During difficult times in your life, especially during financial troubles. You may be needing to borrow a sum of money to help you tide your finances. When this unforeseen situation arises, you may consider applying for a loan. You might need to borrow this money for medical emergencies, buying essential goods, or paying regular house bills.
In any case, there is a high possibility that you’ll fall or be tricked by an unreliable money lender like loan sharks, also known as “Ah Longs”, which could potentially make your situation even worse. Many people do fall into the trap of such unlicensed money lending companies. Hence, in this article, you will find all information about unlicensed money lending and how to find the most reliable money lender all over Singapore.
How to Identify a Legitimate and Reliable Moneylender?
A good sign that a singapore money lender is licensed is having a physical office. Licensed money lenders in Singapore must have an office matching the address they have listed at the Ministry of Law Registry. Remember that an Illegitimate money lender will not have any office, or if they happen to have one, they wouldn’t tell you otherwise.
Most of the time they imitate the names of legal moneylenders in Singapore to make sure that people believe them and for them to appear legitimate. Loan sharks do not follow legalities regulated by the Ministry of Law thus skipping such standard operating procedures being practiced by the legal lenders.
Also, it is a rule that a licensed money lender will never contact you via SMS, flyers, or any other kind of telemarketing to offer you good personal loans, fast cash loans, business loans, and incredible loan deals that are too good to be true. It is illegal to do these things as per the law in Singapore. Only a loan shark in Singapore will contact you via phone, texts, or calls because of the fear of being caught. And these scenarios happen most of the time to those who are being lured by their false marketing, trapping them with large sums of debt.
How to Spot an Illegal Moneylender?
Loan sharks try to make sure that their business looks legitimate and appealing to the customer. Hence, they make sure to copy all the details from a licensed money lender business website and then deal with a customer, in the same way, to look legitimate.
Illegal money lenders would also falsify business information like sending you an email that looks and sounds professional but in reality is that they only copy legitimate messages from a licensed money lender to look genuine. They would give you regular business calls, and you would see attractive advertisements from them. So, it is necessary to make sure that you do not believe what you see.
An Illegal Moneylender or “Ah Long ” will want to make the process quick, they would skip the loan’s standard processes to lure you to borrow and sign loans with them. They will offer an incredible loan amount and instantly agree to give you loans without even going through your requirements.
The standard process of applying for a loan is a standard procedure that includes registration, filling in the necessary documents, loan application evaluation by the licensed money lender, etc. If you feel that any of these loan steps are not followed when you have applied for a loan, you need to be alert. Any offer that is too good to be true can cause many problems for you in the future.
You need to be more alert if they start showing the following behavior which are signs of red flags while applying for the loan:
- Showing off aggressive and threatening behavior after handing the loan amount. A legal money lending company will never do this as it is an illegal loan process.
- They start abusing you with foul and demeaning language, they will gaslight and discriminate against you to make you submit to their appeals.
- Loan sharks provide you with loans with attractive schemes or alluring interest rates- Law in Singapore allows a company to offer only up to 4% of interest rate per month. Illegal money lending typically consists of extremely high-interest loan rates.
These are red flags that you need to watch out for when you are taking out a loan. Always protect yourself from such kinds of illegal money lenders. Singapore has many of them, and they will find a way to pressurize you to settle your debts.
What To Consider When Choosing A Reliable Moneylender?
Even if there are a lot of Money Lenders across Singapore, not all of them offer the same loan deals. Some offer better loans than the other. Here are the factors you need to consider and have to pay attention to when choosing which among these legal moneylenders to trust in taking out a loan.
1. Strong Reputation and Credibility
The first thing to check is the validity and legitimacy of the lender. Make sure that the license of the moneylender is legitimate by checking out the Registry from the Ministry of Law. The license number must match up with the one on the MinLaw website.
Aside from checking the legal information like license and business permits issued by the government, it is a must to conduct research on the lender’s background. You can check Google reviews and see the feedback of the clients who had previously availed the loan services of the business. Check these reviews and feedback to have a better understanding on how the lenders operate.
You also need to take note that sometimes customers only leave a review when they have a bad experience. So, you also need to scrutinize each review and filter the legit ones. There are also websites dedicated to collating reviews and feedback on financial institutions. These entities publish reviews and post real recommendations according to the statistics they gathered.
Another thing you need to remember in checking the reputation and credibility of a lender in Singapore is to check whether it has a physical office. Having an office means real business is operating under the jurisdiction of the law.
2. Reasonable Interest Rates
Licensed moneylenders in Singapore are restricted by law to have an interest rate of not more than 4%. There are some lenders who offer a low-interest rate depending on the loan you are applying. They can also give a higher interest rate depending on the loan you applied for, higher interest rates are applicable as long as it is amended by law.
