How To Choose A Licensed Money Lender In Singapore

These are uncertain and troubling times, which explains why some people may turn to loans to tide them over.

However, visiting just about any money lender may turn out to be unsafe as some of these lenders are not licensed, which may lead to problems in the future.

A licensed money lender is your best alternative because it offers fast approval under reasonable terms.

You should find a legitimate money lender who will offer advice and information such as repayment schedules, specific terms, and policies.

Singapore has many money lenders – therefore, it can be challenging to choose the right one.

This article will provide useful information on how to choose a licensed money lender and other information you should know about lenders.

Where Can You Find Licensed Money Lenders In Singapore?

Licensed money lenders are legal financial companies that offer lending services to people.

Rules govern their operations, which restrict their lending amounts, charging fees, and interest rates.

A licensed money lenders’ license, which the lender must acquire from the Singapore government, enables it to operate within the law to ensure it does not exploit lenders.

Licensed lenders cannot call on people to take up loans through social media platforms, texts, phone calls, or perform transactions online.

However, unlicensed money lenders disregard these rules, have high interest rates, and can harass borrowers.

The list of licensed money lenders on the Ministry of Law’s website gives detailed information about lenders that operate legally.

You should check the site regularly because the list is updated to ensure only licensed money lenders that follow the government’s rules remain on the list.

Are Licensed Moneylenders Allowed To Advertise?

The government has set stringent rules about moneylending advertisements to protect Singaporeans and the industry from bad practices.

The Ministry of Law has stipulated what this industry may or may not do concerning advertising.

That said, illegal lenders use all forms of restricted advertisements to attract customers.

Rules That Govern Advertisements

You must have noticed various kinds of adverts used by money lenders. These range from ads on their official websites to messages via SMS or social media.

The Registry of Moneylenders set up rules and guidelines that will cost lenders a fine if they flout them. Licensed money lenders are only allowed to put up advertisements via:

• Official websites of the lender
• Advertisements posted within the lender’s premises
• Business or consumer directories, both in online and print media

Moneylenders Credit Bureau

The Ministry of Law in Singapore established the Moneylenders Credit Bureau (MLCB), a repository with a history of information on requests and payments by money lenders.

The ministry allows the bureau to access credit information about borrowers so that they cannot get into debts they cannot settle.

The Moneylenders Credit Bureau offers licensed money lenders information that will allow them to know the creditworthiness of borrowers before giving them a loan.

The bureau has become advantageous to borrowers and lenders since lenders can run their business without fear of losses , while borrowers will likely not default.

How To Settle Debt With Licensed Money Lenders

The following are the recommended ways to settle debt with a licensed lender when you have trouble settling your loans:

• From the start, apply for an amount that you can afford to repay
• Claim receipts after every payment and make screenshots of online transactions
• Read the terms to understand the contract
• Prioritise loan payments ahead of all expenses
• Negotiate repayment terms or look for a repayment plan if you run into difficulty repaying
• Seek help from social service agencies
• Opt for the Debt Repayment Scheme

Fees And Rates Charged By Licensed Money Lenders

Licensed money lenders in Singapore follow strict guidelines set by the Ministry of Law.

Their interest rates are capped at 4% per month. However, some lenders may give lower interest rates as a promotion, but they can’t exceed this limit.

Licensed money lenders are also only allowed to charge interest on the outstanding amount of the loan. When the borrower continues to pay, the interest rate reduces.

They should also charge up to 4% monthly on late payments; and the same interest on the interest on the outstanding amount.

Licensed lenders can also charge processing fees that should not exceed 10% of the principal amount.

They can impose late payment fees, which should not exceed $60 per month.

How To Know If A Loan Is A Scam

Scams involving money, especially fake loans, have risen exponentially in Singapore.

This calls for the need for borrowers to be careful when looking for a money lender. The following are the signs that the lender is not genuine:

Instant Approval

Loan scammers usually give their customers guaranteed approval of their applications.

Genuine lenders usually search for your credit history and ask for more information about you before approving a loan. They will also conduct comprehensive documentation before approving the loan.

Avoid lenders who perform instant approvals without going through your income statement and the right documentation.

High Processing Fee

Loan sharks normally ask for a high “processing fee” before approving your loan. To avoid being conned, avoid complying with any demands of money upfront.

Method Of Advertising

Legal money lenders are only allowed to use business or consumer directories, their websites, and advertisements on their official premises’ exterior and interior parts to put up advertisements.

On the other hand, loan sharks use social media or SMSes to look for clients, which is prohibited.

Absence Of Contract

Loan scammers do not provide loan contracts so as to avoid exposing their illegal dealings. If you ask for a contract and do not get one, withdraw from further dealings with the scammer.

No Physical Office

Loan sharks usually lack a physical business premise. They operate online, and borrowers cannot identify their location.

