What are the things / areas I should look out for when getting a loan form money lender?
Notes to Borrowers When Obtaining Loans from Licensed Moneylenders
1) What should I consider before taking up a loan?
You should keep these key points in mind:
2) How much can I borrow?
For secured loans, you can obtain a loan of any amount. For unsecured loans, you can obtain:
3) What are the interest rates moneylenders can charge?
From 1 June 2012 onwards, moneylenders are required to compute and disclose to you the Effective Interest Rate of the loan, before the loan is granted. If your annual income is less than $30,000, the interest rate which moneylenders can charge, for both secured and unsecured loans, is capped at:
The Effective Interest Rate takes into account the compounding effect of the frequency of instalments over a one year period. This means that Effective Interest Rate better reflects the actual cost of borrowing over a one year period. Visit www.ipto.gov.sg to find out more about how the
Effective Interest Rate is calculated from 1 June 2012.
If your annual income is $30,000 or more, the caps above are not applicable and interest rate is to be agreed upon between the moneylender and the borrower.
4) What are the fees that moneylenders can charge?
From 1 June 2012 onwards, moneylenders are only permitted to charge six types of fees:
Any other fees are not permitted, and are hence not enforceable by the moneylender.
5) How do I know whether a moneylender is licensed or not?
Do not borrow from unlicensed moneylenders. Verify that a moneylender is licensed by checking the list of licensed moneylenders at www.ipto.gov.sg. Notwithstanding that the moneylenders are licensed, be mindful if they:
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. Please see Question 10 for more details.
6) How can I tell whether an advertisement is from a licensed moneylender or an unlicensed moneylender?
Under the advertising rules, which took effect on 1 November 2011, licensed moneylenders are permitted to advertise only through these three channels: (a) business or consumer directories (in print or online media); (b) websites belonging to the moneylender; and (c) advertisements placed within or on the exterior of the moneylender’s business premises. All other channels are prohibited.
In this regard, the advertising rules can help you differentiate between licensed and unlicensed moneylenders. If you receive flyers, SMSes, emails or other forms of advertisements which are not permitted under the rules, these would be from either licensed moneylenders operating in violation of the rules, or loansharks. Hence, you are advised not to respond to such advertisements. Instead, you should report the advertisements to the Registry at Tel: 6325 2585 or email: email@example.com.Errant licensed moneylenders will be investigated by the Registry and loansharks will be investigated by the Police.
7) Can I rely on the content of an advertisement to take up a loan from a moneylender?
You are advised to seek clarifications on specific terms of the loan contract before signing up with a licensed moneylender, and not to rely solely on the content of advertisements from the moneylender.
8) In the event that I am standing as a surety for a loan, what should I look out for?
You should ensure that:
9) What should I do after being granted a loan?
10) How do I lodge a complaint against a moneylender against unfair practices and/or contract?
You can contact the Registry at Tel: 6325 2585 or email: firstname.lastname@example.org.
Rest assured that the Registry will not disclose your details to the moneylender without your consent. To facilitate the Registry to investigate your complaint, you may need to attend an interview with our officers and provide us with all relevant information and documents related to your loan transactions and circumstances of your dealings with the moneylender.
The Registry views complaints against moneylenders seriously and will investigate them thoroughly. Errant moneylenders will be taken to task. If a moneylender has engaged in an unfair practice towards you, you can pursue the matter through the Small Claims Tribunal or the Court under the Consumer Protection (Fair Trading) Act. The Court also has the power to set aside loan transactions that are exorbitant or substantially unfair.