Interest rates are just one of the many factors to consider in choosing a licensed money lender in Singapore. So keep an eye out on those who give the best interest rates that are favorable to your loaning situation.
3. Flexible Loan Tenure
The best legal money lenders in Singapore always provide a variety of options to their customers. Borrowers can always negotiate on the repayment terms of the loan amount and loan tenure. This is because when the borrower is near to defaulting on the loan, the customer is given other options to settle his debt obligation. Make sure that you are dealing with a lender with a flexible loan repayment plan. This will serve as your safety net in case you encounter financial difficulty along the way or you would like to make an advance payment during the loan tenure.
Another point to remember is that a good money lender in Singapore explains to you all the options you have for the repayment plan, the loan terms, interest rates, and all the other information regarding your loan contract. As a borrower, it is important that you fully understand all the aspects of the loan agreement. The borrower should be responsible for understanding the information encasing the loan contract.
4. Swift Loan Application Process
A money lender in Singapore must have an easy and swift loan application process. With that said, due to the digital era, Many lenders allow online loan applications now where they can make the transaction faster. These money lenders can approve fast cash loans as fast as 30 minutes or less, depending on the requirements you submitted. Choose a lending company that ensures the comfort and convenience of the clients. As a borrower, you should not undergo so much hassle when applying for a personal loan or any other loan type.
You must also remember that applying for personal loans, fast cash loans, business loans and other types of loans is a personal journey. You have to feel comfortable in dealing with the representatives of the licensed moneylender you have chosen. If you feel that you are not valued as a customer, you can always find some other place to conduct your financial transactions.
The Importance of Choosing a Licensed and Reliable Moneylender
To see the benefits and importance of choosing a licensed moneylender, it would be best to compare it with the traditional borrowing process that involves banks. The main importance of applying for a fast cash loan with a money lending business is because it is very convenient.
It has a shorter application and approval process than a traditional application with banks, and money lending agencies disburse the cash loan almost immediately and within the day of approval itself. Because of the shorter loan process, it also cuts down on paperwork and the number of required documents.
In this aspect, licensed moneylenders are less stringent than banks, but are still as trustworthy and reputed. Lastly, money lending agencies offer very low interest rates, which makes repayment much easier compared to bank-sourced loans.
These benefits, several of which are mandated by the Ministry of Law in Singapore, are the results of having reputed and licensed money lending companies. Illegal money lending agencies can cause the opposite of these benefits.
Comparing Licensed Moneylender vs. Illegal Moneylender
The main difference between licensed and illegal money lenders is their registration with the Ministry of Law. Licensed money lenders are included on the list of legitimate money lenders, kept and recorded by the government. Coupled with this registration, licensed money lenders also receive license numbers which they display on their websites and offices. However, there are also other signs which you can use to spot which is a legitimate moneylender and which is an illegal one. Take a look at the following table:
|Licensed Money Lenders||Illegal Money Lenders|
|• Has license number and included in the list of legitimate moneylenders kept by the Ministry of Law|
• Has a physical office which can be visited
• Loan application involves a complete contract that requires a signature
• Treats their clients with respect both in general interaction and in loan payment collection
• Clear statement in contract, and the contract is easily understood
• Follows the rules on maximum interest rates (does not exceed 4% except for business loans)
|• No license number, does not exist in legitimate moneylender list|
• No physical office
•Loan application contract either has incomplete sections or does not exist at all in the loan application process
• Uses abusive language in transactions, and employs harassment in payment collection
• The contract has vague terms and conditions and/or has clauses which feels “too good to be true”
• Has interest rates that exceed 4%/exorbitant interest rates
The Ministry of Laws’ Guideline for Licensed Moneylenders
Licensed moneylenders are not allowed to solicit loans using text messages, phone calls, or social media platforms. If these mediums of communication are used, it is likely that an illegal moneylender is trying to transact with you. In this case, it is encouraged that you report the sender to the proper authorities for their investigation.
Also, everyone should be careful not to leave any personal documents in the hands of the loan officer after the information within has been confirmed. Licensed moneylenders are not allowed to hold on to the client’s personal documents, such as credit reports for example.
Another type of personal information is your passwords, especially passwords for government sites. Never share your important passwords with anyone, even with people who claim to be loan officers, because it is extremely prohibited by the Ministry of Law in Singapore.
Those are some of the most reputed money lender companies in Singapore, which have similarities because of laws and guidelines implemented by the government. But they have some small differences which can steer a client’s interest either towards or away.
Money lending businesses are still superior compared to traditional bank-sourced loans because of the huge difference in convenience. The speed and the easiness of the process make it ideal for clients who are in difficult situations and the last thing that they need is another difficult process to go over with.
However, despite the convenience of the money lending process, it is also important to know how to differentiate between a licensed money lender and those that are illegal. Remember to stay away from anything illegal, and always prefer to transact with legitimate companies.
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