Moneylending is an almost inevitable process of building financial independence as an individual or a business. Plenty of opportunities can be easily lost if you do not have the money upfront, and borrowing is one of the sure ways to address the issue.
However, there are a significant number of horror stories about money lending in Singapore that may cause you to hesitate. This article has been written to help break whatever stigma you might have against moneylending, and then help you find the best moneylender here in Singapore.
How to Find the Best Moneylender in Singapore
Perhaps one of the fastest options to borrow a loan from here in Singapore is through a licensed moneylender. And, there are several of them present, so choosing the best option for you can be challenging. Below are some top tips that you have to keep in mind when deciding on which agency you will partner with for your financial issues.
Make sure the Moneylender is Licensed
First and foremost, your choice should be a licensed moneylender. The Moneylenders Act is a law that prohibits the support of illegal money lending, and you can get in trouble if you patronize unlicensed lenders.
This act ensures that your rights as a borrower are protected, meaning you won’t be placed in a position where you are vulnerable to money extortion. The complete list of licensed moneylenders in Singapore is available on the website of the Ministry of Law.
No Hidden Charges & Low-Interest Rate
Because they are regulated by the Singapore government in terms of charges and interest rates, you should choose a licensed moneylender that requires reasonable and legal fees of up to 4% only per month.
Your institution of choice should be upfront and transparent with whatever charges you might be asked to pay. In the case that you find yourself getting extorted illegally after borrowing money, you may report the agency to the proper authorities.
Flexible Loan Terms and Tenure
Unlike traditional loans, moneylenders offer policies that have flexible terms and tenure. You can set-up your loan in the most convenient manner for you, and the moneylender should help make that into reality.
This makes the moneylender a more favorable option for individuals who have bad credit ratings as traditional bank loans are typically rigid. Borrowing from a moneylender can help you consider closely your best route moving forward, and your choices are guided with sound advice from the lender.
Transparency to Customers
A good moneylender would also pour all efforts into making their clients understand the terms that are under the policy they are offering. You should not, in any way, be rushed to sign the documents without first having a good picture of what you are getting yourself into.
The moneylender should explain to you how the policy is supposed to work, and there should be no hidden agenda that might bring harm to you later on. Transparency is required by the regulatory authorities, as this helps protect the borrowers from getting into stickier situations after taking out a loan that was supposed to help them.
Protects Your Personal Data
Much like any legal institution is expected to do, a good moneylender should go to great lengths to protect your privacy. Several worst-case scenarios could happen if your personal information falls into the wrong hands.
Moneylenders should only get the relevant documents, and should never demand that they keep the original copies of such.
What a Licensed Moneylender Can Do Under the Law
There is much regulation in place that prevents you from falling into the wrong hands when you want to get moneylending services from licensed Singapore lenders. However, it would also help to become aware of what these agencies are allowed to do. Below are two of their likely actions if you are suddenly falling short of your signed commitments.
They can talk to your family, relatives, or friends about the money you owed
Although not every moneylender out there does this tactic, it could happen. The licensed moneylender, usually through a third-party debt collector, could approach the people closest to you and talk to them about your debt. They find this information by stalking your public profiles (e.g. Facebook) which are easily accessible data that can be accessed by anyone.
This is a legal proceeding as long as the lender or debt collector does not use abusive or intimidating language. If you want to keep your credit history as personal as possible, you can either take steps to hide your connections or you can make sure you pay your installments on time. Besides, these are measures that licensed moneylenders take only when you are not fulfilling your end of the agreement.
Negotiate repayment terms within your means
A good moneylender should always negotiate the terms of your repayments with you, clarifying all details before finalizing the documents for your loan. They are required by law to do this, as any form of hidden charges should not come up later on without the borrower being made aware of it in the beginning.
You can choose to draft your repayment scheme or the lender can give you different options. A third-party debt collector can also be involved to mediate the conversation and can give you more insight into your repayment plans.
What A Licensed Money Lender Cannot Do Under the Law
There have been plenty of cases of intimidation that have driven the reputation of money lending in Singapore into a poor status. If more people are aware of the regulations put in place in recent years that protect borrowers from such acts, however, this number could be reduced significantly.
If you are in a position where you have to borrow a loan from a licensed moneylender but are too afraid to do so, below are some red flags that you can keep in mind. This will help you know your rights as a borrower and hopefully will ease your concerns over these licensed agencies.
