More and more people in Singapore are borrowing loans for various reasons. At times, there are financial emergencies like hospitalisations or a shortfall of cash to pay your monthly bills. And other times, money is required for important life events such as weddings or education or buying a vehicle and so on. With a bouquet of loans available at every moneylender in Singapore, all these different requirements can be easily met.
But how to identify the ideal moneylender? And what to keep in mind when looking for one? Glance through our quick list to know more about it.
#1 Choose a licensed or legal moneylender in Singapore
The financial market of Singapore is bustling with many moneylenders. But what you need to remember is that you must borrow only from a government-recognized, approved moneylender. There are many benefits when you choose a licensed moneylender in Singapore like they lend money online or offer payday loan in Singapore. But here are a few very important ones:
- Legal moneylenders are bound by the law. So, you can rest assured about the authenticity.
- Your personal details are safe with legal moneylenders. They won’t misuse your data or spam you with unnecessary offers.
- As per the government’s rules, moneylenders can charge you a maximum interest of as little as 4 per cent per month. Legal moneylenders have to abide by this and other rules laid down by the government.
- Licensed moneylenders respect your dignity, even if you are a defaulter. The loan process then becomes harassment-free.
- They are not only better than unlicensed moneylenders with regards to security, but they also have an advantage over traditional institutions like banks. Moneylenders lend money online, making the process fast and easy.
Now that you know why a legal money lender is your best bet for borrowing a loan, here’s more about how to recognize whether a moneylender in Singapore is licensed or not.
- MinLaw’s registry: All licensed moneylenders are listed on the MinLaw website. So, all registered moneylenders on this website are legal and you can approach them. But remember to check the license validity and any additional notes or remarks to be totally sure of the moneylender’s authenticity.
- Advertisements: Legal moneylenders are bound by strict advertising rules. They can promote their services only on business or consumer directories, their own websites, inside the registered premises from where they operate. Moreover, they are not allowed to ask for loan applications via phone or SMS. Automatically, if you find any moneylender resorting to any such practices, they are not authentic and you need to stay away from them.
- Documentation: A legal and authentic moneylender will provide you with appropriate documents and even insist that you follow the appropriate documentation process. They always return the personal documents you may have submitted for verification. And give you an authentic loan contract or agreement.
#2 Identify your loan requirement
Even before you approach a moneylender, identify why you need to borrow. Moneylenders often provide loans for various personal reasons. We’re listing a few common ones here.
- Consolidation of existing debts
- For meeting with monthly expenses
- Buying a vehicle
- Renovation of home
- When selling an existing property and buying a new one
Each of these reasons fetches you a different type of loan and with that, your loan and repayment conditions vary. For example, when you want to borrow to combine multiple loans, you will be offered a debt consolidation loan. Whereas, payday loan Singapore is borrowed to settle your monthly expenses. So, when you have clarity about the reason why you’re borrowing, the entire process becomes easier for both you as well as the moneylenders.
#3 Check eligibility
Loan approvals happen based on your income and repayment ability. Here’s a ready reckoner that will help you understand your eligibility against your income when borrowing from a moneylender in Singapore.
Apart from that, your credit score also plays a crucial role in determining your eligibility. Although moneylenders can help you convert a bad credit score into a good one with their financial services, it would be good to have your own assessment about this. You can get a credit report for yourself from Credit Bureau Singapore or Moneylenders Credit Bureau.
#4 Gather the required documents
A legal money lender in Singapore will expect you to provide the following documents for loan approval:
- Income and employment proof
- Residence proof
- Latest credit score
- Previous CPF statements
In addition to the above documents, foreign borrowers are required to submit:
- Tenancy agreement
- Employee letter
- Employee pass
- Bank statements
#5 Understand the costs involved
When you borrow from a moneylender in Singapore, it becomes more economical for you as there are certain rules and restrictions.
- The monthly interest rate is capped at 4 percent
- The late payment interest rate cannot cross the 4 percent limit
- In case of late fees, it cannot exceed 60 Singapore dollars in a month
- Administrative fees cannot exceed 10 percent of the total principal amount
- In case of non-payment, recovery is to be made only on the court-approved legal costs
- The total costs charged by the moneylender cannot exceed the principal amount
If everything goes smoothly, you will be given the required loan amount. Now once the loan amount is sanctioned, here’s what you must keep in mind:
- Check if the dispensed loan amount is right. Loan providers will deduct 10 percent of the loan amount as an administrative fee.
- Maintain a properly documented record. Ensure that you have copies of your loan agreement, repayment receipts, and a detailed statement of all transactions.
- Most importantly, make sure your repayment schedule is regular and on time. Avoid any defaults.
Now, also be prepared for the unforeseen circumstances when you borrow money. At times, even if you are extremely disciplined in your repayment, you might face problems, making the loan repayment impossible for you. At such times you can resort to one of the following two things:
- You can approach your lender and request an extension. Most moneylenders are considerate and will work out a new repayment schedule for you that suits your financial situation.
- You may consider filing for bankruptcy if your loan is above 15 thousand Singapore dollars. When you do this, the lender will stop charging you any interest and will not be able to file a case against you. But the flipside to this is that there can be grave implications of this on your financial reputation and credit score. So, this should be reported when nothing else works out.
With this checklist, you can find the right moneylender for yourself and go through the borrowing process smoothly.