Anyone who hears money lending will think about banks and other financial institutions. However, with the industry’s tightening strict guidelines and inaccessible products, many turn to a licensed money lender for their financing needs. These institutions operate like banks and have fully-regulated activities. If it’s your first time using a licensed moneylender, you’ll definitely want to read through the rest of this short and helpful guide made just for you.
What Is a Moneylender?
As we’ve mentioned, banks and financial institutions fit squarely with moneylending. However, it doesn’t mean they’re the same as licensed moneylenders. A licensed money lender or micro-lender is a non-bank affiliated financial service anyone with capital can do. The “licensed” aspect of lending is a lender’s agreement to have regulation under the Ministry of Law and Registry of Moneylenders.
Why Does the Registry of Moneylenders Exist?
In 2008, Singapore’s government passed the Moneylenders Act of 2008, allowing dedicated moneylenders to provide reputable and high-quality services to Singaporeans and foreign workers. The Registry is responsible for testing, reviewing, licensing, and revoking moneylenders in Singapore to ensure they provide you with the fairest and highest-quality service available.
- Lender Business Registration and Licensing
All prospective licensed moneylenders undergo education and training seminars from the Registry. After their course, business owners have to undergo a licensed money lender examination, allowing them to become full-fledged licensed moneylenders in Singapore upon passing the exams. The Registry will grant them a license to operate and register their brand name to the list. Any reputable money lender must display and mention their license number any time they conduct business.
- Revoking Licenses From Unscrupulous Lenders
A licensed money lender guarantees fairness and recourse for any misgiving and poor judgment. If recourse due to an error or unfair event arises, the Registry records the incident and passes arbitration to the Ministry of Law. The Ministry will task the Registry to revoke a poor-conduct lender’s license if the case’s evidence strongly goes against them.Needless to say, it is always smart to review your options if your moneylender of choice is licensed. There are reliable websites that provide a list of licensed moneylenders like the Singapore Ministry of Law website and Moneylenders Singapore.
The Ministry of Law’s Regulation and Arbitration of All Existing Moneylending Activities
The Registry is MinLaw’s executive arm. On the other hand, MinLaw completely regulates all licensed money lender activities to ensure it complies with the Moneylenders Act of 2008. The Ministry has the authority to change product specifications and enforce new rules that it deems fair for both lenders and borrowers. Additionally, it acts as an arbitrary party in conflicts between the two parties.
- Ensures Lenders Do Not Disclose Your Private Information
MinLaw protects Singaporean and foreign workers or expatriate rights against unscrupulous parties. A licensed money lender has the right to ask for your delicate information, such as your employee ID and SingPass details. However, if the lender discloses this information to undesirable parties and bad actors, the Ministry can ban their activities and file criminal charges against the lenders.
- Interest Rate Cap Enforcement
The Ministry ensures that any money lender in the country follows and does not exceed its imposed interest rate cap for any loan. Today, a 4% interest rate cap exists for all moneylender loan types available in the market. You can report any moneylender that goes beyond the MinLaw’s imposed interest rate cap.
- Loan Charges Not Exceeding 10% of The Principle
Furthermore, the Ministry enforces fairness by having all money lenders commit to loan charges that do not exceed 10% of the principal loan amount. If you borrow S $1,000, the moneylender cannot charge you anything beyond S $100 for processing fees. Loan sharks have been notorious for charging highly for processing, prompting authorities to clamp down their illegal practices.
- Late Charges Up To S $60 Only
One other notorious loan shark activity is expensively charging borrowers for late payments and penalties. Licensed lenders can charge only up to S $60 for every late payment penalty on any personal loan or other financial products. Furthermore, MinLaw restricts compounding late interest penalties, which is a loan shark favorite.
- All Charges Should Not Exceed 100% of Loan Principal
Lastly, MinLaw makes licensed lending fair for borrowers by ensuring no moneylender can charge beyond 100% of the loan principal upon calculating the total of late charges, processing fees, and interest rates. Loan sharks always change their terms, allowing them to exceed the total. Without regulation, borrowers have had no recourse against them.
Why Have Moneylenders Become the Antidote to Loan Sharks?
Any money lender in Singapore complies with MinLaw and the Registry’s requirements. In doing so, the authorities can penalize them for any criminal activity and unfair practice. Loan sharks can freely charge borrowers exorbitant interest rates, late charges, and late payments. While hundreds of lenders exist today, as per the list of licensed moneylenders, a great number of “ah longs” still exist. Any money lender under regulation exhibits the following traits.
