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How to Settle Licensed Money Lender Debt? 2024Guide

how to settle licensed money lender
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Struggling to pay off your loan? Don’t panic! There are ways you can work out your debt from a licensed moneylender without extreme measures.

Have a chat with the lender to know if you can negotiate the repayment terms. It is essential to contact your money lender for information on how you can settle your debt. It is also crucial to ensure you get your loan from a licensed money lender to protect yourself from loan sharks.

Here is a deeper dive into the different ways on how to settle licensed money lender in Singapore:

How Do You Deal with a Licensed Moneylender?

Negotiate your monthly payment with your moneylender. Talk to your loan officer and request for a flexible repayment schedule that will match your current financial capabilities. 

Note that it’s best to talk to your loan provider instead of defaulting. Lenders will usually understand your situation and can give you a better repayment plan. 

Stay Vigilant: What To Do Before Taking a Loan from Licensed Money Lenders

The licensed money lender you choose is supposed to help with legitimate information and flexible loan repayment schedules. Many money lenders are available in Singapore, and finding the best options can be pretty challenging.

Here are some tips to help you choose the best-licensed money lender in Singapore:

  • Check the License

One of the best ways to ensure that a money lender is credible is to check whether they are licensed. You can check if their name is listed on the Ministry of Law’s website. The website lists all the legal money lenders registered with the Registry of Moneylenders.

You can also call 1800-2255-529 to get in touch with the Registry staff to verify the moneylender’s legal status and registration.

  • Beware of the Mode of Advertising

Licensed money lenders never advertise through SMS, call, emails, or social media. Only scammers or unlicensed money lenders will contact you to offer you a loan.

  • Know the Permitted Charges and Fees

All moneylenders are only permitted to impose the following charges and expenses: a fee not exceeding $60 for each month of late repayment; a fee not exceeding 10% of the principal of the loan when a loan is granted; and legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

  • Know that the Interest Rates are Capped at 4% Per Month

Licensed money lenders are not allowed by law to charge more than 4% interest loans on all loans. You will often see deceptive loans advertised with low-interest rates to entice and scam you.

  • Check if They Have Legit Workplaces

Licensed money lenders have legit working offices you can visit during business hours. Unlicensed money lending platforms only offer their services by phone and often pretend to offer them 24 hours a day.

Know Your Rights: Legal Money Lenders Cannot Do the Following

We have all heard stories about debt collectors and loan sharks hurling insults or banging very loudly on the doors of borrowers who do not pay up their debts on time. These are things that no borrower wants to experience. It is, therefore, essential to be aware of the things that a licensed moneylender cannot put you through.

Licensed money lenders cannot:

1. Threaten, Harass, Or Intimidate A Borrower

The Protection from Harassment Act protects borrowers against harassment and intimidation. A money lender or debt collector should never threaten or insult you or your family. The act is against using abusive, insulting, or threatening words or behavior intended to cause distress or alarm to the borrower.

They are liable under the penal code for unlawful discrimination if they threaten to injure or destroy your home. Not that they do not have to lay a hand on you or verbalize threats, but they can be liable if they use gestures to intimidate you.

2. Cause Injury

Causing injury to anyone is a punishable offense in Singapore. If a debt collector or money lender causes harm to a borrower to the extent of wounding or causing unconsciousness, the offender might face imprisonment for up to 2 years or a fine of $S5,000 and, in some cases, both.

3. Stalk

A debt collector or money lender should not persistently monitor the movements of a borrower. This is often considered unlawful stalking under the Protection from Harassment Act. Stalking is unlawful, especially intending to cause distress or intimidation.

4. Vandalize

It is unlawful under the Vandalism Act to write profanities or splash pain in public spaces and at your doorstep. This includes a debt collection pasting a debt collection notice or banners in the borrower’s workplace or home.

5. Seize Control or Damage Your Property

Some debt collectors can intimidate you by saying they will damage or take away your car, house, and other possessions. However, without a Writ of Seizure and Sale from Singapore Courts, the moneylender can never seize your property.

In addition, a debt collector or moneylender cannot damage your property. It will be punishable under the Penal Code and can be punished with a fine, imprisonment, or, in some cases, both.

6. Use Unlawful Assembly

A debt collector or licensed money lender cannot come looking for loan repayments with a mob, i.e., a group of more than five people. This is unlawful assembly and can be punished by a jail term.

How Do I Report Illegal Money Lenders in Singapore?

If you wish to provide any information related to illegal moneylenders or loan scams, contact the Police hotline at 1800-255-0000, or submit it online at www.police.gov.sg/iwitness

If you receive a cold call or unsolicited text message asking if you would like to take up a loan, call the anti-scam helpline at 1800-722-6688 to verify. Visit www.scamalert.sg to find out more about loan scams.

Good To Know

1. Is Moneylender Safe? How Do Licensed Money Lenders work?

Yes, a licensed money lender in Singapore is safe. It is a legal entity who is authorized to carry on the business of money lending in Singapore. They are regulated and registered under the Ministry of Law. These legal lenders abide by the rules and regulations set in the Moneylenders Act which protects both the lender and the borrower.

Licensed moneylenders let you borrow fast cash with fair interest rates, charges, and fees. 

