Money is an essential commodity that is needed for sustenance. However, the means to earn are unfortunately limited. If you need urgent funds in Singapore, a licensed moneylender can help you with a personal loan. These lenders are known to offer customizable loan packages according to one’s unique financial condition.
It is safe to borrow money from such lenders. You, of course, need to perform due diligence from your end to ensure you are dealing with licensed entities only.
This article will attempt to answer common questions people have about moneylenders.
Common Questions Borrowers Have About Licensed Moneylenders
How Much Money Can You Borrow from a Licensed Moneylender?
In the case of a secured loan, you can obtain any loan amount. However, if applying for an unsecured loan, the amount depends on your annual income.
For example, if your yearly income is a minimum of $10,000 and less than $20,000, you can borrow up to $3,000. On the other hand, if your yearly income is a minimum of $20,000, you can borrow six times your monthly income.
What are the Interest Rates Offered?
According to law, the maximum interest rate that a licensed moneylender can charge you is 4% per month. The limit applies irrespective of whether you are applying for a secured or unsecured loan.
Do You Have to Pay Additional Fees?
The government defines limits as to what and how much fees moneylenders can charge. For example, if you have delayed the repayment of any installment, you cannot be charged more than $60 a month as a late fee.
When granting loans, moneylenders can charge you a one-time administrative fee. This amount cannot exceed 10% of the principal loan amount.
Also, the interest rate and various other fees together cannot exceed the total principal loan amount.
You will have to bear the legal costs ordered by the court in case of a successful claim made by the moneylender for the recovery of the loan.
Will You Be Charged for Late Repayment?
Yes. Again the maximum late interest rate that a moneylender can charge you is 4% each month the loan is repaid late. Also, the interest can be charged only on the amount due for that particular installment period.
For example, you take a loan of $3,000, and you fail to pay the first installment of $500 on time. The late interest rate will be charged only on the $500 due for that period and not the remaining $2,500.
Can You Pay Off Your Loan Early?
Yes. If it is possible on your end, you can pay off your loan early. As per law, moneylenders cannot charge you additional fees for settling your loan early.
How to Distinguish Between Licensed and Unlicensed Moneylenders?
The first thing you can do is verify if a moneylender is registered with the Republic of Singapore. You can visit the Ministry of Law’s website to get the updated list of valid moneylenders.
Pay attention to their advertisement medium. For example, a licensed moneylender cannot reach out to you over text, phone calls, or social media to offer their services. If they ask for procession or GST fees for quick loan disbursal, it would be safe to assume they are unlicensed vendors.
A moneylender does provide quick approval, but they will go through your documents and clearly state and explain loan terms to you. If the lender speeds through the process or pressurizes you to sign an incomplete contract, stay away from them.
You can report such incidents to the Ministry of Law, wherein appropriate action will be taken against such lenders.
What Documents are Required for Loan Approval?
Some of the basic documents required for loan approval are:
- Personal identification documents – NIRC or passport (for foreigners).
- Proof of residence – if you do not own a house, you can show your tenancy agreement or utility bills.
- Proof of employment – recent salary slips – a minimum of 3 months, recent banking statement.
- Work Permit, S Pass/ E Pass – for foreigners.
You can also keep your credit report ready. However, as most lenders consider your yearly income rather than your credit history to determine the repayment terms, the credit report is not an essential document.
Can the Loan Application Process be Completed Online?
No. All licensed moneylenders are required to complete a face-to-face verification of the borrower at an approved place of business before approving any loan.
You can authenticate a licensed moneylender by visiting a government website or going through reviews on third-party websites. Understand the repayment terms clearly and do not hesitate to ask questions in case of any concerns. Applying for any loan is understandably a daunting experience. Thus, it would help if you took your time researching lenders and the services they offer.