Are you looking for a licensed moneylender? Then you’ve come to the right place! Our guide to borrowing can help you.
Many people in Singapore face financial difficulties. Life has the habit of taking you – and your savings account – by surprise. For example, you might need a larger down payment for your HDB flat, for your post-operative medical equipment or for your children’s tuition fees. On the other hand, you might decide it’s finally time to visit Japan or purchase bikes for the whole family.
That’s why licensed moneylenders exist. They are able to lend you a personal loan within hours! To enjoy their resource, you can apply for a fast cash loan here.
But, here’s the problem:
There are almost infinite loan packages and solutions, plus you have to understand the legal slang. This translates into hours of research that you can avoid by reading this article.
We’ll unravel all the issues to consider before taking the loan, eligibility conditions, and loan sharks. We’ll also discuss the best licensed moneylenders in Singapore that can help if anything goes wrong.
These licensed moneylenders can be found all over Singapore. From Jurong to Tanjong Pagar to Toa Payoh and Bedok.
What Do You Need To Do Before Borrowing From A Legal Moneylender?
Before borrowing from a legal moneylender, you have to:
- Consider any government schemes that might suit you as an alternative
- Shortlist several moneylenders to ensure you’re getting the best value
- Read the contract thoroughly
- Make sure you understand the legal requirements
- Ensure you can make diligent repayments
Those are MinLaw’s advice to get a good loan. What about the best loan for your needs?
Here’s what to consider:
Decide On The Type Of Loan You Need
The array of personal loan options seems limitless.
Let’s see what a personal loan is first.
Some licensed moneylenders use the term for any sum you borrow for personal reasons as opposed to business reasons. So they diversify their choice according to your needs to include:
- Renovation loans
- Education loans
- Car loans
- Home loans
- Medical loans
- Wedding loans
- Payday loans
- Emergency loans
Some options –payday or emergency loans included – feature smaller principal amounts than others. By comparison, larger ones like wedding loans have longer tenures. Some massive loans may even require collateral to secure them against. We all know that events such as weddings cost a lot of money on the little red dot.
So depending on your goals, income level, and budget, you have to choose between:
- Unsecured loans (no collateral needed)
- Secured loans (collateral needed)
But there’s another catch.
Genuine personal loans – aka personal installment loans – have the advantage of flexibility, which means you can use the money for everything you want without explanations. Conversely, customised loans like education loans can only be used for books, tuition, and other things directly related to your studies.
The choice can seem a no-brainer because, of course, you want that flexibility.
However, customised loans usually have lower interest rates and longer tenures. The reason is that your licensed moneylender sees you’re working towards an objective, which makes you a more trustworthy client.
So the ultimate choice boils down to versatility vs affordability.
What Is A Credit Score And How Will It Affect Your Loan Application?
Your credit score is a rating based on your past financial history. It considers your spending habits, how diligently you’re paying your bills, how much debt you have compared to your income, and so forth.
If you have never taken any loan, it does not mean that you have a perfect credit score. As you do not have any previous transactions, your credit score will be undetermined.
Risk grade and probability of default:
|Probability of default
Source: Credit Bureau Singapore
Basically, if you’re an organised consumer living within your means, you probably have a high credit score.
This score shows financial institutions that you’re not going to default on your payments, which means:
- Access to more significant amounts
- Lower interest
- Longer tenures
The excellent news is licensed moneylenders in Singapore care less about your credit rating than banks do.
Regardless of your credit history, you can easily get an immediate loan with them!
- Get your credit rating from Credit Bureau Singapore before applying for the loan. That way, you’ll only apply to loans that you qualify for and avoid rejections.
- Consider righting your poor rating. Start with any unpaid bills or credit facilities you’re not using.
How Much Can You Borrow From A Licensed Moneylender In Singapore?
Yes, there is a limit to the amount of money you can borrow. According to MinLaw, licensed moneylenders can only lend up to:
- $500 if you’re a foreigner earning less than $10,000
- $3,000 if you’re a Singaporean or PR earning less than $20,000 or a foreign citizen earning $10,000-$20,000
- Six times your monthly income if you’re earning over $20,000
However, these are minimum requirements, and moneylenders can set their own rules. For example, an emergency loan is usually up to four times your monthly income.
Also, banks have more stringent conditions.
They impose age-related requirements, and some don’t have loan options available for people earning below $30,000/ year.