2. What Are the Pros and Cons of Using Moneylending Services?

Licensed money lenders are a prevalent option for people who need quick cash in Singapore. They can be very convenient, but as with every service, they also have drawbacks. Here is an overview of some of the pros and cons of borrowing money from a licensed money lender:

The Pros

  • Fast access to cash
  • Flexible repayment schedule
  • The quick and easy application process
  • Access to a loan, even with bad credit
  • Use personal loans for any purpose, including payday loans and business loans

The Cons

  • Missing a payment can lead to a debt snowball
  • Missed repayments can lead to a bad credit score
professional lawyer concept punishment and judgement idea

Types of Loans Can You Borrow From A Licensed Money Lender

1. Personal Loan & Foreigner Loan

Unsecured personal loans for citizens, PR, and foreigners are approved based on creditworthiness, monthly or annual income, repayment history, employer reputation, etc. 

A personal loan can be used for multiple purposes, like meeting expenses of a medical emergency, travel, house renovation, as well as debt consolidation, etc which comes with flexible tenure either for the short term or long term.

Features

Moneylenders

Loan amount

Up to 6x monthly salary 

Interest rate

Up to 4% per month

Repayment period

Up to 12 months subject to the terms & conditions of the agreement

Application approval

Within 30 minutes 

Eligibility

Must be 21 years old with a minimum annual income of S$24,000 for citizens and permanent residents and S$36,000 for foreigners

Typical requirements

  • For citizens and PR: NRIC, proof of income, and proof of residence.
  • For foreigners: Passport, work permit, proof of residence, income, and employment letter

2. Payday Loan 

Payday loans are short-term loans that can help you cover immediate cash needs until you get your next paycheck. These are typically due within the month—or close to your next payday.

As the name indicates, in a payday loan, you can borrow up to one month’s worth of your salary from a licensed money lender to help with your short-term financial issues and repay it back on your next paycheck.

Features

Moneylenders

Loan amount

Up to 1 month of your salary

Interest rate

Up to 4% per month

Repayment period

Within a month or on next payday

Application approval

Within 30 minutes 

Eligibility

Must be 21 years old with a minimum annual income of S$24,000 for citizens and permanent residents and S$36,000 for foreigners

Typical requirements

  • For citizens and PR: NRIC, proof of income, and proof of residence.
  • For foreigners: Passport, work permit, proof of residence, income, and employment letter

3. Business Loan

This type of package is something you can avail of in meeting urgent needs for your growing business or ventures. These are welcome for start-ups and small businesses are corporate entities. 

If their commercial activities indicate their earning and growth potential, banks will quickly rally behind them. On the other hand, CEOs and sole proprietors with bad credit can always seek help from a licensed money lender, who can then offer them up to S$200,000 payable up to 2 years.

Features

Moneylenders

Loan amount

Up to S$200,000

Interest rate

5 to 15% per month

Repayment period

Up to 2 years subject to the terms & conditions of the agreement

Application approval

Within 30 minutes

Eligibility

  • Company must be registered in Singapore
  • Operational for at least 1 year
  • Has a minimum turnover of S$60,000

Typical requirements

NRIC of all business partners, profile, income tax notice, financial statement, utility bills, tenancy agreement, etc.

4. Bridging Loan

Bridging loans are specially designed for Singaporeans who want to purchase a new property, like a house or flat, but need to borrow additional capital to fund the purchase. 

Bridging loans from licensed money lenders can help you bridge a financial or working capital gap when upgrading or moving home.

Features

Moneylenders

Loan amount

Up to 6x monthly salary

Interest rate

Up to 4% per month

Repayment period

Until your house completion date

Application approval

Within 30 minutes 

Eligibility

  • At least 21 years old
  • Exercised the option to purchase OTP
  • Minimum salary of $2,000 required

Typical requirements

NRIC, copy of the OTP, proof of residence, and income

What to Do After Being Granted a Loan?

  • Make sure the moneylender delivers to you the correct principal amount of the loan. The moneylender is only permitted an upfront deduction of a loan approval fee of up to 10% of the principal amount.
  • Pay the loan instalments on time to avoid incurring late payment fees and late interest.
  • Make sure the moneylender issues to you a receipt every time you make any repayment towards your loan, and check it for correctness (e.g. name, amount, date).
  • Make sure you receive a statement of account for all your loan(s) at least once every January and July, and check it for correctness (e.g. name, amount, date); and
  • You should retain all statements of accounts and receipts of payments, as documentation and evidence of payments.

Closing

If you find yourself in a financially tight situation, always talk to your moneylender and come up with a flexible repayment plan that can fit your current financial capabilities.

Key Takeaways

  • Prepare to settle the monthly installments at least a month early to help you settle your debt fast:
  • Licensed money lenders offer a discount for early loan repayment.
  • Licensed moneylenders follow a strict code of ethics by the Ministry of Law.
  • If you are not able to settle the debt on time, you can discuss with the money lender to come up with a flexible plan that fits your current financial status.
  • You can access a personal loan from a licensed money lender even with bad credit.

Still looking for a loan for your personal needs? Loan Advisor offers free loan quotes from Singapore’s top licensed moneylenders, free of charge! Request for loan quotes now to compare your options.

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