During times of financial hardships, unexpected medical emergencies, or dire circumstances in life, you may find yourself in a bind, struggling to make ends meet and solve the issue at hand.
During such times, most of us seek help from our family and friends, but it does not always work out.
A better solution is to look out for a licensed money lender that can help you acquire personal loans.
If you are looking to take out a personal loan and are unsure of how to find a trusted and licensed money lender, as well as the terms of acquiring a personal loan and other details, then read this useful guide.
Here is a complete guide on how to find a licensed money lender in Singapore.
What Is A Money Lender?
According to the Singapore Moneylenders Act, a money lender is an entity that can act as the principal lender or as an agent in a moneylending institution. It essentially carries out the business of moneylending.
Any entity that has not been authorised by a license to lend money cannot call itself a money lender.
How To Find A Licensed Money Lender
To determine whether a money lender is authorised to loan money, the Ministry of Law has compiled a list of licensed money lenders in Singapore, which can be found online.
Is A Licensed Money Lender A Viable Bank Loan Alternative?
Living in one of the most expensive cities in the world – Singapore – can take a toll on one’s finances.
In Singapore, one’s education, wedding expenses, or medical bills can cost a few thousand dollars, and getting a bank loan is not always the most viable option.
Banks usually have stricter loan approval policies and require a considerable period of time before it gives you the required cash, if at all.
Finding a licensed money lender then becomes your next best option.
What To Consider Before Taking Up A Loan From A Money Lender?
Consider all other options such as asking for help from family and friends, or looking up financial assistance programmes offered by the government before you decide to take up a loan from a money lender.
Before you enter into a contract with a licensed money lender, make sure that you understand and agree to all its terms, keeping in mind your income and financial constraints.
You are legally obligated to fulfil a loan contract you enter into with a legal money lender in Singapore. This includes not just the principal amount that you borrowed, but also the interest rate and any applicable fee.
Do Not Rush Into Signing A Contract
Many unlicensed and illegal money lenders can resort to harassment and coercion.
Shop around, look up licensed and legit organisations in the Registry of Moneylenders, and negotiate a deal that suits you best in the long term.
It is highly advisable to only borrow the amount you need, and what you can easily repay given your income and personal finances.
Determine The Type Of Loan You Need
It is crucial to assess your finances and select the type of loan you need before you settle on a licensed money lender in Singapore.
The most important question you can ask to determine the type of loan you need is whether it is for a major emergency or small inconvenience.
If it is a minor financial crisis that you’d like to deal with swiftly, reaching out to a list of licensed money lenders in Singapore would be a wise choice.
Paying off credit card debts, consolidating your loans, and spending on home renovation are some instances where a licensed money lender such as Lending Bee can come to your rescue.
Your next step is to get a copy of your credit score and try to clean it up a little before you apply for a personal loan.
Many licensed money lenders do not check your credit score before approving loans, but others may reject loan applications with poor credit ratings.
How Much Can You Borrow?
Before moving ahead with your loan application to a licensed money lender, determine the amount of loan that you can apply for, and your eligibility for the said amount.
According to Singapore law, the maximum amount of unsecured loan that you can get is determined by your annual income and citizenship status.
The Monetary Authority of Singapore (MAS) has limited the amount of unsecured loan one can borrow to 12 times of one’s monthly income.
This curb has been placed to prevent over-borrowing and the additional pressure of paying back more than you can.
Unsecured loans are those for which there is no collateral that the bank can seize or foreclose if it is left unpaid. Examples of unsecured loans include credit cards, personal loans, educational loans, and home renovation loans.
For secured loans, there is usually no cap on the amount of money that you can borrow, and since collateral is involved, it can be seized by the money lender if you fail to pay back your loaned amount.
What Interest Rates Can The Money Lender Charge?
The Ministry of Law has a set of rules that all licensed money lenders must adhere to.
This controls the interest rate, amount of late fees, and any other costs that the borrower may incur when taking out loans from a money lender.
With effect from 1 Oct 2015, licensed money lenders in Singapore cannot impose an interest rate and a late interest rate of more than 4% per month.
The late fees against the borrowed amount cannot exceed more than $60 per month.
The total costs of lending money, including the interest rate, late interest, late fees, administrative fees, and any other charges, should not exceed the principal loan amount.
The administrative fees charged by a licensed money lender should also not exceed 10% of the principal loan amount.
It is important to note that the money lender is required by law to inform the borrower of all terms of the loan and explain them in a language that the borrower can understand.
The money lender must give complete information about the interest rate, late interest charges, any administrative fees, and details of the installment payment in case of a term loan to the borrower before any contract is signed.