This means it becomes difficult to arrest them whenever something goes wrong. A borrower should request to visit the lender’s physical location – if there is none, it could be a scam.

Since you may need instant cash due to an emergency, you might wonder if you can find loan sharks that operate 24 hours.

In Singapore, you can’t find money lenders who run their operations for 24 hours, and if you find one, it is most likely an illegal lender or loan shark.

Money Lender License

The Moneylenders Act requires a lender to obtain a money lender license to operate in Singapore – unless the lender gets a license that authorises, exempts, or excludes them from the requirements.

So this is the first factor to consider if you are considering a loan from a lender.

What To Do Before Taking A Loan

Before going ahead with your application, there are some crucial things you should consider:

Repayment Period And Interest Rate

When you apply for a loan, you must know about the repayment schedule, the interest rates, and the lender’s terms.

While interest charges are not the same for all lenders, the average rate among most is 4%. This is the highest rate a licensed lender can charge.

Also, a common repayment schedule lasts for five to 10 years. If the term is longer, it will attract less interest throughout the period but with a higher monthly installment.

Check If You Are Eligible

You must check if you fulfil the eligibility requirements for a loan in terms of your age, income, and bank balances.

Look For Appropriate Lenders

Getting a loan is not hard in Singapore. However, the challenge lies in looking for the right lender.

Check that  the lender is licensed because this means it operates legally and has regulations that guide its services.

Check If Its Terms Are Favourable

Make sure you understand the terms while considering your source of income and financial commitments.

Be aware that being unable to pay will attract penalties that can cause problems in the future.

How To Check If A Money Lender Is Licensed

There has been an increase in loan sharks acting as genuine lenders, who prey on innocent citizens that have no other option.

For this reason, one must check if a money lender operates legally by noting these points:

Genuine Lenders Request You To Sign A Contract

As mentioned above, licensed money lenders have rules to follow. The law requires them to offer a contract to their clients to sign.

The contract contains information such as the interest rate, repayment schedule, and late payment fees, among other crucial details.

Do not accept your offer if the lender does not offer a contract or gives you an incomplete form to sign.

Is Listed On The Ministry Of Law Website

The Ministry of Law’s website lists all licensed money lenders in Singapore.

If you find a lender, check the website to confirm if it is listed. If it is not, it could be a loan shark.

Makes You Understand Its Terms

The law in Singapore requires a licensed money lender to explain to its clients the contract terms in a language they will understand.

The lender is also required to answer all questions about the loan. A lender that refuses to explain the terms could be a loan shark.

Does Not Charge Above Market Rates

Licensed money lenders in Singapore follow rules that set market interest rates. The maximum interest rate is 4%. A licensed lender will never charge above this rate.

A Physical Office

Licensed money lenders always have a physical office to carry out their activities.

The office provides a place to perform the first verification process, necessary documentation, and contract signing.

So be careful when you meet a lender running their activities online or admit they don’t have an office.

Intimidations And Abusive Language

Loan sharks usually use intimidation and abusive language to get their money back.

Rules and guidelines by the Ministry of Law do not permit licensed money lenders to employ such methods.

Often, such intimidations do not happen until the loan is issued, so you should use the Registry of Moneylenders’ website to find genuine lenders.

What To Do After The Loan Is Granted

Once you receive your loan, there are steps you should take:

• While taking your loan, check if you got the correct principal amount. The law requires money lenders to charge a fee not exceeding 10% of the principal amount. Ensure the lender didn’t deduct more than this percentage.
• Request an account statement at least once every six months you received the loan when you have repaid it.
• Pay the right monthly installments at the right time.
• Request a receipt from your money lender every time you pay it. The receipt should be signed and indicate the right date.

Where To Get Help

Even if you have good financial intentions, you may sometimes run into problems. The good news is that you can easily find where to get help.

If you find yourself in trouble with your finances, the first step is to check your situation and develop a plan to overcome it.

If it becomes difficult to solve on your own, it is advisable to seek help.

One of the recommended places to seek assistance is Credit Counselling Singapore (CCS), a non-profit organisation that helps individuals with debt issues.

It educates them on how to use the money appropriately and deal with financial issues. CCS can also help you develop a debt repayment scheme.

The Debt Advisory Centre (DAC) also offers education to individuals with debt issues. While some companies offer assistance, they may charge you for their services.

Licensed money lenders in Singapore can also offer help when you talk to them about your issues. They may help develop a payment plan or restructure your loan in a way that favours you, since doing so also benefits them.

In short, obtaining a loan entails a great responsibility from both the borrower and the lender. You need to comply with guidelines to save yourself from trouble.

If you need assistance on financial issues, check out Katong Credit. It is a reliable and trustworthy licensed money lender that can assist you whenever you need help with money issues.

So please feel free to contact Katong Credit. We would love to help you.