In this article, we are going to talk about how a person can legally borrow money from a licensed lender. Also, how to know if they are licensed, who are licensed lender, and which are their prohibited practices.
Who are licensed moneylenders?
These are the people or a group of people who have been approved by the law to give loans to people. There are also several rules and regulations which they have to follow to give out loans. These rules have been set by the Ministry of Law, which was made by the Singapore government. These rules and regulations are followed by many lenders and are hence included in the list of licensed lenders.
They will only act as an agent who is responsible for lending money to the borrower. They will have to charge them all the fees and also interest rates according to the rules. If they want to be legal in the market, they have to follow everything that the law states. Then only will they be included in the list of the licensed lender, which is updated almost every month?
Moneylender Singapore gives you a lot of options from which you can choose according to your needs. They will give all the type of loan you want, and each will be of a different price. Also, there will be a huge difference between the interest rate on different loans available.
A licensed lender will never try to interact directly with a borrower as stated in the rules. This is because some of the illegal lenders will meet them and threaten them into taking the loan. So this is the reason why the lender is not allowed to meet the borrower virtually. By virtually, it means they should not even interact with the lender who meets them on call or through ads.
How to know if a moneylender is licensed or not?
It is made compulsory by the MinLaw that the people should know which are legal and which illegal. This is to save them from getting scammed in the market. Also, they can save their money this way. Moneylenders are strictly told not to contact borrowers through SMS, email, or phone call.
You should automatically know which lender is legal and which is illegal by this. The moneylender is also given some rules to give you loans at a fixed rate of interest. Also, the amount for which the loan can be given and also the fees are fixed. If you have to repay the late repayment fees, you only have to pay $60 a month.
These are some of the rules and regulation which all the lender have to follow to stay legal. They have also made this a compulsion that the lender can only take a maximum of 4% interest on all loans. If any of the lenders found breaking this law will be fined and also jailed.
The people can also report any kind of behaviour to the MinLaw, and they will investigate further. The licensed moneylender has a policy where they never try to contact or give anything online. They will have to meet face to face if they want to give a loan policy to the borrower.
What are some prohibited practices of moneylenders?
There is much different practice which a lender does, and some of them are prohibited. These prohibited activities can be used by the lender to scam some people. Here are some of the prohibited activities to look out for in a lender.
- The use of abusive language and also an aggressive tone is used by the illegal lender.
- The legal lender is never allowed to ask for your SingPass Id and also password.
- They will not give back NRIC, Personal ID card, and also ATM card or passport.
- They will never ask you to sign a blank contract before making the terms and conditions.
- They are not even allowed to give out loans to the people before explaining to them the terms and conditions.
- They cannot keep a part of the principal amount of the loan for their personal use.
Private loan Singapore is a very risky thing to take due to these illegal lenders. These types of lenders are also called loan sharks in the market and Ah Long in the Singaporean language. These are the lenders who are trying to make a profit for themselves and ruining the name of others.
So there are different corporations made which are working on solving this matter. These are Credit Bureau Singapore (CBS) and also the moneylender credit Bureau (MLCB). They work every night and day to separate the illegal ones from the legal ones. This helps the people to easily recognize the legal lender and then take a loan from them.
What are the things to do before borrowing from a licensed moneylender?
Here is a list of things that you have to do before you take a loan from the licensed moneylender.
- Check your ability to abide by the terms
This means that before you borrow the loan, you have to check the terms and conditions. Then you will have to see if you can abide by or complete all the payments mentioned in this policy. This means that you have to check all the terms and conditions before you sign the contract.
- What is the interest rate which lender can charge
The maximum amount of interest rate that is allowed to be taken by the lender is 4%. If any lender is charging you more than 4%, then you should not take the loan from them.
- Other fees that can be taken
They can take different charges, but these are also limited by the MinLaw. They can take late repayment fees of up to $60 per month on the current policy. They can also take 10% principal amount of the loan as an administrative charge.
- Beware of caveats
This is like a hidden charge which some of the lenders create on the borrowers’ property without informing them. This is an illegal thing to do, and those caught doing this will be fined, jailed, and their business closed.