If you find yourself in a troubling situation where you need to take out a sum of cash for emergency purposes, you might want to consider getting financial assistance from a licensed money lender.
Singapore citizens should note that the decision to choose lenders in Singapore should not just come from a simple Google search. Continue reading to find out all about licensed money lenders in Singapore.
Who are licensed money lenders in Singapore? What do they do?
Essentially, licensed money lenders are individuals or non-banking entities which offer money loan services to those in need. They generally provide a short term loan and flexible repayment term. They also offer a variety of loans such as personal loan, payday loan, foreigner loan, bridging loan and business loan.
Traditionally, loans are often offered by financial institutions or creditors like major banks or credit unions. However, licensed money lenders are entities lending money with their own wealth to those seeking to use the financial help for their own personal agenda.
Unlike the traditional method of borrowing money, going for licensed money lenders would not require a middleman as the process will only include the borrower and the lender directly.
The loans offered by licensed lenders often have loan terms which would be a sizable return for the lender. This could be in terms of a relatively higher interest rate compared to traditional financing, a cut from the profit of the loan, or from the collateral pledged by the borrower.
Next, how do licensed money lenders operate?
Similar to traditional financing, the three main aspects of licensed money loans include a borrower, a lender, and also a contract. The contract is there as a form of protection for both parties where the loan amount, personal loan interest rates, and other additional details of the loan are all entailed in the contract.
Should there be a breach of contract, the party responsible is liable for punishment by the law. Moreover, if you are planning to take out a loan from licensed money lenders based on collateral, the institution will have your property examined first to determine your asset’s value.
Licensed money lenders are also more interested in the purpose of your loan proposal rather than who it’s for. This is also why there are different types of loans offered by licensed money lenders such as personal loan, payday loan, business loan, in house renovation loan Singapore, and etc. So be sure to analyze the use of the loan that you’re opting for and apply accordingly.
What are the qualities of a good licensed money lender?
Now, you might be wondering what are the qualities of a good licensed money lender? Let’s dive into the 6 best qualities that a licensed money lender should have in the list below:
1. Responsive to your queries and concerns
Loan terminologies can be overwhelming and complicated for the common people. Hence, if you do not understand any of the terms, do not hesitate to ask questions! A good sign that a lender is credible is their ability to explain all the terms and conditions thoroughly and comprehensively.
Their representative should be able to give a clear walk-through of the loan you’re applying for by explaining all the pros and cons that come with the loan. It is also of paramount importance for a loan provider to be highly responsive to your queries and concerns. Their prompt assistance is a good indicator that they are highly responsible, and most importantly, reliable.
Thus, should there be any problems relating to the process of the loan, or if you need to inform them regarding late payments, they are always ready to help by providing various alternatives.
2. Open 7 days a week
There will be times when you stumble on a financial bump in the road and need to take out extra cash at the most unexpected time. Hence, a lender that operates 7 days a week is definitely a life-savior. Being open everyday is a good indicator that the lender is reliable and trustworthy. This is because they are always available when you need them most especially in emergency situations.
You don’t have to wait for weekends to pay a visit to money lenders, just simply go to any licensed moneylender’s website and submit your loan application! These money lenders are always ready to cater to your loan applications.
3. They take a look at your credit health
The prime feature of most licensed money lenders in Singapore is their claim to conduct minimal credit reports. If you possess a legitimate and steady income, you will typically be qualified to take out loans. However, this doesn’t mean your credit score will not be accessed by the money lenders.
Although your credit score or loan history wouldn’t have bad repercussions in your loan application process, the money lenders are still liable to carry out a history credit check. At the very least, the money lenders should take a look at your credit background for safety purposes.
It is imperative for them to do a little bit of background checking to ensure you are able to do the repayments. Hence, it goes without saying that a money lender that cannot be bothered to even check the reliability of the people they loan to is definitely a red flag.
4. The lender should not try to persuade you to borrow more
A good lender will try to work out a loan contract that is reasonable for you. To that end, they will not try to convince you to take out a higher loan amount than intended in case you are unable to do the repayment.
