In this article, we are going to tell you about how to choose the best-licensed money lender in Singapore. Also, we are going to talk about what to do when taking a loan from a lender and if he is forcing you.
What is a legal moneylender?
Licensed moneylenders are legally approved financial institutions or individuals allowed to give out loans. They will have to follow the rules and regulations set by the Ministry of Law in Singapore. The rules ensure that the borrower is not exploited to any kind of wrong practices.
People should take a loan from a licensed lender as they are under watch by the government. Also, if any lender is caught not following the rules then they are forced to shut down their lending business.
MinLaw has made a list of rules and also lenders which are approved to be in the market. This means that these lenders are declared safe to use by the government of Singapore. The list is updated every month after a quick survey is done with all the lenders. Those lenders who are following the rules are included in the list.
Those who are found breaking the rules or trying to get past them are removed from the list and fined. To ensure your safety you have to take loans from those lenders which are there on the list. Lending money or loan in Singapore is considered illegal without the approval of the Ministry of Law. There is also a loan shark called Ah Long in Singapore who are illegal lenders.
They might be an individual or a group who might have the idea of scamming people to make money. You can easily catch a loan shark as they tend to get aggressive and also raise their tone.
What are the differences between a loan shark and a licensed moneylender?
Here is a list of some of the differences which occur between the two.
- Loan Amount
The legal or licensed moneylender will give you a loan of $3000 if your salary is less than $20,000. That is because it will come 6 times to your monthly income which they are allowed to give a loan for. The illegal or loan shark will give you a huge amount of loan and that too at less rate of interest. They will then ask for repayment and make it late for you to repay and take extra charges and exploit you.
- Interest rate
A licensed moneylender Singapore interest rate is only 4% and they cannot charge more than this. That is because it is written in the rules and regulations by the MinLaw. Loan sharks will charge you a rate of interest that is more than 4% of your loan amount. If you borrow from a legal lender it will be cheap for you and if you take from an illegal lender then it is very costly.
A licensed moneylender will give you a contract to sign which has all the terms and conditions of the loan. They will also make you understand these terms so that there is no problem in the future. Loan sharks do not have any kind of contract they will just speak orally and tell the terms and take your sign. They will not even write it down somewhere as they are going to scam you with the data.
- Type of fee charge
Legal moneylenders are only allowed to take some fees from the borrowers. They can take $60 per month as a late repayment fee and also 10% of the loan amount as a service fee. While the loan sharks will take more money and also charge unnecessary fees to their borrowers.
- Physical office
The licensed moneylender will have their office where the borrower has to come and take the loan face to face. Also, they will discuss all the terms and conditions face to face of the contract. While the illegal lender does not have any kind of office and they do not write anything down. These illegal people will try to take your money through phone or email ID.
- Loan term
The licensed moneylender has their different rate of interest, terms, and deals. They will also write down the deal given to a customer in their note of conduct. While in the case of the illegal moneylender they will write down many things. This will tend to confuse the borrower and want to make him take the loan without even listening.
- License information
Legal moneylenders are included in the diary or note of legal lenders which is there on the MinLaw website. There you can find the date they were formed and also the legal number which they have registered. While in case of an illegal one they will copy a number of the legal lenders. Also, their name or their date of registration and details are not included anywhere else.
What to consider when choosing a legal moneylender?
Here is the list of things that you need to consider before taking a loan from a licensed moneylender.
- Their reputation and creditability
First thing is that you have to check whether the lender you are dealing with is legal or not. Then you will have to check their reputation in the market by asking for reviews and opinions. Then you will have to check whether they are creditable to make up for the losses or not.
- Reasonable interest rate
You will also have to check whether they are giving their customers reasonable interest rates. They cannot charge more than a 4% interest rate to the borrower as mentioned by the Ministry of Law. Many of the moneylenders will give you an interest rate of up to 2% leaving a short margin.
- Flexible repayment schedule
This means that you will be the one to select the repayment schedule according to your liking. Here you can select the repayment period according to the time you can collect the money.
- Hassle-free process
A licensed moneylender does not have a very long process that you have to complete. This means that all the filling and then submitting for approval is done you can get loan in minutes.