Singapore is a first-world country that offers anyone an opportunity to thrive with the right tools, services, and help. One example is Singapore’s licensed moneylenders, which focuses on poor-credit borrowers and those with zero or limited access to bank products and services. In the past, Singapore’s moneylenders were ruthless, organized crime-backed parties. When the government introduced the Moneylender Act of 2008, the service received regulation, testing, and government-monitored implementation.
However, borrowers probably have plenty of questions, such as the difference between licensed moneylenders and banks. Plus, the borrowing cycle can be confusing for some parties, making it crucial that they have a helpful and complete guide to everything related to Singapore’s licensed moneylenders. Today, we supply you with accurate and updated steps to ensure you get a smooth borrowing experience.
Licensed Moneylenders: Finding Them is Easy!
Singapore doesn’t have a few money-lender brands. The country is rife with money lender competition. You’ll find more than 100 licensed moneylenders willing to work with you in achieving your fiscal goals in every district and city. While each of them abides by the same rules and regulations, their offers make one brand much more enticing than their competition.
Fortunately, all their activities receive regulation unless you end up with unscrupulous loan sharks. These illegal lenders will approach and offer you a generous amount with enticing terms and conditions. Unfortunately, their approach seems professional and legitimate, which can confuse and trick borrowers into compliance. Here’s how you can quickly find a licensed money lender in no time.
The Registry of Moneylenders
It’s the Registry of Moneylenders (ROM)’s responsibility to keep all licensed moneylenders in line with the Ministry of Law’s rules and regulations. They’re responsible for issuing and revoking licenses. Plus, they review all possible incidents of money lender misconduct. All legitimate money lenders have passed the ROM’s licensing examinations, ensuring they’re qualified to provide their services.
All licensed moneylenders are part of ROM’s comprehensive money lender list. Luckily, borrowers can access the ROM’s site and download the document for easy offline evaluation. We highly advise that you look for a prospective lender’s license number in the list to guarantee you’re working with a licensed, compliant, and regulated licensed moneylender, especially if you’re in a rush to get funds.
Actions Licensed Moneylenders Must Avoid
Singapore’s history with money lenders has been problematic. Loan sharks have once become the industry’s early foundations. Their goal was to “hook” Singaporeans and foreign workers into borrowing money through enticing terms with huge loan amounts. Unfortunately, the unregulated practice did not give borrowers any protection or recourse from their abusive practices.
To prevent a similar situation from occurring with licensed moneylenders, the Ministry of Law has laid out some basic ground rules that all licensed money lenders must follow. All of these practices are present in the ROM’s licensed money lender licensing examinations. Moneylenders in Singapore who fail to follow these rules will deal with harsh consequences, such as suspension or permanent industry bans.
- Outreach Messaging: Any form of text, email, or internet chat providing you with loan offers is bogus. Therefore, money lenders who sent them are probably loan sharks.
- Out-of-Bounds Advertising: All licensed money lenders can advertise on a single website and within their physical premises.
- Contract Explanation Failure: Any licensed money lender who fails to explain to borrowers about their contract can get suspensions. Borrowers must sign a waiver of full contract understanding before applying for their loan.
- Abusive Language: Loan sharks have been known to slander borrowers who have failed to pay their loans. On the other hand, licensed money lenders can send a subpoena to non-paying borrowers deep in debt (more on this later).
- Physical Harassment: Licensed money lenders cannot use physical means to coerce customers to pay. Loan sharks will always resort to violence.
- Going Beyond Stipulated Fees: The Ministry of Law has its respective stated limitations on money lending fees, protecting both borrowers and lenders (more on this later).
- ‘Blank’ Contract Servicing: Licensed money lenders cannot offer a blank contract for borrowers to sign. The contract must have all its details filled for borrowers to read beforehand.
5 Steps to Have The Smoothest Experience With Licensed Moneylenders
With an idea about licensed money lenders in Singapore that won’t cause headaches, you’re now ready to start borrowing. Licensed lenders have a wide variety of financial products suitable for any situation. However, if you’re unfamiliar with them, we can break them down for you in this guide.
A licensed moneylender offers the following financial products:
- Personal: The go-to financing for many Singaporeans and foreigners. This loan grants you up to six times your monthly salary with a 4% ceiling interest and 10% of loan amount maximum processing fee
- Business: Licensed money lenders can grant your potential business idea up to S $200,000, which is enough to start up and launch your venture. These have variable ceiling interests and processing fees.
- Payday: If your employer skips your pay date due to technical difficulties or whatever reason, you can use a payday loan to address your financial responsibilities before interest rates and utility penalties start ballooning.
