How To Choose A Licensed Money Lender In Singapore
Financial difficulties can leave you stranded without a quick source of income. Opting for a money lender may have crossed your mind if you need to take out a fast cash loan.
Licensed money lenders are known for providing fast loans without much paperwork or red tape.
However, with many money lenders in Singapore, choosing the right one for your needs can be challenging – especially with unlicensed lenders or loan sharks in the picture.
This blog post will provide tips on how to choose licensed money lender in Singapore.
Which Are The Licensed Money Lenders In Singapore?
A licensed money lender in Singapore is a financial institution licensed by Registry of Moneylenders to provide loans to individuals and businesses.
Licensed money lenders must follow guidelines set by the Ministry of Law (MinLaw) and adhere to a code of conduct that includes providing clear and accurate information about their products and services.
The most important thing to do when it comes to how to choose a licensed money lender is to check if a particular lender is on MinLaw’s list of licensed money lenders. The list is available online.
Even though a money lender in Singapore is licensed, you should be cautious if it:
- Withholds your confidential documents such as NRIC and passport
- Uses threats or offensive language when dealing with you or processing your loan
- Insists that you must sign a sketchy or incomplete loan contract with unclear terms and conditions
- Withholds any portion of your loan without any appropriate reason
- Accepts your loan request via text message or email even before it obtains your loan requisition form and verification documents such as payslips
- Approves your loan without offering you a duplicate of the loan contract
The above-mentioned activities are illegal, and if you come across any of them, don’t hesitate to report the money lender to the Registry of Moneylenders.
Remember to include the money lender license, business name, and necessary details.
Are Licensed Money Lenders Allowed To Advertise?
The Moneylenders Act regulates advertising by money lenders in Singapore.
The act prohibits licensed money lenders from advertising their services in any public place, including on the internet, because there are so many loan advertisements on social media.
Therefore, licensed money lenders are only allowed to advertise through the following channels:
Print Or Online Business Directories
Licensed money lenders can advertise their businesses in print and online directories. However, they cannot use false or misleading information in their advertisements.
For example, a licensed money lender cannot say that it offers “low interest rates” when its actual rates are higher than the legal maximum.
Their Official Websites
It is vital to note that the licensed money lender you are considering should have an official website.
The website should include accurate information about the lender’s moneylending license, its contact information, and its rates and fees.
If a money lender lacks a website, or if its website contains inaccurate or outdated information, you should avoid using it.
Their Office Premises
Licensed money lenders are allowed to post advertisements within their office premises.
This ensures that borrowers are made aware of the terms and conditions of the loan before they sign off on a loan contract with the money lender.
The lender’s money lender license must also be prominently displayed so that it can easily be seen by anyone who enters the premises.
Fees And Rates Charged By Licensed Money Lenders
Licensed money lenders must charge fees and rates set by the government.
The maximum interest rate that a licensed money lender can charge is 4% each month. In addition, licensed money lenders are allowed to charge a late payment fee of $60 if you do not repay your loan on time.
It would be best to ask a licensed money lender about its fees and rates before you agree to take out a loan.
If a money lender refuses to tell you its fees and rates, or if it tries to charge you more than the legal maximum, drop the lender immediately.
How To Know If It’s A Loan Scam
Even as you think about how to choose a licensed money lender, you must know there is a possibility of encountering a loan scam.
Some of the things to look out for that may indicate you’re dealing with a scammer include:
- Guarantee of approval regardless of your credit history
- No verification documents are required
- Interest rate quoted is much higher than the average
- Insistence on being paid upfront before any money is disbursed
- Refusal to give you contact details for its company or address
If you’re approached by a money lender in Singapore offering a loan with any of these red flags, it’s best to walk away and find another lender.
There are plenty of reputable companies out there that can offer you a fair loan, so there’s no need to take the risk with a scammer.
What To Do Before Taking A Loan
Before taking out a loan from a money lender in Singapore, consider the following points:
Purpose Of The Loan
Licensed money lenders cannot lend you more money than you need.
Before you take out a loan, you should always have a clear plan on how you will use the loan, especially if you are taking out a loan for the first time.
It will help to ensure that you borrow the right amount of money that you can repay on time.
For example, if you need to borrow money to pay for medical expenses, you should have a copy of the medical bill that shows how much money you need to borrow.
If you are also borrowing money for a business, you should have a business plan that shows how you will use the loan.
Type Of Loan
Licensed money lenders must also provide information about the loan you are borrowing.
