If you are short on money for a project or have an emergency, you can choose to borrow money from licensed moneylenders in Singapore. As with other financial institutions, you will enter into a contract with the lender and be obligated to fulfill the repayment terms.
Instead of going ahead with the first lender you find online, research and compare loan terms. Always start with finding the lender on the licensed moneylender list to verify if they are registered in the Republic of Singapore.
The article will put forth seven factors to consider when choosing a moneylender in Singapore.
1. Business Name on the Licensed Lender List
If you have come across a moneylender, you should first verify their business name on the list of licensed moneylenders in Singapore. Several loan scams have been reported wherein the criminals have impersonated licensed moneylenders.
For example, they might send you their business card with a name similar to that of a licensed moneylender. Therefore, you should remain vigilant and ensure the business name is the same as mentioned on the licensed list of lenders.
2. Registered Business Address
According to law, moneylenders are required to meet you at their registered and approved place of business. The process is carried out to verify your identity and authenticate other documents. No licensed lender can approve your loan without meeting you face-to-face.
If the lender calls you for a meeting, make sure the address is the same as the one mentioned in the licensed moneylender list. Do not go meeting them at a café or mall. Also, stay away from lenders who claim to grant quick loans remotely.
3. Official Business Website
Licensed moneylenders can only advertise using business and consumer directories on their registered premises and official website. So if a moneylender gets in touch with you over call, text message, or social media, it is safe they are unlicensed moneylenders.
When visiting a licensed moneylender’s website, ensure the business URL is accurate. Unfortunately, hackers, today can easily create websites similar to that of a licensed lender to confuse and extort money from you. In 2019 alone, 1700 loan scams have been registered, with people losing about $6.8 million.
4. Customer Ratings
A moneylender could be registered and have the appropriate license to conduct business, but how good is their customer service? Customer reviews and ratings are an excellent way to understand if working with a particular lender is worth your time and effort.
Borrowing a loan can understandably be an overwhelming experience. The lender’s job is to offer favorable terms, explain the contract in a simplified manner, and make the process seamless. If a lender has consistently poor reviews, you don’t consider them and search for better options.
5. Loan Amount Offered
A lender on the licensed moneylender list has to abide by the loan cap amount set by the government. For example, as a Singapore citizen earning at least $10,000 but less than $20,000 annually, then in an unsecured loan, you can borrow a maximum amount of $3,000.
Similarly, if you have an annual income of at least $20,000, you can borrow six times your monthly income. If you get an offer of a loan above the capped limit, it is not recommended that you work with such lenders.
6. Interest Rates and Fees Charged
The maximum interest rate any lender can charge is 4% per month, irrespective of your income and loan type. If you fail to repay the installment amount for a particular month on time, 4% is the maximum late payment fee that the lender can only charge for that particular month.
Any other administrative fees the lender charges cannot be more than 10% of the principal amount. Ensure to shop around for lenders and compare interest rates and repayment terms offered.
7. Suspicious Activity
You find a licensed moneylender, but do keep an eye on how they behave with you during the initial process. For example, you should not tolerate the lender’s abusive or threatening behavior. In addition, they cannot retain any of your original documents or force you to sign incomplete contracts.
If you come across any lender displaying such suspicious activity, you can report them to the Registry of moneylenders.
If you plan to borrow money, ensure you choose a lender registered on the licensed moneylender list, updated by MinLaw regularly. Ensure the lender’s business name, address, landline number, and website are the same as mentioned on the list. Then, compare interest rates, fees, and repayment terms to find a contract suitable for your needs.