Prepare These Documents Before Visiting The Legal Moneylender’s Office
As a rule of thumb, you’ll need:
- Proof of identity: NRIC (Singaporeans); Employment Pass and passport (PRs; foreign citizens)
- Proof of address: utility bill; lease contract
- Proof of income: computerised payslips; CPF statements; bank statement; tax statement
However, each moneylender has different requirements depending on the type of personal loan you need, so you should double-check their websites. For instance, you may need all of the above for $50,000 but less paperwork for a $1,000 loan.
Pro tip: Sign in with your SingPass on most licensed moneylenders’ websites to upload these documents automatically. Only licensed and honest moneylenders will have the SingPass function.
Is There A Cap On The Costs Licensed Moneylenders Can Charge? How Much Can Licensed Moneylenders Charge?
MinLaw regulates moneylenders’ activity in Singapore, which means it imposes fair conditions on their practice. Moneylenders can’t legally charge you more than the fees we’ll discuss below. If they do, that means you’re either dealing with a loan shark or an authorised moneylender breaking the law.
That means you can report any illicit behaviour immediately instead of putting up with it.
Here’s what you need to know:
- The maximum interest rate per month is 4% of the outstanding balance.
- The maximum late interest rate is 4% of that month’s installment.
- The maximum late repayment penalty is $60.
- The maximum admin fee is 10% after you receive the money.
- These charges can’t amount to more than your total loan amount.
Warning: If you default on your loan and the moneylender wins after taking you to court, the judge can legally ask you to repay the court fees.
For instance, you take a $5,000 loan with $500 installments and a 4% interest rate.
- The maximum admin fee is $500. The moneylender can withhold this amount from the sum they transfer into your account, but they can’t ask you to pay the money before approving the loan.
- The first interest rate is $200, which means the remaining $300 of the installment goes toward paying your principal amount.
- The second month’s interest rate is also 4%, but 4% out of the outstanding $4,700, making it $188. And so forth each month.
- If you’re late paying one month’s installment, the maximum late interest rate is 4% of $500, so $20. The moneylender can add a maximum of $60 penalty.
- These charges combined can’t amount to over $5,000.
How Do I Know If I’m Dealing With A Licensed Moneylender Or A Loan Scam?
The fees above should give you a clue of whether you’re dealing with a licensed moneylender or not.
Wait, what is a loan scam? Why have people lost more than $8,000 to these scammers? You can read the definition of loan scams as well as true stories here.
Here are other factors to consider:
Refer And Check The Ministry Of Law’s List Of Licensed Moneylenders
Loan sharks aren’t on MinLaw’s list of registered moneylenders, so that’s your best starting point. If your lender isn’t on there, that’s a major red flag, and you should alert the authorities.
Pro tip: Don’t fall for an unauthorised lender’s ruses. They can claim on a professional-looking website that they are licensed or invent reasons why their name isn’t on MinLaw’s list.
Look Out For The Form Of Advertisement By The Moneylender
The Ministry of Law in Singapore prevents aggressive advertising from licensed moneylenders. They can only use:
- Business directories
- Consumer directories
- Their websites
- Their physical business premises (walls, windows, doors, hallways, etc.)
Conversely, unauthorised lenders don’t shy away from using direct and targeted advertising means such as:
- Direct mail
- WhatsApp messages
- Social media ads or direct messages
Pro tip: Alert MinLaw here if you receive such a message.
Check The Interest Rate And Fees Offered By The Lender
Remember that the maximum interest rates and additional charges are only the ones we discussed above. If you’re ever in doubt of your personal loan, double-check everything on MinLaw’s website because it always has updated info.
That said, beware of moneylenders who:
- Ask over 4% interest because you supposedly have a small income or need more money.
- Calculate the interest from the principal amount.
- Ask for immense late penalties over the maximum 4% late interest based on that month’s instalment plus $60.
- Demand a pre-approval admin fee to get you access to a higher loan amount or speed up the approval process.
- Ask for early repayment fees.
- Always vary their charges and conditions.
- Demand to keep or use your credit card if you’re too late paying your instalments.
Check If The Licensed Moneylender Has A Physical Address
To guide you to getting the best and legal personal loan, you need to check if the lender has a physical address.
Unauthorised moneylenders won’t have set business premises because that would make them easier to find by the authorities. So, they’ll always claim it’s easier to meet outside your block or workplace, or even in a restaurant. Others will only connect with you on the phone.
