- Considerations before taking a loan
Before approaching a moneylender, take into account other options, like the different financial assistance schemes provided by various Government agencies. You can consult with the agencies to find out more about their plans.
You are officially obliged to fulfil any loan contract you enter into with a licensed moneylender.
Look at whether you have the ability to abide by the contractual terms, keeping in mind your income and financial liabilities. Borrow basically what you need to have and have the ability to repay. Be conscious that if you are not capable to satisfy the contractual terms, the late payment fees and interest repayment will be a financial strain not just on yourself but in addition on your family.
The regulation entails moneylenders to spell out the terms of a loan to you in a language you comprehend and to provide you with a copy of the loan agreement. Confirm you fully comprehend the terms of the contract, especially, the installment schedule, the interest rate charged and the fees applicable.
Think about carefully before conceding to any contractual term which gives a moneylender to lodge a caveat on the sale proceeds of your real estate property at the time of default of the loan repayment. When a caveat is lodged against your property, you will definitely not manage to sell it without first paying back the moneylender completely. It can wipe out all or a significant part of the proceeds if the settlement is taken from the net proceeds from the sale of the property.
You should look around several moneylenders for the best favourable terms. You should not hurry into and commit yourself to a loan unless you are pleased with the terms and conditions .
- The amount of money can you borrow from a licensed money lender?
For secured loans, you can acquire a loan of any amount. For unsecured loans, you can obtain:
Up to $3,000, in the event that your yearly income is below $20,000;
As much as 2 months' income, in the event that your yearly income is $20,000 or more but no more than $30,000;
As high as 4 months' income, when your annual income is $30,000 or more but less than $120,000; and
Any amount, if your annual income is $120,000 or higher.
- Rates That Money Lenders can Charge
With effect from 1 October 2015, the maximum lending rates moneylenders can charge is 4% monthly. This cap applies no matter what the borrower's income and whether or not the loan is an unsecured or secured one. If a borrower fails to repay the loan punctually, the maximum rate of late interest a moneylender can charge is 4% monthly for every month the loan is paid off late.
The computation of interest charged on the loan must be based on the amount of principal remaining after deducting from the original principal the full payments made by or on behalf of the borrower which are appropriated to principal. [To illustrate , if X takes a loan of $10,000, and X has repaid $4,000, only the remaining $6,000 can be taken into consideration for the calculation of interest.]
The late interest can only be charged on an amount that is repaid late. The moneylender can not charge on amounts that are outstanding but not yet due to be repaid. [ To illustrate, if X takes a loan of $10,000, and fails to pay for the first instalment of $2,000, the moneylender may charge the late interest on $2,000 but not on the remaining $8,000 as it is not due yet. ]
- Fees That Money Lenders Can Request
With effect from 1 October 2015, all moneylenders are only permitted to impose the following expenses and charges :
a fee not exceeding $60 for each and every month of late repayment;
a fee not exceeding 10% of the principal of the loan when a loan is granted; and
legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.
The total charges imposed by a moneylender on any loan, consisting of interest, late interest, upfront administrative and late fee also can not exceed an amount equivalent to the principal of the loan. [To illustrate, if X takes a loan of $10,000, then the interest, late interest, 10% administrative fee and monthly $60 late fees can not exceed $10,000.]
- How Do I verify if a money lender is licensed by Ministry of Law?
Do not get a loan from unlicensed moneylenders. Authenticate that a moneylender is licensed by checking the list of licensed moneylenders. "Click here to access the list of licensed moneylenders."
Notwithstanding that the moneylenders are accredited, be mindful if they:
Use profane language, or behave in a intimidating manner towards you.
Ask for your SingPass user ID and/or password.
Retain your NRIC card or any other personal ID documents (e.g. driver's licence, passport, work permit, employment pass or ATM card).
Ask you to sign on a incomplete or blank Note of Contract for the loan.
Grant you a loan in the absence of giving you a copy of the Note of contract for the loan and/or without adequately explaining to you all the terms and conditions .
Grant you a loan without exercising due diligence (e.g. approving a loan over the phone, SMS or email before even getting your loan application and supporting documents, for example, the income tax assessment and payslips).
Withhold any portion of your principal loan amount for any reason.
This type of practices are not tolerable. In the event that you come across them, you should report the moneylender to the Registry of Moneylenders, with information such as the moneylender's business contact, name and licence numbers. Please see Question 10 for more details.
- Singapore Regulations On Money Lending Advertising
Licensed moneylenders are allowed to market only through these three channels:
( a) business or consumer directories (in print or online media);.
( b) websites belonging to the moneylender; and.
( c) advertisements positioned within or on the exterior of the moneylender's business premises. All other channels are prohibited.
If you receive flyers, SMSes, emails or other forms of adverts which are not authorized, these would either be from licensed moneylenders operating in violation of the marketing restrictions, or from unlicensed moneylenders. Hence, you are advised not to react to such advertisements. In fact, you should report the ads by giving us with a proof of the advertisements (for SMS-- a screen capture) to the Registry at e-mail address: OneMinLaw@mlaw.gov.sg or to the Police.
Take into consideration carefully prior to agreeing to any contractual term which makes it possible for a moneylender to lodge a caveat on the sale proceeds of your real estate property upon default of the loan repayment. If a borrower fails to repay the loan on time, the maximum rate of late interest a moneylender can charge is 4% per month for each month the loan is repaid late.
To make clear, if X takes a loan of $10,000, and fails to pay for the first instalment of $2,000, the moneylender can charge the late interest on $2,000 but not on the remaining $8,000 as it is not due. The full charges imposed by a moneylender on any loan, consisting of interest, late interest, upfront administrative and late fee also can not go beyond an amount equivalent to the principal of the loan. To illustrate, if X takes a loan of $10,000, then the interest, late interest, 10% administrative fee and monthly $60 late fees can not exceed $10,000.