There are so many stories concerning loan shark harassing borrowers and moneylenders in Singapore. Some loan sharks even present themselves as licensed moneylenders to potential borrowers. Even then, it is important for individuals to seek for reliable licensed moneylenders.
Potential borrowers in Singapore need to ensure they do not fall prey into one of the loan shark traps. There are actually some simple ways for you to ensure you are getting a loan from a credible and accredited lender.
Here are some important pointers that will guide you so as to ensure you are borrowing safely.
Loan Application Process
Reliable and accredited moneylender will have a simple process when processing loan applications. According to the law, a moneylender needs to make clear the terms and jargon used for a loan. This needs to be clear to you, the borrower and easy to understand.
You also need to be extremely careful concerning certain mistrustful behavior as well. This may include:
- The use of offensive language
- Not being issued with a copy of your loan contract
- Being asked to sign incomplete loan agreement or a blank page
- Being asked to present SingPass ID and your password
- Holding of any personal papers (including work permit, driver’s license, and NRIC card)
- Being offered a loan without any checks being done, such as over SMS, approving online, over the phone, or email
You need to note that a Credit Bureau (MLCB) for Moneylenders exists. This bureau keeps information on borrowers’ loans and their repayments record with the licensed moneylenders. This is intended to assist moneylenders to assess a borrower’s creditworthiness. You can also request a copy of your credit record from them as well.
Confirm Their License
Singapore has by now 170 certified moneylenders and each is registered with the Law Ministry. Do not accept to take out cash loans from any moneylender who is not on this list.
There are set limits as to how much ready cash loan a licensed moneylender can offer to a potential borrower. For unsecured loans- those without security- you can take:-
- Equivalent of $3,000 when your yearly pay is below $20,000,
- Equivalent of 2 month’s pay if your yearly wages is above $20,000 but below $30,000,
- Equivalent of 4 months’ pay when your yearly wages is below or over $30,000 but less than $120,000;
- Any loan amount, when your yearly pay is $120,000 and above.
When you realize that the moneylender you are dealing with is ready to offer you a loan above the authorized guideline. then just know something isn’t right. Do not take out a loan from such a lender.
Licensed moneylenders are also expected to follow the interest rates limits. This is in addition to the set loan limits. Effective 1 October 2015, moneylenders are to charge a maximum of 4% a month in interest rates. When a borrower fails to pay their loan installments in time, the moneylender is permitted to charge a fee. This late interest fee is charged monthly for every month the repayment is made late. And it is capped at 4% a month.
The late interest amount only applies to the loan amount that a borrower has not yet repaid. For example, if you took a loan of $5,000 and you have already paid $3,000 in good time, the licensed moneylender will only charge the late interest fee on the outstanding $2,000.
Other fees that licensed moneylenders are can charge are given below:
- A fee not more than $60 for every month a borrower makes late repayment;
- A fee not more than 10% of the principal amount granted; and
- Court ordered legal costs for the recovery of the loan and successful claim for the moneylender.
Statement of Accounts
Once you have received your loan, it is advisable to ensure that the licensed moneylender delivers the correct amount you’ve borrowed. Bear in mind that in having a loan agreement shows that both the moneylender and you are bound by the said contract. Therefore, they need to follow its terms and deliver what was promised too.
When it’s time for you to reimburse the loan, you have to ensure that the accredited moneylender gives you a receipt. The receipt should have the correct date, show the correct cash amount that you have paid, your name, a signature and the moneylender’s stamp. You also need to get a semi-annual statement of account. Of importance is that you retain all these documents and statements as proof of all the payments you will have made.
When you encounter any mistrustful behavior or when a moneylender does not adhere to the stipulated guidelines set by the Ministry of Law. You need to get in touch with the Registry on 1800-2255-529 or you can email them at OneMinLaw@mlaw.gov.sg. You can be guaranteed that the Singaporean registry will not reveal your identity. This they can only do without your consent. Nonetheless, they will require that you go to an interview session. It is a good idea to attend as you then collect the relevant information. This will also facilitate the carrying out of a thorough investigation.
It is not advisable for you to take out loans from unlicensed lenders. This will be risking you and your kins lives. And in specific, consider their loan shark methods of debt collection.