Moneylender Loan Application
From Nov 30 onwards, moneylender borrowers are to be subject to certain loan caps in accordance with their income levels. These new regulations are based on Ministry of Law statements made on Friday (Nov 16), which were announced last 4 October.
The following rules will apply to both citizens and permanent residents of Singapore, including resident foreigners:
- Singaporeans and permanent residents who earn below S$20,000 per year can borrow as much as S$3,000, no matter which and how many lenders they might approach.
- People with incomes above this level may borrow as much as six times their average monthly earnings. This means that a person earning some S$48,000 per year can borrow as much as S$24,000 from various lenders.
- Resident foreigner borrowers are subject to a lesser cumulative loan cap of $1,500, which only applies to those who earn below $10,000 per year.
- Foreigners earning from $10,000 to $20,000 per year can borrow as much as $3,000.
- Foreigners earning at least $20,000 can borrow as much as six times their average monthly earnings.
- Starting 1 October 2015, a moneylender can only impose the following interest rates on loans:
- The highest interest rate that moneylenders may charge borrowers is 4% per month. The cap will apply regardless of whether it is a secured or unsecured loan and no matter the income level of the borrower.
- Were a borrower to fail in making loan repayment on schedule, the maximum monthly rate of late interest that may be charged borrowers is 4%, in any month that payment is late.
- The Interest charged on a typical loan is based on the total amount of the principal remaining, after all, payments made by or for a borrower that is appropriated to the principal are deducted from the original principal amount.
For example, were you to secure a loan of $10,000 and have repaid $4,000 already, only the outstanding balance of $6,000 would need to be accounted for in interest computations.
Late interest charges can only be applied to amounts that are paid late. A lender cannot impose charges on any outstanding amount that is not yet due for repayment. For example, were you to secure a loan of $10,000 but neglected to pay for the initial installment of $2,000, the lender may apply late interest charges on the $2,000, but not on the outstanding balance of $8,000, for the latter would not yet be due for repayment.
Starting 1 October 2015, a moneylender can only impose the following fees and expenses on loans:
- A fee of not more than $60 for each month of late payment;
- A fee of not more than 10% of the loan principal when the loan is arranged; and
- Legal costs mandated by a court that involve successful claims by the lender towards recovering the loan.
The charges for a moneylender loan comprise the following:
- Interest rates
- Late interest rates
- Upfront administrative fees
- Late payment fees
All of these charges cannot exceed the loan principal amount in total. For example, were you to secure a loan of $10,000, all interest fees, late interest fees, the 10% administrative fee, as well as any monthly late fees of some $60, may not exceed $10,000 in total.
Bank Loan Application
When it comes to applying for loans, individuals have long been focused on getting their help from banks. Banks are perhaps the best financial institutions that can aid a lot of individuals when it comes to their financial needs. When you find yourself in a bit of a problem, you should look at how banks and financial institutions can help you.
First, you should familiarize yourself with the ins and outs of the process. What are the basic facts about personal loans that every person should keep in mind? There are a few things that you should know.
The Different Types of Personal Loans
There are different types of personal loans that people should know more about before they try getting a loan.
Secured Personal Loans
Secured Personal Loans is the kind of loans that uses a big-ticket item to finance the purchase of another thing. Usually, a car or a boat is placed as collateral so that the individual can apply for a loan to buy a house or pay for another big debt. This one is the kind of loan that would be less risky than the others.
Unsecured Personal Loans
There are also unsecured personal loans. An unsecured personal loan is where a bank or a licensed money lender agrees to loan an individual an amount without any need of a guarantee of any security. Typically, the loan amount can be used to finance anything. A perfect example of an unsecured personal loan is a car loan. Car loans are restricted to the purchase of new cars, and the new car acts as security.
The Application Process
The application process is a tedious and amazing kind of experience if you get approved. It is not a very good experience if the individual does not get approved.
- If you are in the process of applying, then you can go and take note of the following process, such as:
- You must decide about the kind of loan you want or the kind of loan that you can pay.
- Compare all the different kinds of personal loan options so you can get the best possible deals.
- Once you are decided, you should look at potential personal loan providers and compare rates.
- Go to a website that offers the products you need.
- Fill out the online application form and submit it.
When Is the Approval?
