Before turning to moneylenders for financing, it is important to explore all possible options to avoid high-interest loans. One such option is to consider selling any endowment policies that you may have. Endowment policies are investment products that combine insurance coverage with savings plans. They provide a guaranteed payout at the end of the policy term or upon death, whichever occurs first. However, if you are facing financial difficulties and need cash urgently, selling your endowment policy may be a better option than borrowing from a moneylender.
Selling your endowment policy involves selling it to a third party for a lump sum payment. The amount you receive may be less than the total sum assured under the policy, but it can provide you with the cash you need without incurring high-interest loans. Furthermore, once you have sold your policy, you are no longer responsible for making premium payments, which can be a relief if you are struggling financially. If you are facing financial difficulties and need cash urgently, selling your endowment policy may be a better option than borrowing from moneylenders. It is important to consider all options before turning to high-interest loans that may put you in a worse financial position in the long run.
However, if you’re still considering taking out a loan, there are several things to keep in mind. Firstly, before approaching a moneylender, consider other alternatives such as financial assistance schemes offered by various government agencies. You’re also legally obligated to fulfill any loan contract you enter into with a licensed moneylender, so make sure you’re able to abide by the contractual terms, keeping in mind your income and financial obligations. Borrow only what you need and can repay. Late payment fees and interest payments can be a financial strain on you and your family. Moneylenders are required by law to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract. Make sure you fully understand the terms of the contract, particularly the repayment schedule, interest rate charged, and fees applicable. Be cautious about agreeing to any term that allows a moneylender to lodge a caveat on the sale proceeds of your real estate property if you default on the loan repayment. Shop around different moneylenders to find the most favorable terms.
Moneylenders Act in Singapore
The Moneylenders Act is a law in Singapore that was enacted to regulate moneylending activities and protect borrowers from unscrupulous lenders. The Act broadly defines a moneylender as an individual or entity that provides loans or credit facilities, whether secured or unsecured, to individuals or businesses.
The Act requires that moneylenders obtain a license from the Registrar of Moneylenders and abide by certain regulations and restrictions. For instance, moneylenders cannot charge more than a specific amount of interest and fees, nor can they use abusive or threatening behavior when dealing with borrowers.
Penalties are provided for moneylenders who contravene the Act. These penalties may include fines, imprisonment, or revocation of their license to operate as a moneylender. The primary goal of the Moneylenders Act is to ensure that moneylending activities in Singapore are conducted fairly and transparently, with borrowers protected from unethical practices.
The amount that can be borrowed depends on the borrower’s annual income. For secured loans, the amount is not limited. For unsecured loans, borrowing limits vary based on the borrower’s annual income. If an individual earns less than $20,000 annually, they can borrow up to $3,000. If they earn more than $20,000 per year, they can borrow up to six times their monthly income.
Effective from 1 October 2015, licensed moneylenders can charge a maximum of 4% interest per month. Late interest may also be charged at a maximum of 4% per month for every month the loan remains unpaid. Additionally, the total charges imposed on a loan, including interest, late interest, upfront administrative fees, and late fees, cannot exceed the principal of the loan.
Licensed moneylenders may impose a late repayment fee of up to $60 for each month of late repayment, a loan approval fee of up to 10% of the loan principal, and legal costs ordered by the court for successful loan recovery.
Borrowers should be cautious of licensed moneylenders who use abusive language, behave in a threatening manner, request their SingPass user ID and/or password, withhold their ID documents, ask them to sign a blank or incomplete loan contract, grant them a loan without providing a copy of the contract and/or properly explaining all the terms and conditions, grant them a loan without due diligence, or withhold any part of their principal loan amount for any reason. If borrowers encounter any of these practices, they should report the moneylender to the Registry of Moneylenders or call 1800-2255-529. The Registry will not disclose borrowers’ personal information to moneylenders without their permission. To investigate a complaint, the Registry may require borrowers to meet with officers and provide all relevant information and documents relating to their loan transactions and dealings with the moneylender. The Registry takes complaints against moneylenders seriously, and unfair practices will not be tolerated.
