Top FAQs on Borrowing From Licensed Money Lenders in Singapore
If you have ever considered getting a loan from licensed money lenders in Singapore, you may have naturally had questions you need answers to.
Even if you have been skeptical about the whole process since you fear getting scammed or blinded by unclear regulations, it’s important to note that borrowing from unlicensed moneylenders can lead to severe financial and legal consequences. Fortunately, in the event of a need for quick cash, borrowing from a licensed moneylender can be entirely legitimate and safe.
But before that, what should you know? What are some of the questions you may have? This article will elaborate on the most frequently asked questions about licensed money lending in Singapore.
Who are Licensed Money Lenders in Singapore?
A licensed money lender is a firm duly registered and approved by the Ministry of Law for granting loans in Singapore. Unlike illegal loan sharks, licensed lenders are transparent in all ways as required by law.
To ascertain whether a money lender is licensed, you can check whether they are on the list of licensed moneylenders. You can check the Singapore Ministry of Law’s official website.
How Much Interest Do Licensed Money Lenders in Singapore Charge?
One of the most frequent questions asked has to do with interest rates. The law states that in Singapore, licensed money lenders should not have extremely high interest rates. The maximum amount legally allowed for them to charge is 4% monthly, regardless of your income or loan amount.
In the event of default, the late interest also stops at 4% per month on the outstanding amount. The total late payment charges and administrative costs must not exceed 10% of the loan principal. These will keep you from falling into the debt trap.
How Quickly Can You Get Your Loan Approved?
In most instances, you get approval within 24 to 48 hours. This is one of the benefits of borrowing from a licensed money lender. Some money lenders grant same-day approvals if you can provide all the necessary documents in time, such as your NRIC, proof of income, and recent utility bills. This makes licensed money lenders attractive if you need urgent cash.
Are There Any Loan Limits for Borrowing?
The loan limit you can qualify for mainly depends on your annual income. For instance, if you earn less than $10,000 a year for unsecured loans, you can borrow a maximum of $3,000. On the other hand, if you earn between $10,000-$20,000 annually, more than $3,000, even as much as 6 times your monthly income if you earn over $20,000 yearly.
These limits are in place to protect you from borrowing amounts that you may struggle to repay, ensuring your financial security.
What If You Can’t Pay Back the Loan?
Many licensed money lenders are prepared to work out a repayment plan with you. Usually, life happens, and you will sometimes fall into bad times with your repayments. If this does happen, the best thing you can do is to get in contact with your lender straight away.
Importantly, do not fail to pay your loan. It is against the law and will adversely affect your credit score. There are laws set for licensed money lenders; hence, they cannot harass or threaten you. In case of unfair treatment, you can complain to the Registry of Moneylenders by filling out a complaint form on their website or visiting their office.
Can Licensed Money Lenders Advertise?
Yes, licensed moneylenders in Singapore advertise, but with some restrictions. They can advertise online and in physical business directories, their websites, and notice boards within their premises.
Always beware of such advertisements and check the authenticity of any lender who approaches you with an offer to give you a loan. It is a scam if you receive unsolicited messages, calls, or flyers.
Conclusion
With answers to the above questions, you can confidently and successfully navigate the borrowing process and avoid pitfalls like falling into the hands of scammers.
Lastly, always exercise patience and due diligence. Consider borrowing only from a licensed money lender who operates within the bounds of the law and upholds professional standards. At Credit Empire, we are committed to guiding and supporting our clients at every stage of their borrowing journey, empowering them to make the best borrowing decisions.