Harass, Threaten, Or Intimidate
A licensed moneylender, first and foremost, cannot use abusive and threatening language or actions against their borrowers. Verbal and physical abuse can cause them to lose their license to operate.
If you find yourself being a target of harassment, threats, or intimidation by a moneylender, you may proceed to the nearest police station to help you with your case. It is illegal to do such acts, and it will not only cost the lender their license but they could also be fined for whatever damage they have incurred during the act.
Vandalize And Damage Property
Unlike in the movies where lenders vandalize and damage property as a means of warning to those who have not repaid their debts, Singapore has also banned such acts. A licensed moneylender will never use such tactics, as they can be penalized if caught, on top of having their operations halted by the authorities.
No matter the amount of debt you have, the moneylender does not have the right to wreak any type of damage on your property, and this even includes the posting of debt collection notices outside your place or establishment. Again, if you find yourself being subjected to such acts from a moneylender, report them to the authorities.
Seize Or Control Your Property
The moneylender also has no power to seize or control your property, even if you are unable to repay your loan. This is especially true for short-term loans and personal loans that usually do not require collateral.
Without a Writ of Seizure issued by the Singapore Courts, the moneylender will have no legal means to seize control of whatever possession or property you may have. They can, again, be charged and penalized if they do this without the legal documents, so report your situation to the authorities immediately if you ever find yourself being a victim of this intimidation tactic.
Engage In An Unlawful Assembly
An unlawful assembly is defined to be a mob-style gathering of 5 or more people that are sent out to collect your repayment. This is considered an intimidation tactic, and the moneylender who sends out debt collectors this way can be charged heavily.
A jail term awaits any agency that uses such methods to collect a debt, as this is illegal by Singaporean law. The moneylender who does this act can be considered an ‘Ah Long’ or loan sharks which can make them criminally liable.
The Ministry of Laws’ Guideline for Licensed Moneylenders
There are a couple of guidelines that you have to be aware of when choosing your licensed moneylender. These can help you do a background check on your options, to ensure that you are placing yourself in a safe and favorable situation that will help solve your financial issue.
- A balance interest rate is adhered to by licensed moneylenders which causes them to charge only a maximum of 4% interest rate.
- Administrative fees of not more than 10% of the principal loan amount are the only fees that the licensed moneylender can charge.
- Late payment fees cannot exceed SGD 60 and the interest rates for these fees cannot go beyond 4%.
- Interest rates are chargeable only to your remaining balance, whether unpaid or late; they cannot be charged on the amount that you have already paid.
- The moneylender should not charge total fees (e.g. administrative fee, late repayment fee, interest rates) that exceed the principal loan amount.
- Moneylenders are required to use polite and professional language at all times towards their customers (as mentioned previously, their license can be revoked and they can be fined if they do not oblige).
- All the terms and policies that are under the contract of the loan that you will be getting should be explained in a manner that you can understand.
- Licensed moneylenders cannot ask you to give your SingPass ID and password and cannot hold your NRIC card or any other personal identification documents.
- They should also not ask you to sign any blank contracts or grant you the money without first giving you a copy of the document you have signed.
- Licensed moneylenders have no right to prevent the release of any portion of the loan amount after approval.
- Legal advertising for loans can only be done through three means namely: print or online media advertisements, promotions on their websites, and/or placing advertisements within or on the exterior of the lender’s business premises.
If you experience or witness any violations of the above-stated guidelines, you may contact the Registry immediately. They will not disclose any information about your complaint to the moneylender without your consent.
After filing, you will be called for an interview with the officers to help them investigate your complaint. If the moneylender is proven to have been violating the guidelines, you may pursue your case at the Small Claims Tribunal or under the Consumer Protection (Fair Trading) Act in the Court.
Protect Yourself from Unlicensed Moneylenders
Choosing to borrow money and get into debt is indeed a challenging decision, especially in Singapore where lending is an intimidating concept.
In recent years, however, the government has made steps to regulate the area of financing through debts, by placing regulations that can help control such activities.
You need not be intimidated if you want to borrow money from a licensed moneylender. Your job is instead to choose the best among the long list of good and licensed moneylenders that are ready to help you improve your financial situation.
1 Fullerton Credit is one such agency. They are listed among the top licensed moneylenders in Singapore and have a notable reputation to back this status. They have been servicing their customers for more than ten years, and have received remarkable customer feedback.