Borrowers who feel that they have been treated unfairly have the option to pursue the matter through the Small Claims Tribunal or the Court, in accordance with the Consumer Protection (Fair Trading) Act. The Court has the authority to nullify loan transactions that are excessively high or significantly unfair.
Before you start
With over 150 licensed money lenders in Singapore, Licensed moneylenders are prohibited from soliciting loans through text messages, phone calls, or social media platforms. They must meet borrowers in person at approved business locations and verify their identity through face-to-face interaction before approving any loans. It is strictly forbidden to conduct loan transactions online or at locations not approved by the authorities.
Licensed Moneylenders and Resources
Prior to accessing a licensed moneylender’s website, it is highly recommended that you verify the physical and website address against the list of licensed moneylenders provided below.
- Registry of Moneylenders list of Approved Moneylenders
By regulating licensed moneylenders, the Registry of Moneylenders aims to foster a secure and ethical moneylending industry in Singapore. You can refer to the Registry of Moneylenders to find licensed moneylenders across SIngapore
- Loan Advisor Portal
While Loan Advisor is not a licensed moneylender, it has earned the trust of over 1,000 Singaporeans as a finance directory comparison website. The company is dedicated to helping loan seekers meet their financial needs, including personal and business loans, among others. They provide free and unbiased information on the top loans with the best interest rates from authorized providers, making it easy for customers to compare and make informed financial decisions. Additionally, their educational blog content offers practical money-saving tips and guides to help Singaporeans make wise financial choices. With Loan Advisor, customers can compare and obtain immediate loan quotes from multiple loan providers effortlessly.
- Best Licensed Moneylender Pte Ltd
With over 17 years of experience in the industry, Best Licensed Moneylender is dedicated to providing comprehensive financial solutions to meet all your needs with flexible loan packages that can be customized to fit your unique requirements. Whether you need a personal loan, business loan.
- 1133 Money Lenders
1133 Money Lenders Private Limited is committed to providing reliable financial services to all Singaporeans. Being a licensed private money lender, the company offers a range of financing options and is fully compliant with the Moneylenders Act. Since its establishment in 2006, the company has strived to provide consistent and high-quality lending services to individuals and small businesses. Located in the Balestier, 1133 Money Lenders takes pride in its small-cap express loans. The company tailors its lending services to meet the specific financial needs of each customer, transforming their financial troubles into moments of relief.
- CreditMaster Pte Ltd
CreditMaster Pte Ltd is committed to offering reliable financial services based on trust and integrity as a licensed lender. The company understands the financial needs of its clients and strives to provide them with timely and efficient loan services. They offer a range of loan packages, including small business loans, foreigner loans, personal loans, and payday loans.
Borrowing money can be a difficult and stressful process, especially when faced with unexpected expenses or financial difficulties. While licensed moneylenders offer a seemingly convenient solution, it is important to understand the risks and potential consequences of taking out a loan.
Licensed moneylenders are regulated by the government and are required to comply with certain rules and regulations to protect consumers. However, their interest rates can be high and may lead to a debt cycle that can be difficult to break. The borrower may find themselves struggling to make repayments, which can result in additional fees, charges, and penalties.
In addition to the financial risks, borrowing from a licensed moneylender may also have a negative impact on the borrower’s credit score, which can make it more difficult to obtain credit in the future. This is particularly true if the borrower defaults on the loan, which can result in legal action, and may even affect their ability to find employment or secure housing.
Before considering borrowing from a licensed moneylender, it is important to explore other options, such as borrowing from family and friends or seeking assistance from financial counseling services. Additionally, if you have an endowment insurance policy, it may be a good idea to consider selling it first before borrowing from a licensed moneylender. Selling an endowment policy may provide a lump sum that can be used to pay off debts or cover unexpected expenses without the high-interest rates and potential risks associated with borrowing from a licensed moneylender.
In conclusion, while licensed moneylenders can be a quick solution to financial difficulties, it is important to carefully consider the risks and consequences before taking out a loan. Exploring alternative options and seeking professional advice can help to avoid the pitfalls associated with borrowing from licensed moneylenders.
Article contributed by CapitaSafe, the leading independent resale insurance provider specialising in the acquisition of life and endowment insurance policies in Singapore.