There are instances where some money lenders will offer you a high loan amount – more than the amount you initially intended. In most cases, these lenders are only trying to milk more money out of you in the form of interest payments and higher fees and charges due to the increased loan amount.
Most licensed money lenders would put emphasis on how much you need, rather than how much money you want. To note, lending money is definitely a cautious and prudent business.
Thus, these money lenders would need to have certainty that you are able to provide them with repayments and no other hidden agenda. Hence, if there are money lenders that keep pursuing you to take out a loan amount that is beyond your capabilities, you might want to stay away from them.
5. Transparency on loan fees
Loan companies must be up-front regarding the charges they impose for you to be able to assess the entire loan expenses. This is to help you compare and contrast with other loan plans that would best suit your needs and capabilities. The usual charges that you can expect are administrative fee, interest, late interest and late fee.
A licensed lender can only charge up to 4% interest rate per month and an administrative fee of up to 10% only. These fees are fixed and will not move regardless of the amount taken. Hence, it is best for you to avoid taking out a loan from a money lender that is not fully transparent on the fee charges to obtain the loan or during the settlement procedure.
On another note, be wary of loan sharks masquerading as loan providers that will charge unexpected surprise fees during the loan application procedure. These loan sharks tend to include “surprise charges” only later after you have selected a loan. Thus, read thoroughly all the terms and conditions of a loan contract prior to taking out a loan.
However, we’d advise you to always go for money lenders that are transparent about the fees incurred for the loan from the get-go.
6. Provide reasonably fast approvals
A good licensed lender also tends to have a quick process of approving loans. As soon as your credit history check and other requirements have been met, the approval for your loan should be made so that you can get the money in a speedy manner.
It goes without saying that the prime reason for most people to take out a loan is simply because they need money, and they need it fast! There are plenty of reasons why one needs to get immediate cash – be it for urgent medical bills, in house renovation loans, or even wedding expenses.
For whatever reason that may be, one thing is clear and that is, the faster you get the money, the better.
So, the best thing to do is to opt for money lenders which can offer you fast approvals. There are many licensed money lenders in Singapore that can access loan applications in just one hour, but be sure to check out the reviews first to know that you are in safe hands.
What is the difference between licensed and unlicensed lenders?
According to Singapore’s Moneylenders Act, no entity can offer money lending services in Singapore unless they are:
- authorized by a license
- an excluded moneylender
- an exempted moneylender
So before you weigh your choices on which money lender you should go for to get loans, make sure you opt for a licensed moneylender. It is crucial for you to only deal with licensed money lenders especially if you want to get financing because it is very unlikely for a licensed moneylender to perform fraudulent services. Here are some of crucial differences between a licensed and unlicensed lender:
1. The lender is registered with the Registry of Moneylenders
So, the number one criteria that a money lender should have is to possess a license. If you want to check out a list of licensed moneylenders in Singapore, the Ministry of Law has gathered a comprehensive list here: List of Valid Moneylenders in The Republic of Singapore. Ensure that the money lender service you’re dealing with is listed in ROM’s list of licensed moneylenders to refrain yourself from engaging in fraudulent schemes.
If the lender is not on the list, do not engage with them.
2. How they attract their customers
Another major difference is that most unlicensed money lenders operate using shady schemes which include sending unsolicited messages to potential victims.
These messages are often sent via WhatsApp, supposedly from the Monetary Authority of Singapore or the Ministry of Law, requiring the borrowers to pay a deposit amount and a 7% GST from the loan amount.
Licensed money lenders are forbidden from the Ministry of Law to engage in cold calls or sending unsolicited messages to the public. As such, they would not reach out to you randomly for loan application persuasions.
3. Identity verification
Licensed lenders will require the loan applicants to pay a visit to their business space to verify the individual’s identity. Always be extra cautious when dealing with money lending activities.
In summary, always be extra vigilant and careful when engaging with a lender. Know who is licensed and who isn’t before you take any further steps.