In this article, we are going to tell you about things you need to know before you take a loan from a licensed money lender Singapore. We will also tell you about the legal option you can use when you find yourself unable to pay back the loan.
Why should one take a loan in expensive cities?
Squaring off bills and also exchanges can be difficult on your own, especially when you are in an expensive country. Singapore is said to be the most costly country that is there in the globe due to its many attractions and tourists.
Items like medical charges and wedding expenses can go up to $1000 in Singapore, so you might need help. Many people who come or live in Singapore don’t have sufficient money to clear off their bills. So they tend to take loans from banks that have a long and stressful process of approval.
The option of going to a bank to get urgent cash is not a good option due to its process. That is why there is another option in the market that is licensed, moneylenders.
They are an alternative option to a bank loan as they give you loans quicker and also at a low rate of interest. Borrowing from a moneylender might not be a thing that everyone might follow. The main question that is asked is that are moneylenders safe and secure to take a loan from.
All the moneylenders are administered through the Ministry of Law (MinLaw). This means that they keep the licensed and the illegal moneylender apart from each other. According to MinLaw, it is secure to acquire money from licensed moneylenders in the market. Many times people get scammed by illegal lenders, so they are afraid to take loans from them.
Things to consider when borrowing from moneylenders
Here is a list of different things that you need to do to take a loan from moneylenders.
- Decide the sort of loan you require
Before you apply for any sort of loan, you should check your finance to see which one suits your needs. You should also check whether you need money in an emergency or not. If you need a minor case loan, then you can apply for an ideal personal loan. It can also be used to paying off any home debts, credit card obligations and also consolidate your card.
- Investigation on the loan you are taking
Once you have decided on the sort of loan you are going to take from the moneylender. You will have to read and carefully check all its terms and conditions also its repayment schedule. You should also contemplate obtaining a credit report from the Credit Bureau of Singapore. Also, you can buy the credit report from the Moneylender Credit Bureau (MLCB). Several licensed moneylenders avoid looking at credit reports, but some do to check the person’s repayment ability. You should also think to clean up your credit score if it is bad before filing any kind of document. Then you should also check whether you are eligible to take a loan from the moneylender or not.
The maximum amount of loan depending on your yearly income in Singapore. If you have an income of less than $10,000, then you can get a loan of up to $3000. If you have an income of more than $20,000, you can get a loan of up to 6 times your monthly salary.
- Arrange all the records you need
This means that once you have decided where to get a personal loan in Singapore, you have to prepare your documents. Also, before you apply, you will need to check your documents and also the required documents for taking a loan. You will need to bring your evidence of earnings and also employment proof with you. Then you will also need to carry your NRIC at the time of applying.
You will have to bring your prevailing credit record and former CPF statement with you. Then you will need to bring a copy of your residential address as proof. You will need a tenancy contract, employment note, employment permit, and bank statement if you are a foreigner. When it gets to allowing unsecured credits like personal loan, they approve them on your annual income. That is why you must bring your payslip when you come to take any kind of loan from anywhere.
- Do we have a Cap on costs involved
Every moneylender in Singapore needs to follow the laws established by MinLaw. That is the rate of interest, late charges, and additional charges that can be charged to the borrower. The MinLaw passed a resolution on 1st October 2015 to set the following rules. The interest rate to anyone should not be higher than 4% every month.
Overdue interest should also not be higher than 4% every month. Late fees for repayment should not higher than $60 every month. The administrative fee should not surpass 10% of the loan amount. A legal cost which are for licensed moneylenders to recoup the loan sum.
How to verify if I am buying from an authorised moneylender or a scammer?
The most apparent way is to check whether the moneylender is there on the listing of MinLaw’s website. You should also consider some time to study the reviews about the moneylender you are choosing to go with. Suppose the moneylender is giving loans through a text message or phone call, then it is a scam. This type of scam is described as Ah Long in Singapore, which means moneylenders are breaking the laws of MinLaw.
According to MinLaw, they can advertise through business or customer records. Also, the websites that are pertaining to the moneylenders. Also, they can advertise by putting up banners and hoarding on walls and also posters.
After they have approved, they will give you NIRC and a personal identification document to the owner. They will also issue a loan agreement and give it to the loan holder with the money. Also, before they approve the loan, they will tell you the terms and conditions and also everything.