The usual approval time of personal loans depends on the kind of lender. Some financial institutions may take less than a minute to approve while others take a lot of time to approve. Either way, the lender or the financial institution will keep in touch with the applicant and take note of his loan needs.
If the loan is approved, he will receive an email with all the loan information. If the loan is not approved, he will receive an email informing him that his application has been rejected. For some financial institutions, they would provide the reasons for not approving the loan; however others will not provide any reason.
What Happens Next?
After loan approval, the individual would need to get his identity approved. Identity approval requires the need for the:
- Driver’s license;
- Passport; and
Some financial institutions also require and need some supplementary documentation in the form of the following, such as:
- Your birth certificate;
- Your citizenship certificate;
- Utility bills; and
- Your overseas driver’s license.
The next one that needs to get verified is your income. When you fill out the application form, you will be required to submit the information that could help the lender or the financial institution to verify your income and your source of income.
Most lenders would require the following:
- Your annual salary;
- Your last three payslips for the past three months;
- The current monthly account of your bank statements; and
- Some individuals would also be required to submit their income tax returns from the last two years.
How Will The Lenders Verify Employment?
Most lenders would verify employment by calling the employer and getting his contact information. If needed, the lender would get in touch with the employer and verify all of the information that the individual provided. Hence, if you would want to get approved by the lender, you should make sure that you would give all of the right information that would be easy to verify.
Are there other documents that are required?
There may be other documents that would be required by the financial institutions, especially for car loans, such as the following:
- Car insurance policy;
- Dealer tax invoice;
- Car registration number;
- Vehicle number;
- Engine number;
- How much you paid for the car; and
- The contact information of the seller.
How Do I Qualify For A Personal Loan?
To qualify for a personal loan, you would need to follow the more specific requirements as provided by law such as the age of requirement as well as the regular source of income.
If you are looking for more secured personal loans, you should know that the requirements are a little bit stricter than what you can imagine, such as the fact that you need to have good credit. You need to be a permanent Singapore resident or citizen. There may also be a minimum income you need to earn before you can be approved.
If the loan is a car loan, you need to present the car. It generally needs to be secured by another asset. Some lenders would accept things such as jewelry so it would be easy to shop around.
How Do I Find The Right Personal Loan?
To find a good personal loan, you should consider your needs and your situation. Every single time that you apply for credit, you should be able to choose the right loan so you would not need to make multiple loan applications.
What are the considerations that you should make?
First, you should consider the kind of loan that you are taking out. What is your need exactly? Do you need money for a car? Do you need money for a new house? Do you need money to refinance debt? The important thing to do is to first know about the kind of loan that you are going to take out.
You also need to know how much you are going to borrow. While it is true that most financial institutions may provide a good kind of loan, you need to be able to know the limit of how much you are going to borrow. Look at the individual loan products and make sure that you know the minimum and the maximum loan amounts.
You also need to know the repayments that you can afford. The monthly payments will dictate just how much you need to repay the loans that you have. What can you afford to pay on a month to month basis? What kind of repayment scheme are you more comfortable with.
You also need to have good credit history and know what it is that you need to fix to have a credit score that matches the requirements of your needs. Make sure that you know what you are doing and make sure that every step you take is going to help you and your financial history.
What Happens After Application?
After your application, you need to know that you have to give the bank or the financial institution some time for them to clarify and verify your needs as well as your records. It may take some time, such as the following:
- For small loans like payday loans, the turnaround time of the review could be in a matter of minutes, hours, or days.
- For bigger loans, you may need around three weeks.
- For even bigger loans, especially business loans, it may take up to 60 days.
Once you apply, there is no guarantee that you can have the approval that you need. The reality is that the loan may get approved or disapproved, and that is something that you cannot control. This reason is why most of the providers aim to look at the possibility of the loan getting approved or disapproved before allowing anyone to apply for a loan. If you get disapproved, do not take it with onion skin as that is just the reality.
The Serious Reality
It is necessary for you to have a serious look at your finances and make sure that you know what you are getting into. The reality is simple: you should know your financial reality, and that is the only way for you to make sure that you are doing the right thing for you and your financial history.
Give your financial history a clear look so you would know what you can afford. You should always have control with your finances and everything else in between.