From time to time, individuals need to borrow money. Ideally, the demand for money is supposed to be higher than its supply. The Singaporean economy continues to grow, attracting investors from
different parts of the world. The lending business has become more attractive than before. Unfortunately, some unscrupulous business people take advantage of borrowers’ ignorance to steal from them. It pains to lose the little money that you have in the process of seeking additional funds. Loan sharks have become so many in the lending industry, and this has made it imperative to seek funds only and only from licensed lenders.
One of the main reasons why individuals try to seek funds from even unlicensed lenders is to bypass some requirements. For instance, when you want to borrow money online instantly, there are so many options compared to traditional lenders. The requirements may not be so stringent compared to what banks and credit unions demand. However, some of these requirements are meant to protect you.
When you need instant cash, perhaps in times of emergencies, you may not meet the criteria established by banks. In this case, moneylenders may save you a lot. However, it would help if you guarded against loan sharks, for they are quite ruthless in their business dealings. They often charge very high rates, in some cases even 40% in a month. How wonderful would it have been if they would let everyone know the true nature of their business? Unfortunately, this cannot happen. Most of them do their best to steal, making it appear as if they are licensed. check the list top licensed lenders at
It is vital to be aware of the difference between legit lenders and loan shark in case you need funds from a lender. This is the best protection you can have. The following tips will help you determine whether a money lender is licensed and the ones you have to be careful with.
Licensed explain the loan terms in a way easy to understand
Under the law, all money lenders in Singapore are under obligation to explain the loan in terms of the borrower in a language easy to comprehend. The law requires them to respond to every question that you may have. A licensed lender is also under an obligation to explain to the borrower the rates charged, the payment approach, and the loan duration in advance. It is the responsibility of the lender to ensure that you understand all these issues before signing the loan contract. In case you come across a moneylender who offers a deal and appears reluctant to explain the terms of the loan in clean English, or in a way that you can understand, run! There are higher chances you are dealing with a scammer.
A licensed charge a rate that falls within the market interest rate
The law also stipulates the guidelines that are supposed to be followed concerning interest rates. The government established the maximum interest rate of 4% per month right from October 1ST, 2015. A legit money lender will not charge a higher interest rate than 4%. In contrast, loan sharks often charge higher rates. For instance, there are cases where borrowers have been charged up to 40% per month. Be careful with such a lender. In case you receive an offer with an interest rate of more than 4%, run away!
A licensed money lender will ensure that you are signing a contract
The Singaporean law requires money lenders to ensure their clients sign a contract. The law requires that a layer pens the contract. The contract should stipulate the following
a) Interest rate
b) Payment schedule
c) Fees such as late payment charges or prepayment penalties.
In case you receive a loan offer where the lender is ready to give you funds without signing the contract, reject it, and continue searching for other lenders. That is not how licensed lenders conduct themselves. What if you do not sign the contract? Well, you would have opened ways to be conned. Again, what if you sign the contract without understanding the terms? According to the law, the contract is binding once you append your signature to it. It will be difficult to seek redress in case the lender exploits you.
Licensed lenders only charge three different fees
Singapore law requires moneylenders to charge only three different types of fees, not including the interest rate. These are;
● In case of the loan defaults, a borrower may be charged a late payment fee, not more than $60 per month and interest fees not more than 4% per month on the outstanding loan amount. It is also important to remember that the late fees are not supposed to be compounded as regular interest. They only accumulate monthly but only on the late balance.
● The up-front service fees. The fee should not be more than 10% of the loan value
● Legal fees due to a court challenge.
If you come across a lender who charges additional fees apart from those as mentioned above, they are likely to be loan sharks. For instance, suppose a lender demands a late payment fee of $103 per month, you will be paying illegal fees. No licensed lender can do that to you intentionally.
Licensed lenders are supposed to have offices
Please do not take it to be normal in case a lender giving you an offer and does not have a recognizable office. Singapore law requires all licensed lenders to have offices that should be registered on the website of the Ministry of Law. Ideally, licensed lenders carry out most of their businesses in their offices. This can be a difficult identifying mark in case you have to borrow money online instantly because you may not have adequate time to search for such details. In most cases, unlicensed money lenders do not have offices, or if they do, they do not match the one registered on the website of the Singapore Ministry of Law.
The Bottom Line
Unscrupulous lenders can go too far to ensure they steal from you. However, you can identify whether you are dealing with a licensed money lender. The five tips we have discussed in this blog can help you. In case you suspect a lender might not be legit, walk away.