What to know before borrowing from a licensed money lender

Singapore is one of the most expensive cities in the world, making settling your bills and expenses without a financial backup one of the hardest things ever. Although banks are among the great options for support in financial emergencies, they take time to sanction the loans. This is where licensed money lenders come into the picture. Before borrowing loans from these lenders, herein is everything you need to know to avoid messing things up.

Singaporeans have endless possibilities when it comes to getting funds to meet their financial emergencies. The city has banks and over 100 money lenders dedicated to making lives easier. However, these sources of funds have advantages and downsides that make citizens, permanent residents in the country, or foreign employees choose where to borrow. For instance, private licensed money lenders process loans faster than banks and unlicensed money lenders. Moreover, most of them operate under the Ministry of Law (MinLaw); hence, borrowing cash from them is safe. Singapore sees more licensed money lenders join the market every day. Therefore, you should not Ignore finding a trusted one for your emergency financial needs.

Who Exactly is a Licensed Moneylender in Singapore? 

A licensed moneylender is a person or group registered under the Singapore Moneylenders Act to provide loans.  The Act requires these moneylenders to adhere to the state rules and regulations. What is the best part? Licensed moneylenders ensure loans are approved within 24 hours, which does not happen in most Singaporean banks. 

Moreover, they send notices to borrowers who delay repayment instead of taking insensitive actions like Unlicensed moneylenders.  Since licensed moneylenders wait for the signal from the government before making moves, their interest rates are also expected to be fair because the state regulates them. The hassle-free loan approval procedure of these lenders focuses on your credit score and vital details. Once they are verified, you will get your loan depending on what you earn.

Types of Loans Licensed Moneylenders Issue

Licensed Moneylenders in Singapore provide Secured Loans and Unsecured loans. The former is a personal loan tied to your property as collateral. If you go out of the agreement and default the loan, the lender will sell the properties or assets to recover the funds.  For unsecured loans, including credit card debt, assets or properties are not involved in the contract.  However, if you default on the loan, the moneylender can file a lawsuit to claim what you owe. The court can then rule out you settle the debt if you have the cash. I do not have the needed loan amount, the High Court may order your property to be sold to pay off the unsecured loan. Let us now look at everything you need to know about licensed money lenders in Singapore.

Everyone Qualifies for loans in Singapore

 Licensed moneylenders give citizens, permanent residents, and foreign employees loans for their legitimate urgent needs. The government understands the world is now globalized; hence, there may be ex-pats residing with Singapore nationals. If you are not a Singaporean, licensed moneylenders will require your payslip to confirm your occupation, passport, bank statement, and employment pass before giving you a loan.

Licensed Moneylender Have Standard Interest Rates

Whether the loan you want is huge or small, licensed moneylenders will always charge a 4 % nominal and late interest on your loan. Apart from the interest on each late payment, you will be charged a late fee of more than $ 60. These figures show that licensed moneylenders provide loans at reasonable interest rates than unlicensed ones. However, this should not make you ignore early repayments to avoid debt accumulation that can compromise your financial status.

Failing to Repay Installments on Time Can Attract Late Payment Penalties

Moneylenders have a right to sue you for failing to commit yourself to the installments as agreed. If repaying the installments according to the agreed time is challenging for you, talk to your licensed moneylender to see the best way to go about it. In your negotiation, request refinancing or extension to avoid penalties attached to late payments. Although you may incur more costs in this process, the transparency achieved can be crucial to your financial status.

You Can Complain if the Lender Shows Unethical Behaviors

The law of Singapore allows you to forward a formal complaint in case the licensed moneylender is portraying unethical behaviors. Some deviant behaviors the Singaporean government does not expect from licensed moneylenders include threats, withholding the borrower’s crucial behavior, and using persuasive tactics. Rules and regulations also require borrowers to only present copies of their original documents, scanned when approving loans. If you grow suspicious of your lender’s activity, reach the Registry of Moneylenders through 1800-225-529.  

Also, the Registry of Moneylenders has a website you can use to forward the complaint. Once your complaint is received, formal investigations will be launched and the right action taken against the lender. You may also be required to provide more details to speed up investigations. Most importantly, the moneylender will not know your identity during the investigation.

Face to Face Loan Verification is important

Technological advancements have allowed licensed moneylenders to provide online loan applications. However, loan verification should be done at a physical address before the lender disburses the funds.  If the lender informs you about the loan approval through a text message or email, that is a red flag you should take seriously and look for another licensed lender. Moneylenders operating under the rules and regulations of Singapore are banned from texting, making phone calls, or emailing their clients. Also, avoid moneylenders who are unclear about their contracts because chances are they are fraudsters.

The Bottom Line

If you find yourself in financial emergencies, licensed money lenders Singapore can be your savior. Although there are unlicensed money lenders and banks, the services of licensed moneylenders are unmatched. Before borrowing, check if the authorized money lender has a better reputation and is listed to avoid messing things up while looking for financial support.  Above is everything you need to know about licensed money lenders in Singapore.  After reading, share with your friends to get them in the know.