- Zero Abusive Practices
All lender personal loan terms have undergone the MinLaw and Registry’s scrutiny. Therefore, legitimate lenders guarantee zero abusive practices, which thrive with loan shark financing practices. Illicit moneylenders can charge beyond the stipulated interest rate charges and physically harass borrowers who fail to pay their dues.
- Authorities Regulate All Activities and Charges
As we’ve mentioned earlier, all licensed lenders answer government agencies responsible for monitoring their payment fees, loan contract writing, and everything else to make their fast cash service fair and dependable. In doing so, a borrower can submit their loan application with complete confidence in their lenders.
- Fast Cash Loan Approval
Lenders describe their service as fast cash loans because your contract for the loan and the monetary amount is something you can receive on the same day. Suppose you’ve submitted all your requirements to prove your eligibility, and the lender deems you’ve fulfilled it. In that case, you can get your financing within hours after applying, making the service greatly useful for time-sensitive situations.
- Transparent and Organized Practices
When you work with licensed Singaporean microlenders, they fully commit to sharing essential information with you. They will explain every term and condition your loan contract possesses until you sign the confirmation form along with your loan application. Additionally, legitimate lenders will respect your rights and ensure they follow every MinLaw and Registry stipulation.
Signs That You’re Working With Loan Sharks
It’s easy to fall prey to loan sharks. Their representatives will approach you in areas with bustling financial activity, such as tourist spots and malls. You’ll be tempted with their offers because you need cash, and an item you want or need is just within reach. However, loan sharks will impose seemingly good deals — that is until they start changing the contract terms. Doing this allows them to enslave you with debt indefinitely.
Here are five signs that you’re working with loan sharks.
- Incomplete Loan Contract and Documents
Many loan sharks make it convenient for you to receive money. In less than an hour, loan sharks will approve your financing. You’re definitely working with a loan shark if they present to you a blank loan contract and simply explain that you’ll need to pay regularly and deal with a yet-to-be-determined interest rate. Avoid these offers at all costs, no matter how high and appealing the loan amount.
- Keeps Original Copies of Your Delicate Information
Licensed lenders and loan sharks will ask for your company ID, address, and SingPass details. However, legitimate lenders must return your original copies. On the other hand, loan sharks will never bother returning your original copies. Numerous borrower harassment cases highlight loan sharks who have stolen their borrower’s identities using their identification.
- Does Not Explain Your Contract
All licensed lenders will explain your financing’s terms and conditions completely, and they’ll ask you to sign a form that states you’ve understood their explanation. However, loan sharks will explain it in simple terms, but you cannot find any fine print regarding their statements. Therefore, you have no recourse in case the loan shark changes your loan terms and conditions.
- Approves Your Loan Without Checking Your Documents
Loan sharks want you to perceive their service as an enormous benefit. They’ll entice you with seemingly-perfect deals. However, they’ll have you sign blank documents, but they’ll mention that they’ve already approved your loan — you can just submit your documents later. Any licensed lender will oppose doing this because it’s against regulations.
- Does Not Give You The Full Principal Amount For Some Reason
One sure sign that you’re working with loan sharks: they’ll mention that they can’t provide 30-50% of your loan because “they’re a little short on funds” during your application. Banks, financial institutions, and licensed microlenders will never use this excuse after your loan application approval.
Types of Moneylender Loans Available
Licensed lending companies in Singapore can offer virtually every financial product from banks and financial institutions. The only major differences are the terms and conditions, interest caps, loan amount limits, and loan tenure. You can use these five financial services by asking your local money lending business.
Every Singaporean and foreigner who walks into a money lending company will likely apply for a personal loan. Borrowers can get up to six times their monthly salary and deal with a 4% interest rate. Licensed money lending businesses give borrowers a maximum of 12 months to accomplish their repayment.
- Debt Consolidation
In some cases, borrowers can use their low-interest money lending business personal loan as a debt consolidation tool. On the other hand, some lenders offer this service willingly — so make sure to ask.
Foreigners in Singapore virtually have zero access to bank loans. Alternatively, money lending businesses have much more accepting terms, such as not requiring credit histories, that enable them to borrow money conveniently.
Singaporean business owners are reputable and always pay their Singaporean and foreign employees on time. However, employees can use payday loans to get their income if an extreme incident occurs that disables their employers from paying them on time.
All startups, small and medium businesses can benefit from a fiscal boost. Many money lending businesses are willing to hear your business ideas. As long as you make the money flow clear, you’ll find financial support from Singaporean lenders.
If you need an enormous amount of cash as a down payment for a property or vehicle, you can use a licensed lender’s bridging loan with friendlier terms than bank bridging loans.