That said, you should always do your own research before you agree to take up a loan.
For example, suppose you are planning to get a personal loan.
In that case, you should research the different types of personal loans available and be aware of the risks of taking up such a loan.
Your Credit Score
Licensed money lenders are required to conduct a credit check on all borrowers.
You should always request a duplicate credit report from the Moneylenders Credit Bureau website for your own reference.
The report will show whether the money lender conducted a credit check properly. If you have a bad credit score, a licensed money lender in Singapore may refuse to give you a loan.
How To Check If Money Lender Is Licensed
You can check if a money lender has a license by searching for its name on the website of the Registry of Moneylenders, which has a list of all licensed money lenders in Singapore.
The Registry will list out the money lender’s name, address, website and license number. You should always check the license number of the money lender before you agree to borrow money from it.
Also, you can ask to visit its physical locations. If the lender refuses or offers an alternative of meeting in a location like a carpark, it is best not to get involved with them since there is no guarantee your funds will be safe.
What To Do After Loan Is Granted
After you have been granted a loan, it is essential to take some time to understand the terms of your loan and make sure you are comfortable with them.
If you have any questions, ask your licensed money lender.
Once you are ready to proceed, you will need to sign the loan agreement and provide any collateral that may be required.
The contract will state the terms of your loan, including the interest rate, repayment date, and any other charges that may be applicable.
Once the paperwork is complete, the money lender will disburse the funds to you, and you will be responsible for repaying the loan according to the terms of your agreement.
You can come up with a strategy on how to settle your debt with a licensed money lender.
If you make your payments on time and in full, you can expect a favourable report from the money lender, which can help improve your credit score.
How To Settle A Debt By A Licensed Money Lender
If you are planning to get a loan from a licensed money lender in Singapore, you should know that settling the loan on time is crucial.
Not only will it help you avoid late fees and additional interest charges, but it will also enable you to maintain a good relationship with the money lender.
Here are a few tips on how to settle your loan:
- Make sure you have the correct contact information for the money lender. This includes its name, address, phone number, and email address.
- Read over your loan agreement carefully because it will help you understand the repayment terms and conditions.
- Make a budget and stick to it. This will ensure you have enough money to make your loan payments on time.
- Stay organised to keep track of your loan balance, payment due dates, and other important information in one place.
- Communicate with the money lender if you’re having trouble making a payment. It may be able to work with you to come up with a repayment plan that works for both of you.
Where To Get Help
If you take out a loan and have trouble repaying it, you should contact various organisations in Singapore as they have alternative ways to settle a licensed money lender’s debt.
They can help you create a budget and negotiate with creditors. This prevents the money lender from suing you, especially if you took a secured loan against an asset.
If you lose the case, you could be ordered to pay the money lender back, plus interest and fees.
Some of the popular organisations in Singapore may include:
- Credit Counselling Singapore (CCS)
This organisation renders aid to those who are having difficulty managing their debts.
- Credit Collection Association of Singapore (CCAS)
CCAS acts for all money lending agencies in Singapore. It also helps to solve disputes between moneylending agencies and their customers in case of any misunderstanding.
- Credit Association of Singapore (CAS)
Credit Association of Singapore represents all licensed money lenders in Singapore. You can usually contact them before borrowing a loan from a licensed money lender, as it can offer you credit guidance and counselling.
- National Council On Problem Gambling (NCPG)
If you took out a loan from a licensed money lender in Singapore and used it to gamble, you can reach out to NCPG for assistance when you cannot repay the loan.
Frequently Asked Questions
What Are The Consequences Of Borrowing From An Unlicensed Money Lender In Singapore?
The consequences can be severe. You may be harassed and stalked if you fail to repay the loan or fall prey to a scam.
You could also end up paying high processing fees and interest on your loan.
What Should I Do If I Borrowed From An Unlicensed Money Lender In Singapore?
If you have borrowed from an unlicensed money lender in Singapore, you should contact the police and file a report. You should also get a lawyer to help you deal with the situation.
Always Choose A Reliable Licensed Money Lender
The government regulates licensed money lenders in Singapore to protect you from illegal lenders and loan sharks.
You can check the Registry of Moneylenders to find a list of licensed money lenders in Singapore. Make sure you understand the terms of your loan and feel comfortable with them before signing the loan agreement.
If you are looking for a loan or quick cash, contact Horison Credit today for fast cash loans with low interest rates.