Nowadays, people face a constant need for money, whether for wanting to boost their business or simply for personal reasons. Fortunately for them, there are many Government Schemes and money lender Singapore services aimed to combat these financial issues. The Singapore law on licensed moneylenders regulates the process of lending money, coming in the aid of borrowers. You can not only finance your medical emergencies or travel plans but can also invest in education or your dream home. The wide range of financing options available today cover your every need.
What Is a Licensed Money Lender Singapore?
Licensed moneylenders represent entities that lend money to borrowers and differentiate from commercial banks by the rates applied. A licensed money lender Singapore works under the Moneylenders Act and loans money out of their capital. There are some requirements to become a licensed moneylender, as it is a difficult process to be granted a license by the Registry of Moneylenders. However, this is a benefit for the borrowers, as it offers them the guarantee of working with legitimate lenders. The first important step in accessing a loan is to make sure you work with a licensed money lender Singapore. You can verify the authenticity of a lender by accessing the list of licensed moneylenders.
On the other hand, unlicensed moneylenders are usually individuals who lend money without being officially authorized to do so. They are also known as loan sharks, who use illegal methods such as harassment and violence. They do so not only to lure their victims but also to force them into paying the loan and exaggerated fees. Borrowers should avoid individuals who practice mischievous activities, such as those who resort to fright tactics, offensive language, and bad behaviour. They will first ask for your personal information, including documents like your identity card, passport, or employment forms. Once you hand over your documents to an unlicensed moneylender, you might never get them back.
Not only that, but loansharks will also ask you to sign a misleading contract, often without clarifying important aspects or giving you a copy of it. Being persistent about offering you a loan is another characteristic of deceiving conduct. Many people fall into the trap of illegal lenders because they promise easily accessible loans. Unlike licensed moneylenders, loansharks will try to convince you to contract a borrowing via unsecured communication channels, such as text messages, email or phone calls. Unfortunately, these loansharks easily infiltrate communities, causing harm, so it is important to report any suspicious activities to the authorities.
General Requirements for Taking Up a Loan
Once you decide to take out a loan from a professional entity, there is only a short procedure that must be followed. Lenders want to help you as soon as possible, so they will offer continuous consulting services to make this process easier for you. They will make sure you understand the concepts like:
· Eligibility Criteria
Depending on the lender, you must meet some factors to be eligible for a specific loan. First, they might check your financial situation to make sure you have a stable income to make the monthly payments. Additionally, there is a limit on how much you can borrow depending on your total income, and that means the more debts you have, the less money you can borrow. More than that, if you consider purchasing a property, it will become the subject of loan-to-value limits. Age is also a factor in eligibility, as younger people can often contract a loan for a longer time.
· The Limits of the Borrowed Sums
Different loan types come with some benefits, depending on your needs. For example, if you need some money to bring changes to your home, a home renovation loan might be the solution for you. You will receive the money in the form of one lump sum, allowing you to easily make any renovations to your house, increasing its value. Depending on the destination of the money, the advisor will guide you in choosing the best solution to fulfil your dream. Other factors that determine the maximum amount of money you can borrow include your deposit, income, interest rates, and the repayment term.
· The Terms and Conditions
No matter what type of loan you decide to contract, you should be aware of the terms and conditions of the contract. According to law, you must repay the whole amount of money you borrow plus the agreed charges. Always be calculated and prepared for this new responsibility, avoiding unwanted stressful situations. That means only borrowing what you can surely repay. Fortunately, the advisors will help you in this direction, explaining aspects such as the interest rates and the repayment period. You will sign the document only once you clearly understand and agree with the contract's terms and conditions. When the deal is done, you will receive a copy of the signed contract.
What Is the Singapore Law on Licensed Moneylenders?
The Singapore law on licensed moneylenders is aimed at protecting the rights of the borrowers. Licensed moneylenders always act based on a set of rules and regulations enforced by the government, including the Moneylenders Act. As stated above, a licensed money lender Singapore is required to explain the terms of the contract in a language you understand and offer you a cautionary statement together with the contract's copy. Lenders are also subjected to advertising restrictions, meaning they cannot use misleading tactics or grant you a loan without your desire.
The caps on loan costs are also enforced by the Singapore law on licensed moneylenders. They are allowed to perceive a one-time administrative fee that does not exceed 10% of the agreed sum you borrowed, also known as loan principal. The interest rates applied to the principal are capped at a monthly 4%, but the total repayment sum will never be more than double the amount you borrowed. Unsecured loans, which are not backed by collateral, also have a maximum limit, depending on the borrower's annual income. The purpose of these regulations is to support the borrowers and to avoid repayment inability.
How Is the Debt Collected?
If you do not respect the terms of the contract for prolonged periods, the licensed moneylenders can take steps to recover their debts from you, usually with the help of debt collectors. The recovery agents are tasked with recovering the money owed. They will contact you and carry out negotiations based on your financial circumstances. However, they will, under no circumstances, resort to harassing behaviour. In extreme cases, debt collectors are allowed to initiate legal claims, but this is a solution they highly try to avoid. Instead, they choose to support you in finding a solution to settle your debt.
In the end, a loan represents the tool that helps you achieve your dreams. It offers you the opportunity to pay in time for things you need today. As a piece of advice, remember to keep yourself informed about the Singapore law on licensed moneylenders and always avoid unlicensed lenders. In searching for the perfect loan plan for you, a loan advisor can be of great help. With the high-quality consulting services available for you, financing becomes a piece of cake.