However, remember this activity is illegal. MinLaw says moneylenders should always have at least one due-diligence meeting at their headquarters.
So, remember to Google your lender to make sure they have that address.
Licensed Moneylenders Will Ask You For A Face-To-Face Verification
Face-to-face verification is mandatory according to MinLaw, and it should only take place at the moneylender’s official site of business.
This is a key factor when applying for a personal loan with a licensed moneylender.
Remember: you can submit your loan application online and receive a pre-approval message or phone call. However, the approval is only done after meeting your lender at their headquarters. After this approval, your creditor should discuss with you thoroughly the contract’s terms.
What Should You Take Note Of When Dealing With A Licensed Moneylender?
Some licensed moneylenders aren’t up to standard, which means they can, unfortunately, act outside of the law. Report anyone who:
- Threatens you or your family
- Uses abusive language
- Tries to assault you
- Asks to keep your ID or personal things as collateral
- Demands passwords to your accounts
- Demands to use your credit card
- Doesn’t explain your contract
- Demands you to sign incomplete or blank papers
- Doesn’t give you receipts
- Doesn’t meet you at their headquarters
- Asks for other fees than the ones we discussed
Remember to report these people as soon as you notice troubling behaviour.
So, What Should You Do When Your Loan Has Been Approved?
Congratulations! Now that your loan’s been approved. Now:
- Make sure your legal lender doesn’t ask for more than the legal 10% admin fee.
- You understand and agree to everything included in the contract.
- You receive and keep a signed copy of that contract.
- You have a statement of account.
- You make diligent repayments at the agreed dates.
- You receive and keep all the receipts.
- You openly communicate any potential issue preventing you from repaying the installments.
What Should You Do If You Are Unable To Repay Your Loan?
If you’re unable to repay your loan, contact the moneylender immediately. If you’re not open and try to find an amicable solution, your creditor has the legal right to contact a collector.
Collectors’ activities aren’t regulated by MinLaw, which makes dealing with them more complicated. However, rest assured that abusive behaviour and violence is outside of the law.
Instead, try these solutions:
Speak To Them And Request For An Extension
When you’re honest with your licensed moneylender, they’re more likely to listen to you.
Remember you have to show them you’re a dependable client. That means you have to bring supporting documentation to your negotiation:
- Proof that what stopped you to repay the loan was a one-time thing
- Evidence that you’ll be able to resume diligent repayments in the future
- Financial projections that support a potential debt restructuring plan
File For Bankruptcy
Filing for bankruptcy is a legal alternative if your debt is >$15,000 and you can’t repay it. This solution stops interest from accumulating and prevents potential court proceedings.
On the downside, people who’ve filed for bankruptcy have lower credit scores, and it takes years for this rating to grow back. Another disadvantage is that you’ll have fewer chances of getting another loan anytime soon.
Here Are Some Organisations That Might Be Able To Help You:
If you’re unable to repay your loan, consider:
Credit Counselling Singapore (CCS)
CCS helps with free counselling, customised debt restructuring plans, and negotiation assistance.
Registry of Moneylenders (MinLaw)
MinLaw has an extended FAQ that will help you understand loan conditions.
Credit Collection Association of Singapore (CCAS)
CCAS is best for legal assistance if you’re in legal proceedings with your creditor.
National Council on Problem Gambling (NCPG)
NCPG helps gambling addicts solve their problems so they can resume paying their loans diligently.
Credit Association of Singapore (CAS)
CAS is a treasure-trove of information for borrowers.
If you come from a low-income family, ComCare offers financial assistance in short to medium terms. You’ll receive financial support if you can’t work if you need childcare, kindergarten subsidies, or subsistence support.
Get The Best Personal Loan You Deserve With The Right Legal Lender
Many people in Singapore know the face of financial distress; you can be one of them too. Remember to keep your composure even in dire straits because that’s how you’ll choose the best personal loan.
This means choosing the best licensed moneylenders in Singapore that can offer the best service and rates.
Start by evaluating different options from different legal moneylenders. Shortlist these solutions to assess them based on your current income and goals.
If you can’t get or repay this loan, you should still avoid loan sharks! These illegal lenders are terrible and violent, and they charge sky high interest rates! It’s best to negotiate with your financial institutions openly and reach out to one of the many helpful organisations above.