Anyone who wants to borrow money will think of going directly to a bank or financial institution. But in a sector that encompasses many privately held firms and regulated activities, Singapore’s banks have tightened lending practices for increased transparency.
Such situations will often lead you to a list of licensed money lender companies for your financing needs. As a first-time money borrower, you will want to read this guide.
How Does Money Lending Work?
All the banks, credit unions, and financial institutions offer traditional ways of money borrowing. However, that doesn’t mean it’s the same. A licensed moneylender is a financial service registered with a regulatory agency.
That means they are licensed and obligated to abide by the regulations of Singapore under the Ministry of Law. Licensed moneylenders need to meet the borrower in person or transact securely through their website to lend money to individuals or firms. They need to follow the right procedures, collect relevant paperwork, and comply with the laws.
How Are The Money Lending Activities Regulated?
All moneylender activities in Singapore are regulated or complied with the Moneylender’s Act of 2008. This authority enforces rules that it deems fair for both lenders and borrowers. In addition, in case of conflicts between the two parties, it acts as remediation or an arbitrary party.
- Safety of information: The Ministry of Law protects its citizens against any unscrupulous practices. That means, although the lender can ask you for sensitive information such as your name, employee ID, or SingPass details, it cannot disclose this further to any other parties without your explicit authorization.
- Cap of interest rates: As of today, no money lender can charge more than 4% of an interest rate for any type of loan available in the market. As a consumer, you have the right to report any money lender that goes beyond the imposed rate cap.
- Loan charges not to exceed 10% of the principal amount: For example, if you need to borrow $1000 from a moneylender, they will not charge beyond $100 for processing fees. This ensures that you are not falling into the trap of any loan shark tactics known for charging high processing fees from their borrowers.
- Minimal late charges: A licensed moneylender can charge you up to $60 for every late payment on a personal loan or any other financial product, not more.
- Fair borrowing practices: All licensed moneylenders cannot charge beyond 100% of the loan principal when processing fees charges or interest rates.
A Saving Grace from Loan Sharks
You are protected from high interest rates, late charges, and late payments with a licensed moneylender. Legitimate lenders protect your interests and do not harass you if you fail to pay your dues.
In addition, they are answerable to government agencies and do so in complete confidence of their lenders. In any case, you can get your financing within hours after applying, facilitating a fast loan useful for time-sensitive situations. There are transparent and organized practices but fixed contract terms when dealing with licensed lenders.
Check the list of licensed moneylender businesses on the ministry’s site, follow the right steps to apply for your loan and try not to default on any payment to avoid a heavier debt burden.