- Foreigner: Workers from abroad make up a huge chunk of Singapore’s labor force. However, due to a lack of credit history, banks can only offer them a handful of financial products. Licensed moneylenders have their doors open for everyone.
Now that you’re familiar with all their products, here are five easy steps to get a high-quality loan.
Many Singapore borrowers opt for a personal loan Singapore because six months of their salary is enough to pay for car dues and education fees. However, personal loan amounts fall quite short for start-up businesses looking for sufficient capital, and its loan tenor is too short of paying off within their activity period.
To avoid having problems and sliding into deep debt, you must calculate the total loan amount you need. Assess your budget to ensure you can effectively repay your loan amount monthly too.
All of Singapore’s licensed moneylenders require you to fulfill their requirements to make you eligible. Here are the most common and average requirements for any loan except business loans:
Eligibility
- All moneylenders require you to be:
- At least 21 years old
- Singaporean/PR residents must have regular employment or a source of income above $1,500 per month.
- Foreigners/Expats working in Singapore must have regular employment or an income source above $2,000 per month.
Requirements
Prepare all these documents before inquiring with the 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 Foreign Workers
- A valid work permit / S Pass / Employment Pass
- Passport
- 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)
Borrowing money costs money, even if you don’t provide an initial investment. You’re going to deal with numerous expenses throughout your borrowing venture. However, it’s not all about interest fees alone. Late payments, penalty fees, administrative or processing fees, and many others stipulated in your contract also exist. Learn more about them below.
- Interest Rates: Banks and moneylenders express these in percentages. Some interest rates apply per year or per day (in the case of payday loans). These are added fees using the principal or unpaid amount as the basis.
- Late Payment Penalties: If you’re late repaying your loan, banks and moneylenders will make you pay for it. Late payments are usually less than S $15 with money lenders because they cannot charge beyond a total of S $60 inclusive of all other fees listed here except interest.
- Early Repayment Fees: Banks calculate their total profit with interest rates. If you pay early, they only get a profit fraction. Therefore, they make borrowers pay early repayment fees as a lump-sum payment for the difference. On the other hand, licensed moneylenders welcome early repayments without added fees.
- Administrative Fees: Usually, banks will charge you a 1-10% processing fee depending on the promotion available. Singapore’s licensed lenders can charge you anything between the same figures too.
- Legal Expenses (But Not Always): Both banks and licensed lenders will charge you legal fees if they win against you in a claims court.
The Registry of Moneylenders keeps the definitive record of licensed lenders across Singapore. If you find a good promotion from a lender, look up their license number and trade name in ROM’s list. Doing this ensures you aren’t working with shady parties that will abuse their authority later on.
Truthfully, all financing will have jarring interest rate figures, complex terms (even in a personal loan), and other challenges. You’ll need to focus on your objective to reach your goals and pay your loan successfully. Recalibrate your budget, realistically cut down on your expenses, and ensure everyone involved in the loan is on the same page.
What Happens After My Loan Application Gets Approval?
Banks will take about 2-8 weeks to process your loan application. However, some banks now have immediate loan disbursement upon loan application approval. On the other hand, licensed money lenders in Singapore will release your loan amount on the same day they approve your application.
You can use your loan for different vital situations that can alleviate future problems. Here are some situations where you can use them.
- Emergencies: Medical and employment-related emergencies will require a huge sum in a short period, making personal loans perfect for the situation.
- Debt Consolidation (With a Few Caveats): You can work with Singapore’s financial unions and charity organizations to find the best debt consolidation services. However, you can use personal loans as an alternative if its payment terms prove suitable.
- Try a Business Idea: A business loan can make your venture productive. However, a personal loan might be sufficient for testing a business idea.
- Invest and Grow: With convenient online brokerage applications and platforms, you can use your loan to grow money and profit.
The Consequences of Failing to Pay
Both Singapore’s banks and licensed moneylenders can declare bankruptcy on borrowers who fail to pay their loans for more than 3-5 months. Usually, the parties will reach out to debtors informing them about possible legal action if they fail to make the next payment. Licensed lenders can file a claim against borrowers too.
It’s Easy to Find The Best Singaporean Licensed Moneylender Near You
Let’s make it easy for you: a top-tier Singaporean money lender with years of experience and top reviews from customers is the best choice for financing.
A Licensed Money Lender like Bugis Credit can provide you with any kind of loan that you need. Being the #1 Licensed moneylender in Singapore, your peace of mind is our priority. We offer financial assistance with simple loan terms that we can customize according to your capability to repay without the rigid requirements and processes. Visit our website today and fill out our loan application form to get started!
