If you need urgent cash, you could choose to take a loan from a licensed moneylender in Singapore. But in the digital age, with new types of scams being reported, you must perform due diligence before associating with any lender.
Firstly, you must go through the licensed moneylender list to verify if the lender is a registered entity in the Republic of Singapore. Next, you can access online resources offered by MinLaw to understand the loan limits, interest rates, and other rules and regulations.
The article has seven aspects that attempt to make choosing the right moneylender easier for you.
Registered as a Licensed Moneylender
Moneylenders require a license to operate in Singapore. You can easily verify if the moneylender is licensed or unlicensed by visiting MinLaw’s website. You can get details such as the lender’s business name, registered address, landline number, and business URL if any.
It is recommended you only take a loan from a licensed moneylender. There is a risk of being cheated or falling prey to unfavorable repayment terms if you work to sign a contract with an unlicensed moneylender.
Interest Rates Offered
According to law, regardless of whether your loan is secured or unsecured, a lender can charge you a maximum interest rate of 4%. Therefore, you should compare interest rates from multiple moneylenders to understand what will work best for you.
When it comes to the rate of late interest, the maximum a lender can charge for the period you are late is also 4%. So, for example, if you have borrowed $5,000 and miss the second installment of $1,000, the lender may charge you a late interest rate on the $1,000 for that particular month and not the remaining $3,000, which is not due yet.
Additional Fees Charged
Apart from interest rates, the moneylender can charge you late and administrative fees. For example, the lender can charge you a maximum of $60 for each month you repay the loan late. They can charge you an administrative fee if your loan is granted, and it cannot exceed 10% of the principal loan amount.
If you fail to repay the loan, and the lender takes you to court, then you will be liable to pay the court-ordered fees on a successful claim. Together, all the interest rates and fees cannot exceed the principal loan amount.
Knowing the maximum interest rates and fees can help you to choose around for competitive minimum rates by lenders.
Different Advertising Ways
Lenders belonging to the licensed moneylender list cannot advertise their services through a direct phone call, SMS, WhatsApp, or social media. The allowed mediums of advertising are business or consumer directories, print and online, ads placed within or in the exterior of the lender’s business premises, and the lender’s official website.
When visiting a moneylender’s website, ensure it is the registered business URL and not a similar sounding/looking website. Keep yourself updated and visit the policy advisory on loan scams for more information.
A licensed moneylender must meet you at their approved place of business for verification purposes. No loan can be approved without this face-to-face meeting. You can find the registered business address on the moneylender list along with their landline number.
Ensure you go and complete the verification at the same address and not a different one. If a lender offers to grant you a loan remotely, it is best not to associate yourself with such businesses.
First off, you should look out for a loan amount that you are confident you can pay off. Next, the repayment terms should be favorable, considering your current financial condition. The lender’s job is to explain the contract in an easy-to-understand form. Always ask if you have any questions to clear your doubts.
Do not rush to sign the first contract you come across. Instead, take your time to understand the repayment terms, compare them with other lenders to find the one best suited to your needs.
Quality of Customer Service
You can find customer ratings and reviews on third-party websites. They provide insights into intangible factors such as how the staff treats customers, are they helpful, or if they make the process hassle-free or harrowing.
If a moneylender has received a string of bad reviews, it would be better for you to explore other options.
When looking for a moneylender, always start your search by going through the licensed moneylender list. Consider aspects such as business name, contact information, address, website, interest rates, fees, and level of customer service offered before you sign a contract with a moneylender.