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Finding the Right Licensed Moneylender in 3 Simple Steps

Learn how to find the right licensed moneylender in 3 simple steps today

Learn how to find the right licensed moneylender in 3 simple steps today

2017 introduces new moneylending changes disrupting the moneylending industry. This leads to the importance of finding the right licensed moneylender company that is up to date with the government new rulings.

Borrowers usually borrow out of reason, most of the time the reason is due to an emergency or money is being held up somewhere. Thus it could be hard to secure loans from financial institutions and borrowers might find licensed moneylenders instead. So let’s break it down on what is happening on the ground.

Errant Moneylending Practises you must Avoid!

There has been ongoing errant moneylenders that tries to bypass the many rules set upon giving a loan.

  1. “New Law” theory: Informing borrowers/potential borrowers that they can be granted only weekly loans because the Government set upon a “new law” which does not exist.
  2. Paying “administrative fees” repeatedly: Offering short-term loans of less than one month in duration, which are repeatedly “re-financed” or “renewed” such that borrowers do not repay any part of the principal or interest. Instead borrowers pay towards a 10% “administrative fee” repeatedly.
  3. Rolling over loans: Offering loans or “re-loans” to pay off existing loans when borrowers are unable to fully pay loans that are due, and charging the borrowers a 10% “administrative fee” repeatedly to roll over the existing loan.
  4. Paying for many late charges: Loans get split into numerous component parts such that when a borrower is unable to repay any component on time, a late charge of $60 for each component is imposed.

Finding the Right Licensed Moneylender

The right licensed moneylender will avoid all the 4 steps above, as they would want to prevent any forms of misinterpretation and retain their moneylender license.

Step 1: Check the licensed moneylender & avoid bad practises

Never ever borrow from unlicensed moneylenders. It is paramount in finding the right licensed moneylender that one has to check the actual license of the moneylender. Verify that a moneylender is licensed by checking the list of licensed moneylenders at https://www.mlaw.gov.sg/content/rom.

  • Not just the license have to work out, the right licensed moneylender will not carry out the following actions
  • Use abusive language, or behave in threatening manner towards you
  • Ask for your SingPass user ID and/or password
  • Retain your NRIC card or any other personal ID documents
  • Ask you to sign on a blank or incomplete Note of Contract for the loan
  • Grant you instant loans without exercising due diligence (e.g loan approval over phone, SMS or email without receiving your loan application details)
  • Withhold any part of your principal loan amount for any reason

Step 2: Avoid tricky loan tactics

The right licensed moneylenders will never grant loans or “re-loans” to borrowers to reduce or extinguish existing known debt. As some errant licensed moneylenders will abuse “re-loans” to “reset” the total borrowing costs and borrowers end up paying multiple administrative fees instead which causes borrowers to end up paying more than their principal amounts.

Should a moneylender force such a sales tactic on you, one can lodge a complain to MinLaw about the business practices being applied.

Step 3: Read the legal document. Get it explained.

Always read the contract terms or get the loan officer to explain the details to you. When borrowing, the right licensed moneylender will breakdown the interest rates, administrative charges, late interest rates, late fees. It is part of the Moneylenders Act that loan officers must inform borrowers on the permitted fees that are chargeable. Before any loan is issued, borrowers must read through a cautionary statement or be read to by the loan officers. The right licensed moneylenders will get the statement explained to the borrowers which must be read, understood and acknowledged.

With effect from 1 October 2015, all licensed moneylenders are only permitted to impose the following charges and expenses

  • Fee not exceeding $60 for each month of late repayment
  • Fee not exceeding 10% of the principal loan amount
  • Court legal costs if a successful claim is made by the moneylender for the recovery of the loan
  • The total charges imposed by a moneylender on any loan distributed, which can comprise of interest, late interest, upfront administrative and late fees cannot exceed an amount equivalent to the loan principal. (e.g if X takes a loan of $10,000, then the interest, late interest, 10% administrative fees and monthly $60 late fees cannot exceed $10,000)

 

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