Category: Articles

How do I know whether a moneylender is licensed or not?

Avoid Unlicensed Moneylenders

Do not borrow from unlicensed moneylenders. Verify that a moneylender is licensed by checking the list of licensed moneylenders. “Click here to access the list of licensed moneylenders.”

Notwithstanding that the moneylenders are licensed, be mindful if they:

  • Use abusive language, or behave in a threatening manner towards you.
  • Ask for your SingPass user ID and/or password.
  • Retain your NRIC card or any other personal ID documents (e.g. driver’s licence, passport,work permit, employment pass or ATM card).
  • Ask you to sign on a blank or incomplete Note of Contract for the loan.
  • Grant you a loan without giving you a copy of the Note of contract for the loan and/or without properly explaining to you all the terms and conditions.
  • Grant you a loan without exercising due diligence (e.g. approving a loan over the phone, SMS or email before even receiving your loan application form and supporting documents, such as the income tax assessment and payslips).
  • Withhold any part of your principal loan amount for any reason.

Such practices are not acceptable. If you encounter them, you should report the moneylender to the Registry of Moneylenders, with information such as the moneylender’s business name, licence and contact numbers.

To find out more about unlicensed moneylenders, you may click on this link: http://www.spf.gov.sg/ahlong/

Proposals made after failing to quash recommendation for interest rate cap

New Moneylender Interest Rates

AFTER failing to have a proposal for a 4 per cent cap on monthly interest rates scrapped, moneylenders now want to be able to slap borrowers with a $60 fee every time a payment is late.

They also want the green light to charge a one-off fee of 10 per cent of the loan once it is approved.

The proposals form part of the raft of claims made by Moneylenders’ Association of Singapore to a government-appointed advisory committee formed last June to review and strengthen moneylending rules.

The 15-member panel will finalise its recommendations today.

It had earlier proposed that an interest rate cap of 4 per cent a month be imposed, including a late-payment interest, also capped at 4 per cent a month.

No other fees would be allowed to be imposed on borrowers.

These proposals drew strenuous objections from licensed moneylenders when announced last November.

Moneylenders, who can now charge as much as they want, with rates averaging 20 per cent to 40 per cent a month, said the 4 per cent interest rate cap was not tenable.

They said they should be allowed to charge 15 per cent to 20 per cent a month in order to cover high overhead costs and the risk they take in lending to certain borrowers.

The Moneylenders’ Association had said to the committee earlier that many of its borrowers would not get loans from banks. They also claimed that at least 20 per cent of such customers default on their payments.

Licensed moneylenders expect a rise in loans as thousands of heavily indebted individuals could have their credit facilities suspended by banks, once tougher rules take effect on June 1.

The president of the Moneylenders’ Association, Mr David Poh, estimates that lending will rise 30 per cent once the new rules kick in.

But credit counsellors have urged the authorities to prevent moneylenders from capitalising on the change in regulations.

A borrower, who wanted to be known only as Mr K. H. Tan, told The Straits Times that he owes more than $20,000 to 15 licensed moneylenders.

He found himself caught in the web of late fees last year when he borrowed money to pay debts to loan sharks.

The 36-year-old, who earns $2,500 a month as a technician, said he first took a loan of $1,000 from a licensed moneylender and was required to pay an instalment of $400 over four weeks.

“The $1,000 loan wasn’t enough to clear my debt. I had also used up my salary to pay the loan sharks. Because it was a weekly loan and the payment was due before I received my salary the next month, I had to borrow from another licensed moneylender to meet the instalment payment of the first licensed moneylender,” said Mr Tan.

“Almost every week, I was shopping for a licensed moneylender to borrow from.”

The loans were easy to get, according to Mr Tan.

“I just needed to show them my payslip to prove that I am gainfully employed. Even though they knew that I was heavily indebted, they were willing to offer me a loan,” he said.

The Monetary Authority of Singapore estimated that at the end of February, there were 32,000 people with unsecured debt of more than 24 times their monthly salary.

This will bar them from taking out further unsecured loans from June 1. The rule gets tighter from June 1, 2017, when the limit falls to 18 times the monthly income. It goes down again from June 1, 2019, to 12 times.

Confessions of a Licensed Moneylender

Articles Licensed Moneylender

SINGAPORE – People have labelled him a “licensed loan shark”.

It is a comment made in jest, but it never fails to make licensed moneylender Sean Chia go on the defensive.

“I tell my friends I’m quite sensitive to the word loan shark. I don’t like to be lumped together with them because what they do is illegal,” says the 46-year-old, who collaborates with his brother, the owner of a debt-collection agency.

The bespectacled, kind-looking man looks nothing like an “Ah Long”.

But some of his old acquaintances have dissociated themselves from him since he joined the moneylending industry.

Mr Chia, a former property consultant, set up XXX Credit about three years ago, pumping in a six-figure amount he saved up over the years.

Licensed moneylending came under the spotlight last week, when the Monetary Authority of Singapore (MAS) announced new limits on borrowing.

As licensed moneylenders come under the purview of the Ministry of Law, the new rules do not apply to them, but MAS said in a forum-letter response that they would be working to fix this.

Mr Chia, who ditched his lucrative but stressful job to spend more time with his young children, says the switch was a 180-degree change.

“I used to mingle with bankers, lawyers, developers and tai tais. People for whom money was never a problem. They had too much of it,” he says.