Things to Consider Before Getting a Loan from Licensed Money Lender
It is hard to get a loan for a few thousand dollars from the bank, therefore there are money lender out there where you are able to get loan which is disapproved by the bank. But before you get a loan from licensed money lender, it is good for you to know the legal terms and regulations money lenders need to keep to so you would not be in a situation where you are at the suffering end.
Before taking up on a loan, it is good to consider the amount of money to borrow. It is important to borrow the amount of money you need and fully understand the terms of contract like the repayment schedule, repayment schedule, interest rate charged and other fees applicable. If there is anything you are unsure of, ask the money lender to explain to you again, there is no harm in asking to further explain something you do not understand.
New regulations were implemented for money lender from 1 October 2015 onwards on the caps of the loan licensed money lender are able to set. Below are the regulation money lender has to keep to.
Moneylenders are only allowed to charge you a maximum of 10% of the loan principal for administrative fee once the loan is granted.
For the interest rate of the loan, money lender is only allowed to set the interest rate at a maximum of 4% per month regardless of the amount of income you have or whether you are taking a secured or unsecured loan.
Licensed money lender is only allowed to charge a maximum of 4% per month for late interest.
The total amount of late fees money lender can charge you is $60 per month. So, in the event that you are late in repaying the money back to the money lender, the maximum amount they can charge you for being late is $60.
The maximum amount of borrowing cost money lender can charge is 100% of the loan principle. Therefore, if you borrowed $2000 from a money lender, the maximum amount a money lender can get back including the borrowed money, interest fees and other fees from you is $4000.
Licensed money lender is prohibited from threatening you or harassing your family. To remind you to make payment or if there are other notice, they are supposed to mail a letter to you to inform you on your late payment rather than coming to your house and threatening you to make payment for the loan.
So how should you choose a licensed money lender? You can find out the list of registered moneylenders in Singapore from Ministry of Law. Always do a check on the money lender you are planning to get a loan from, you do not want to be in a situation where you had taken up a loan from an unlicensed money lender.
Here are 3 tips to help you choose a money lender and getting the best deal.
Look and ask the interest rates and fees of different money lenders before taking up on the loan. There are quite a lot of money lenders in Singapore, to have a better deal for yourself, always ask around the different interest rates for the loan and if there are other fees which you need to pay. The first money lender you went to might not have the best rates for you, therefore it would be wise to search around for the best deal.
Do not believe in the advertisements you had seen or was given to you. Advertisements are used to gather the attention and interests of the viewer therefore the rates would always appear to look the best. However, before you jump in and take up on the loan on the ads, ask the money lender on other terms and conditions for the loan on the ads. It is advised to seek clarifications on the terms for the loan contract and not rely on the advertisement.
Beware of caveats when having a secured loan especially when you use your home as security. Before you sign the loan contract, make sure whether the moneylender is able to lodge a caveat against your house if you default your loan. If a caveat is lodged on your house, you would not be able to sell off your house unless you pay back your loan in full to the moneylender.