Anyone can be caught off-guard by an unexpected turn of events that requires more cash than what was initially planned. While the first go-to solution is to get a bank loan, this option may not always be available to everyone, especially those with a bad credit history.
In this scenario, applying for a loan from a licensed money lender can be a good alternative.
If you’re in the market looking for a reliable money lender in Singapore, read on because we’ll be covering all the essential information you’ll need to land you the right lender.
What are Licensed Money Lenders in Singapore?
Unlike illegal lenders, also commonly known as loan sharks, licensed money lenders in Singapore are approved lenders governed by the Ministry of Law (MinLaw). They adhere to the full set of very strict rules and regulations stipulated by the ministry and do not leverage harassment tactics for debt collection.
How can I Tell if a Money Lender is Licensed?
Before you take up a loan from a money lender in Singapore, make sure to do the following to ensure you’re dealing with a licensed one:
1. Check MinLaw’s Registry
First, you should verify if the lender is under MinLaw’s panel of approved money lenders in Singapore.
2. Physical office
When you’re at the lender’s office, examine the premise to ascertain if it is a legitimate setup. Check that there is a license certificate prominently displayed and the place has a business landline to receive calls and inquiries. Some loan sharks may try to impersonate licensed lenders but they often use only mobile numbers as contact details.
Licensed money lenders in Singapore are only permitted to market their business via print or online directories, their business websites, or advertisements placed within their business premises. If you receive unsolicited promotional messages outside of these legal channels, the lenders behind them are bound to be illegal.
4. Interest Rates and Fees
As a rule of thumb, licensed money lenders in Singapore can only impose a maximum interest rate of 4% per month. Additionally, late interest and fees are capped at 4% and S$60 per month respectively, while processing fees are limited to up to 10% of the loan sum. This fee structure is mandated by MinLaw.
Approved money lenders in Singapore are required to meet borrowers in person at their office to conduct face-to-face verification. During the session, loan officers are required to verify all necessary documents such as personal identification cards or driver’s licenses. They’re also supposed to explain the terms and conditions thoroughly before granting any loan.
Licensed money lenders will always issue a loan contract indicating all the relevant details such as loan amount, interest rate, repayment terms, and the repayment period. Illegal lenders, on the other hand, may not offer a proper contract because they’ll want to keep the loan terms vague.
What should I do to make sure the Money Lender is Reliable?
To ensure you choose a reliable licensed money lender in Singapore, you should:
1. Check their reviews and testimonials
No matter what dire situation you’re in, always take time to do a credential check on the money lender you’re going to apply for a loan from. Google for online reviews or testimonials to gauge their credibility. When in doubt, getting a recommendation from friends or family can be useful too.
2. Find out how long they’ve been in the business
Besides positive reviews, how long the lender has been in the market can also be indicative of its reputation and sustainability. Only a legitimate business with active transactions can run for years. On the contrary, illegal lenders often change their business names for fear of being caught.
3. Observe their conduct
Much like a banking institution, a licensed money lender will always provide professional customer service. They should treat you with the utmost respect. If any lender attempts to coerce you into an agreement without explaining the terms and conditions or uses abusive language, avoid signing up for a loan with them because it may not be a legitimate deal.
You should only choose licensed money lenders to protect yourself from fraudulent lending tactics and exorbitant interests that illegal lenders utilize to scam unsuspecting parties. Once you find a reliable licensed money lender, always remember to only borrow within your means and make your loan payments on time.