When you find yourself experiencing money trouble, you have several options to choose from: borrow some money from your family or friends or ask for a personal loan from a bank.
Of course, these options do have its pros and cons, especially if you approach banks. Banks have clear rules on who can borrow from them and they must have the paperwork to back up their capacity to pay. If you cannot provide at least one of the documents they require, your chances of getting a loan are lower. In some cases, you may even be unable to loan from banks because of your age and credit history.
So, what do you do if you cannot meet the bank’s requirements?
Fortunately, Singapore has a lot of licensed moneylenders you can turn to if you need to get a personal loan for your sudden expenses or funding needs. Moneylenders are more flexible when it comes to who they lend to, including those who are often refused by banks because of their credit history or documentation.
Why do moneylenders lend to people who are considered under high-risk and may likely not pay back? Here are the things you should consider before taking up a personal loan from a moneylender:
Moneylenders are like credit cards when it comes to the interest rates they charge to every loan.
Under Singaporean law, licensed moneylenders are allowed to charge a maximum interest rate of 4% per month on loans. A 4% per month interest is also added on late payments and they can charge up to $60 per month for late payments.
Moneylenders also ask their borrowers to pay an upfront fee, which can be around 10% of the principal you just borrowed. As a result, the money you borrowed can be worth more than what you actually applied for.
If you end up paying your loans late, something you should prevent if you do borrow money from a moneylender, the moneylender would definitely contact you and request you pay ASAP.
If you paid them late, the moneylender is allowed to demand payment and personally come to your home or office to collect your payment. Moneylenders won’t use force to get their repayment. If they do, you can complain to the Singaporean Ministry of Law.
Licensed or Unlicensed
Before you borrow from a moneylender, you must make sure that you ensure that they are licensed to operate as a moneylender by the Singaporean government. Currently, the list of active and licensed moneylenders in the country is posted at the Ministry of Law official website.
If you cannot find the moneylender you were considering on their list, then you may have spotted a loan shark. Getting away from these loan sharks can be tricky and will require immediate action.
Licensed moneylenders are expected to do the following:
- They must explain all the terms and conditions of the loan you are asking about.
- They must print a copy of the Note of Contract for the borrower to study and keep.
- They must do credit reviews and a background check on all prospect borrowers before a loan is granted. They must take into consideration your pay slip, income, and other documents.
- They must indicate the entire principal loan amount and how much cannot be held back.
- They must also adhere to the rules laid out by the Singaporean government in terms of what they can charge from borrowers.
What’s the Moneylenders Credit Bureau?
In some cases, you may find yourself unable to pay on time due to an emergency or accident or you are considering getting a second loan from another moneylender to add to your finance.
In this case, the moneylender you may have chosen would forward your concern or application to the Moneylenders Credit Bureau (MLCB). This institution has the data of all the borrowers in the country and their repayment records. The records would indicate certain details about the borrower in question, like the loans they have borrowed, how much it is and other critical loan details.
The moneylender would then seek the credit report, which would give them an idea if they should extend your financing or permit the second loan. Alternatively, you can provide them your credit report if you have a copy. If they are satisfied with your request and of your credit report, they will be open to extending your deadline or approve your second loan.
To borrow or not to borrow?
Before you seek out a loan from a moneylender, make sure you do your research for other possible options on how you can get funds. There may be a better way for you to get the funds you need without having to risk yourself and get a personal loan from a moneylender.
However, if your credit status or history causes you to question your chances with other methods, moneylenders will indeed be a good choice to consider.
Once you do stick to moneylenders, do your research on which licensed moneylender will give you great rates and easier payment terms. You should also take into account how much you are borrowing and how you can pay the funds without delay. Knowing which type of loan, which you are planning to apply for, can also go a long way in ensuring a swifter loan from moneylenders.
If you cannot pay, you will indeed be visited by debt collectors and it is possible you might get sued in court for your actions. If you are found guilty by the courts, you will not only earn a black mark on your profile but also incur a hefty bill due to the legal costs the moneylender had incurred for trying to get you to pay them back.
Financial transactions need to be considered carefully and in getting personal loans, you must be 100% certain because you will be signing a contract your loan terms and your responsibilities as a borrower once you finalize it with your moneylender. Breaking it early or failing to comply with the terms may cause complications so think wisely!!!