Always borrow money from a licensed moneylender. Power Credit, for example, which is good at money lending in Tanjong Pagar, is a reliable licensed moneylender. You may distinguish between a licenced and an unlicensed money lender in Singapore by looking at the following characteristics:
No legal paperwork
You must receive a loan contract from a licenced money lender in addition to the necessary legal paperwork. The payback time, available payment methods, interest rate, and any other information that can have an impact on your loan in the long run are all clearly stated in their terms and conditions. You won’t receive a loan contract or clear terms or conditions from an unauthorised moneylender.
Loan amounts for secured loans are not capped. Personal loans in Singapore, for example, have a borrowing limit that is determined by your yearly salary. These restrictions must be followed by authorised loan companies. Your borrowing capacity is unrestricted from unlicensed money lenders. You have complete borrowing freedom.
Since October 2015, Singapore’s licenced money lenders are limited to charging the following fees:
- A penalty of no more than S$60 per month of late repayment
- A fee that isn’t more than 10% of the loan’s total principle when one is approved
- If the licensed moneylender’s claim to recover the loan is successful, the court will mandate legal fees.
These guidelines must be followed by all licenced money lenders in Singapore. On the other hand, there are no restrictions on unlicensed money lending in Singapore. Even before they issue the loan, they request the security deposit and GST for the loan processing cost.
Excessive Interest Rates
The Ministry of Law permits registered moneylenders to only charge 4% interest on loans, maximum, per month. Additionally, the interest rate is determined by how creditworthy the customer is.
On the other hand, unregulated money lenders impose absurdly high interest rates and late payment fees. They may also ask you at any moment to cover other unstated expenses like processing charges and other small payments.
Only three channels may be used by Singapore’s licenced payday lenders to advertise:
- Directories for consumers or businesses
- Websites owned by the regulated lender
- Advertisements shown within or outside the licenced money lender’s business property.
Be careful if you receive loan promotions through other media, including fliers, text messages, emails, and/or other media. Either they are using unlicensed money lenders or licenced money lenders who have broken the law.