Steps to Apply For A Personal Loan
1. Prove Your Eligibility By Submitting All Requirements
If you have all these documents on hand, you can head to your nearest moneylender and apply for financing.
All moneylenders require you to be:
- At least 21 years old
- Singaporean/PR residents must have regular employment or a source of income above $2,000 per month
- Foreigners/Expats working in Singapore must have regular employment or a source of income above $3,000 per month
Prepare all these documents before you inquire and venture to your nearest licensed moneylender.
- For Singaporeans/PRs
- Identity card / NRIC
- Proof of residences such as a recent bill or letter addressed to you (for tenants)
- Tenancy agreement (if you are renting)
- Recent 3 months payslip and employment letter if your current employment is less than 6 months
- SingPass Details
- For Singaporeans/PRs
- For Foreign Workers
- A valid work permit / S Pass / Employment Pass
- Proof of employment (staff pass or company pass)
- Recent 3-month payslips & employment letter
- Proof of residence such as a tenancy agreement, recent bill, or letter addressed to you
- Latest bank statement of account to which yearly or monthly salary is credited
- Singpass (to download IRAS NOA)
- For Foreign Workers
2. Head To The Nearest Branch or Go To Their Website
With a single search engine query, you can easily find your chosen lender’s physical branch. Alternatively, you can submit your documents on their website. However, we highly recommend using the nearest licensed lender for quick cash claiming during loan application approval and amount release.
3. Wait For Loan Approval and Cash Release
If you’ve completely satisfied your lender’s terms and conditions for the loan with your requirements, you can wait for an hour or less to receive your cash. On the other hand, you’ll need to wait less than a week to receive your loan application approval, which beats the 2-3 months you’ll need to wait for bank loan approval.
Resolve These Situations Before Your Loan Application
Avoid getting into deep debt by making sure you’re not dealing with the following:
- Existing Debts
If you have outstanding debt, you should pay for it in full first. Money lending loans are convenient, but even the fairest terms can send the most irresponsible borrower spiraling into debt.
- Financing Objectives
Always have an objective when borrowing money. Don’t use loans and financial services to finance your daily needs. Additionally, if your want or need isn’t time-sensitive, resist using your revolving credit or other credit lines.
- Full Understanding of Financing Responsibility
Responsible financial management is ensuring you’ve read and completely understood your loan’s terms and conditions. Furthermore, you’ve asked and exhausted all questions you can with the lender’s representative. With a birds-eye-view on your loan, you won’t be blindsided by anything during your loan term.
- Avoid Working With Loan Sharks
Even if their offers are enticing, avoid loan sharks. Nothing good can come out of illegitimate businesses and bad actors.
- Do Your Own Research
In many cases, the first financing offer you find isn’t always the best one. You can use advanced search algorithm sites, such as Loan Advisor and Moneylender Review, to find the perfect financing for your business.
Know The Total Loan Amount You Can Borrow
Before borrowing, make sure you know the total amount you can receive from a loan.
|Annual income||Singaporeans/PRs||Foreign workers/Expats|
|Less than $10,000||$3,000||$500|
|At least $10,000
and less than $20,000
|At least $20,000||6 times monthly income||6 times monthly income|
Things To Do In Case You Fail To Pay Your Loan
If you’re struggling to repay your debt, here are a few things you can do.
- Extension Requests
Licensed lenders are lenient when it comes to extension requests. In some cases, they can even halt interest charges until you’ve paid the due interest rates and principal. Make sure to inquire about this with a representative.
- Bankruptcy Filing
Your licensed lender can file bankruptcy without warning you. On the other hand, you can initiate the process yourself. In doing so, the government can aid you in liquidating assets, negotiating repayment terms, and ensuring you can get out of debt in a streamlined and fair manner.
- Work With Credit Counselors
Bankruptcy can be too drastic in some situations. Therefore, it’s best to ask credit counselors about alternative courses of action. Additionally, these specialists have ties with debt consolidation and management companies that can help you negotiate with your debtors.
Singapore Moneylending is The Best Alternative To Banks and Financial Institutions
Armed with knowledge about microlending practices and alternative financing in Singapore, you can confidently pass your loan application with full knowledge about your rights and responsibilities as a borrower. Make sure to follow everything we’ve listed here to reap the benefits that Singaporean lenders can offer to you.
Still unsure which moneylender to choose? No worries, 365 Credit Solutions Pte Ltd, is among the best licensed money lenders in Singapore that offer customized loan plans for Singaporeans as well as foreigners to suit their financial needs.