How To Know If A Money Lender Is Licensed?
The easiest, most convenient way to confirm if your money lender is authentic and licensed is to refer to the list of licensed money lenders, called the Registry of Moneylenders, in Singapore.
You can easily avoid getting scammed by blacklisted money lenders in Singapore by keeping a check on the list, which is updated monthly.
Reading reviews online is another way to do your research on a licensed money lender in Singapore. People often document their bad experiences involving loans and share details online for others to be vigilant.
Also, look out for how the money lender is advertising its service.
This is important to note because the Ministry of Law has limited licensed money lenders to only advertise through well-documented channels. These include business directories, their service websites, and advertisements showcased on the doors, walls, or windows of the licensed money lender’s physical location.
So if you are receiving unsolicited text messages or phone calls from money lenders advertising their services, it is a clear red flag and is proof that you are dealing with an unlicensed money lender.
Another suspicious sign that points towards their illegitimacy is if they charge more than the standard interest rates, as imposed by the Singapore Registry of Moneylenders.
Having an interest rate or a late interest rate greater than 4% of the principal amount, or charging more than 10% in administrative fees are clear signs of an illegal money lender or loan shark, rather than a licensed money lender.
Having a physical address is another sign to check for a licensed money lender’s legitimacy.
The Singapore Registry of Moneylenders provides a list of all licensed moneylending businesses, along with their contact details and physical addresses.
This way, you can approach them directly for verification and initiate the process of acquiring a loan.
In case your loan has been approved without having a face-to-face meeting with the money lender, chances are they do not have the approved moneylending license.
Having a meeting at any other place except the one listed on the Registry is another red flag, and you must be vigilant of the tactics of the loan sharks disguised as licensed money lenders.
With the ease technology has provided us all with, it seems like a good idea to deal with your finances online, by filling in a form and getting your loan approved instantly.
But if that is the case, and you have had an approved loan without any physical verification with the money lender, it’s time to say goodbye to them.
Another sign to look out for is that the terms and conditions, interest rates, and late and administrative fees are explained to you in clear and simple words by the money lender.
Any moneylender staying hush over the details of the loan contract is a clear red flag, and you should check with the Registry for a licensed money lender in Singapore.
What If You Need To Lodge A Complaint Against A Licensed Money Lender?
In case you are being threatened or harassed by a money lender, you can reach out to the Registry of Moneylenders directly by contacting at 1800-2255-529.
Harassment and threatening for debt collection are defined strictly as unfair practices by the Registry of Moneylenders, and the Registry deals with such complaints seriously and swiftly.
You can also file a complaint with the Registry online through a feedback form found on the Ministry of Law website.
Make sure to include all relevant information about the money lender: its business name, contact numbers, and license details. You may be called to an interview by the Registry to acquire more details about the loan contract to get to the bottom of the matter.
You can also file a police complaint against the errant money lender for harassment and blackmail.
Alternatively, you can also take the matter to court, through the Small Claims Tribunal under the Consumer Protection Act.
Supporting Documents Required For Your Loan Approval Process
After deciding on a licensed money lender, and the amount that you can comfortably pay back within the decided time frame, you will need the following documents to back your application and get swift approval:
- Your NRIC or passport for verification of identity
- Your bank statements and bills to verify your physical address
- Payslips or income tax statements to verify your monthly or annual income
Your Loan Has Been Approved. What’s Next?
As soon as your loan gets approved, your licensed money lender will deliver to you the decided principal amount of the loan.
He or she can deduct a loan approval fee upfront from the principal amount, which cannot be greater than 10% of that amount.
As soon as you receive the borrowed amount, you are obligated by law to repay the loan to the licensed money lender, according to the terms decided prior to approval.
It is crucial that you take care of the following points as a borrower as soon as you acquire the required loan from the money lender:
- A copy of the loan agreement must be provided to you
- You must obtain a receipt from the money lender every time you make a loan payment
- You must also obtain a statement of account that contains the details of the transaction. This statement contains all payments made and remaining, as well as the remaining balance of the account, and is issued every year in January and July.
- Make sure that all issued receipts contain correct details such as your name, the date, and amount. Also, keep all receipts safe with you for record and as evidence of payments.
Licensed money lenders are a safe and reliable way for acquiring loans when you have an emergency and are strapped for cash.
But one must always exercise caution when signing a loan contract, so do your research, and only get the amount of loan that you can easily pay back without running into additional debt and piling interest.
Finding a licensed money lender, with friendly terms and conditions, and an affordable interest rate can be difficult.