In Singapore, the licensed moneylenders are accredited by the Money Lenders’ Registrar. This means they are obligated to adhere to all the established lending guidelines, interests and service fees in order for them to operate.
Even with this, there comes a time when you are cash-strapped and need some quick cash urgently. But, you are cannot do so because your bank keeps to strict lending rules. Though you might consider borrowing from friends or family, it may not be a good idea.
Thus, you will require assistance from a licensed moneylender. It will be helpful when you can tell apart whether the moneylender is dependable and legal or not.
Below is a look at the fees that moneylenders can charge borrowers.
Fees That Moneylenders May Charge Borrowers
For those loans that were offered between 1st June 2012 and 30th September 2015, the moneylenders are allowed to only charge 6 types of fees:
- For every incident of late payment of interest or loan principal;
- For every situation the loan terms are revised at your request;
- For every dishonored cheque that you issue;
- For every bounced GIRO deduction from your account, as repayment to your moneylender;
- For early payment of your loan or terminating your contract early; and
- Legal charges incurred for recovery of a loan.
Any additional charges are not allowed and are therefore cannot be enforced by any moneylender.
Starting 1st October 2015, licensed moneylenders are only allowed to charge these fees and expenses:
- a fixed charge, not more than $60 for every month late repayments are made; a charge of not more than 10 per cent of the loan principal as at the time the personal loan was granted; and any legal costs as ordered by a law court for the successful recovery of the amount by the moneylender.
- The sum of charges that a moneylender can impose on any loan, including interests, upfront administrative costs, late interest, and late fee cannot be more than an amount equal to the loan principal. [for instance, when X takes out a loan of $11,000, then interests, late interests, 10 per cent administrative costs and the monthly $60 as late fees should not be more than $11,000.]
When your yearly income is below $30,000, the rate that moneylenders may charge, on both unsecured and secured loans, is set at:
- 13 % Effective Interest Rate (EIR) for the secured loans; and
- 20 % Effective Interest Rate (EIR) for the unsecured loans.
The EIR (Effective Interest Rate) considers the compounding result of the installment frequency over a period of 1-year. It then implies that the Effective Interest Rate will better show the real cost of borrowing for a period of a year.
When your yearly earnings are $30,000 and above, the limits above will not apply and the interest rate will be established between the borrower and the moneylender.
Now, since the beginning of October 2015, the maximal interest rate that licensed moneylenders may charge on loans is 4 percent each month. The set limit will apply irrespective of the individual’s income and if the personal loan was taken is a secured or an unsecured one. When a borrower does not keep their word to pay back the loan punctually, the highest rate of the late interest that a moneylender may charge is still 4 percent a month for every month the loan has been repaid late.
The calculation of interesft rates charged on a personal loan needs to be based on the amount of principal left after the deduction from the initial principal the sum of payments that have been made on behalf of or by the borrower that are appropriated to the principal. [For instance, when X takes out a personal loan totaling $10,000, and to date, X has paid off $4,000, the remaining $6,000 may be considered for the calculation of interest.]
The only time late interest is to be charged is only on the amount that was repaid late. This means that a moneylender will not charge late fees on any amounts that are remaining but are not yet due for repayment. [For Instance, when X has taken out a loan amount totaling $10,000 and does not pay the first repayment of $2,000, a moneylender can only charge late interest on the $2,000 and not on the remaining amount of $8,000 since the repayment is not yet due.]
Confirm the License details and address with the Law Ministry
Borrowers need to realize that loan sharks will at times use of a licensed moneylender’s license number, address, name as well as other information to give off a sense of security and trust to the unsuspecting victims. So as to help you avoid this, it is recommended that you take your time to check the info given by anyone claiming to be a moneylender. Use the methods below to help confirm the information:
- Make sure that the address, name, and license number are a match.
- Be sure to check their license numbers against the details found on the Law Ministry’s site:
- Only sign and finalize and your loan contract in person and at the physical office of the address registered. Genuine licensed moneylenders will at all times have you put a signature a complete loan contract in the registered office and address. When a lender asks you to sign a loan contract elsewhere, or even they do not have a current loan agreement. Then it is likely that you are working with a loan shark.
Licensed moneylenders in Singapore are accredited by the Money Lenders’ Registrar. This means they are obligated to adhere to all the established lending guidelines, interests and service fees in order for them to operate.
Even then, borrowers need to realize that loan sharks will at times use licensed moneylender’s license number, address, name and other information to give off a sense of security and trust to unsuspecting victims.
For you to be able to enjoy the best lending service in Singapore, ensure that you are dealing with a licensed moneylender.