Top 6 Legal Moneylenders Review in Singapore
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Guide To Borrowing From Licensed Money Lenders in Singapore
Because of the fraudulent actions of moneylenders in Singapore, the Ministry of Law made several rules and regulations to govern the activities of moneylenders in the nation. These rules had to be strictly enforced for them to be obeyed, and so the Ministry of Law created some guidelines to curb the high-interest rates and fees that moneylenders charge on loans. As of October 2015, these laws and guidelines came into effect, and they have been made available to the public as well, so that you may be aware of what the law says about moneylending activities so that you don’t get defrauded by anyone.
The Moneylending Guidelines
- If you are granted a loan, and regardless of your annual income, your interest rate will be calculated at the Reducing Balance Interest Rate, which means that you will be charged a maximum interest rate of 4% per month. Prior to the setting of this guideline, moneylenders used the Simple Interest Rate to calculate interest, and could charge you interest rates of up to 20%, and even 40% per month.
- Licensed moneylenders are required to calculate interest on a reducing balance basis: that is, they are to calculate your interest rate at 4% or lower on the balance that remains on every monthly repayment that you make. Prior to this guideline, moneylenders calculated interest on a compound basis.
- The only fee a moneylender can charge you is 10% of the principal loan amount as an administrative fee, and this fee is paid immediately after you have been granted the loan.
- You can only be charged S$60 per month for every late repayment that you make on loan, and nothing more than that.
- The maximum interest rate on late repayments is 4% per month, irrespective of if the loan is secured or unsecured.
- The interest on late repayments can only be charged to those repayments that are still unpaid, or late: it cannot and should not be charged to the repayments you have made.
- The total cost of borrowing, including the administrative fee, interest rate charges, and late repayment fees, should not exceed the total principal loan amount that you received.
These guidelines do not mean that it costs you more to borrow from moneylenders: it actually costs you less. The guidelines are in place to protect you and your interests, and any moneylender that doesn’t follow these guidelines is not a legal moneylender.
How Borrowers Can Protect Themselves From Illegal Lenders
As a borrower, you can protect yourself from fraudulent moneylenders by first checking and confirming that they are licensed and accredited by the Moneylenders Association of Singapore and the Ministry of Law. Proof of their license and registration is easily obtained by looking at the list of licensed money lenders. The list contains over 160 names of licensed moneylenders, which means there are many options to choose from, and any moneylender whose name isn’t on the list is not licensed. To be a licensed moneylender means that they have met all the requirements set by the Ministry for moneylending businesses, and so you can trust them to treat you according to the guidelines set by the government.
Secondly, a legal moneylender will make sure that you get to read their terms and conditions and ensure that you understand them before getting involved in anything. The terms and conditions are the essentials of the contract you are going to sign with the moneylender, and it states how much you are eligible to borrow, the interest rates, the repayment plan, and the applicable fees. Make sure you understand the terms and conditions before you sign any contracts, for the contract is legally binding.
Thirdly, the only fee you are supposed to pay to a moneylender is 10% of the principal loan amount, which is paid once you get the loan. Also, a legal moneylender will only charge S$60 on any late repayments you make. Any other fees charged are illegal.
The reputation of a moneylender is important. Check the reviews that they have received from customers to know how good they are, and compare moneylenders before settling on one to do business with.
Also, when repaying your loan to the moneylender, ensure that for every transaction, you get a receipt that has been signed or stamped by the loan officer, and signed by you as well; duly dated, with the correct repaid amount written on it. Make sure that you save these receipts so that you will be able to reproduce them when necessary.
To protect you from illegal moneylenders, here are a few ways to help you identify them:
- Asking for your SingPass user ID and password (Do not share!)
- Asking you to sign a Note of Contract for a loan that is blank. This is a super shady tactic.
- Giving you a contract without explaining the terms to you, or not handing you the Note of Contract copy.
- Withholding any amount from your principal for any reason.
- Advertise their service by calling or SMS you.
- Automatically approving you for credit over the phone or SMS before even having time to properly go over or receiving your application.
Pay attention to these and avoid lenders who do any of them.
The next way to tell if a creditor is questionable is looking at how they advertise. Legally speaking, a licensed lender can only advertise their services in three different places. Those places are:
- The website belonging to the money lender
- Consumer or business directories (printed or online)
- Advertisements placed on the exterior or interior of the moneylender’s physical place of office.
Avoid advertising schemes that come from flyers, email messages or SMS. If you get one of these solicitations, it is either from an unlicensed lender or a creditor that is breaching the advertising regulations for their services.
Find creditors from one of the three legitimate places mentioned above. Before signing anything, you should be aware of ALL contractual obligations. Once you have identified a good lender, pick apart how much you are going to owe them by the end of the loan’s life (i.e borrowed amount, interest fees, miscellaneous lending fees etc.)
Applying for personal credit can be a big pain. But there is an easier way, one that is designed specifically for this purpose.
So What Are The Things To Bring When Heading Down To The Moneylender Office?
Borrowing money from a legal moneylender may be hassle-free, but that doesn’t mean that you don’t require some documentation before getting a loan from them. Singaporean citizens and permanent residents who need to get loans from moneylenders, you will need to take with you:
- Proof of residency, or a tenancy agreement if you are renting, or an official letter from your landlord. Any of these must contain your name, address, and a date no later than one month past.
- Your SingPass token or password so that you can login to the CPF website, the HDB website, and the IRAS website.
- Your identity card or NRIC
- Your employment letter
- A recent, 3-months’ pay slip if you have had your current job for less than 6 months
For foreigners, the items you will need when going for a loan at the moneylender’s include:
- Your work permit, or your Employment pass
- Your passport
- A proof of employment, such as a staff pass, a company pass, an employment letter, or a 3-month old pay slip
- Your proof of residence, which could be a tenancy agreement and a recent bill, or a letter addressed to you at that address
- A most recent statement of account from a bank to which your salary has been paid.
It Pays To Be Careful
Some moneylenders will require seeing a credit report to check your credit history. None of these items are to be kept by the moneylenders: everything must be returned to you after they have seen what they need to. Any moneylender that wants to keep your documents is fraudulent, and you should leave that establishment immediately. Also, a legal moneylender will not ask you for your password: you are to keep your password to yourself and enter to login to those websites when you are supposed to.
To protect yourself and your financial interests, it would be wise for you to do business with only legal moneylenders. Over at Loan Advisor, we do the research and narrow down legal moneylenders so you don’t have to go through the hassle by visiting agency after agency to search for the right one for you. We understand the frustration as well as the urgency of fulfilling your financial emergency as soon as possible hence, we take it upon ourselves to deliver the latest information and reviews so that you are able to locate a suitable moneylender within the comfort and privacy of your own home.