixed income of RM1,500
- Not in bankruptcy and can afford the loan repayment
Check your loan eligibility for free HERE.
The basic documents required are:
- A copy of your NRIC (front & back)
- Latest 3 months payslip
- Latest 3 months bank statement
- A copy of utility bill (i.e. water, electricity)
- A copy of your EPF (detailed) contribution statement
A personal loan is a type of an unsecured loan. This means that you do not need to provide any collateral or have any guarantor in order to borrow money.
You could receive your loan approval result from as fast as 1-2 working days, subject to full & complete document. Loan disbursement takes about 1-2 working day upon signing of loan agreement.
Yes, you can make early repayment.
Direct Lending is an online personal lending platform to help borrowers to search, compare and apply financing that is most suitable to you. We only partner with licensed money lenders that is licensed under the Ministry of Local Government Development (KPKT).
Our service is 100% FREE and will not require any payment from our customers at any time. Direct Lending has over 2,700 reviews rated 5-stars by our customer in our Google Business Page and Facebook.
Applying a personal loan has never been this easy and convenient. Check your eligibility through our platform and we will select the best personal loan that best suit your financing needs. Our dedicated experienced consultant or the officer from the lender will then be in contact and assist you with your personal loan application from A-Z.
Apply and check your eligibility for 100% free. No hidden charges or processing fees. To apply for a personal loan, click HERE.
* Terms & Conditions apply. The financing rates is 1.5% per month or 18% per annum. Tenor of the financing offered is between 1 year and 4 years. As a representative illustration, for a RM10,000 loan amount borrowed for 1 year at an annual interest rate of 18%, the total repayment amount at the end of the tenure is RM11,800.