How To Choose a Singapore Licensed Moneylender

If you intend to take up personal loan in Singapore, you might want to use the service of a reputed, trustworthy licensed moneylender. The lender must also offer different options and offers to the customer. It is necessary that you compare the offers from various firms. Some possible criterion on which to evaluate different lenders include:

What is the application process? The application process for a legal loan maybe easy or tough. A flexible company will have a simple application process. Nowadays, most lenders in Singapore have an online presence and some even allow you to apply online. Some lenders can even complete the process in as little as a few hours. An online application process is simple and requires personal information like proof of identity, evidence of employment etc. Most people can apply online for loans like personal loans, foreigner loan etc. Compare the application procedures of various lenders.

How safe are the transactions: Online transactions are risky but with proper encryption in place, customers need not fear online applications. Different levels of online security like browser encryption, fire walls, and online monitoring are required. Lenders also have to maintain confidentiality with regard to the financial data of customers. So you must choose a company with adequate security options.

What kind of interest rates are you shopping for? The most important criterion while shopping for personal loans is the interest rates offered by the lender. You have to take time to compare the various interest rates offered by various lenders. Choose the option which matches your budget and financial situation. Also make sure before signing up for a loan, to check for hidden clauses regarding repayment options or interest rates. Remember that small loans entail low interest rates and convenient payment options. There is a diversity of small personal loans available according to your need and requirement.

What is the quality of customer service: Make sure that the Singapore licensed money lender you have chosen is able to guide you properly through the loan process. Also make sure that you have access to an online or offline call center or hotline.

Moneylenders can charge fees only for following conditions according to Singapore laws:

With effect from 1 October 2015, all moneylenders are only permitted to impose the following charges and expenses:

  •  a fee not exceeding $60 for each month of late repayment;
  • a fee not exceeding 10% of the principal of the loan when a loan is granted; and
  • legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

The total charges imposed by a moneylender on any loan, consisting of interest, late interest, upfront administrative and late fee also cannot exceed an amount equivalent to the principal of the loan. [To illustrate, if X takes a loan of $10,000, then the interest, late interest, 10% administrative fee and monthly $60 late fees cannot exceed $10,000.]

  • For loans contracted between 1 June 2012 and 30 September 2015, 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:
    • 13 per cent Effective Interest Rate for secured loans; and
    • 20 per cent Effective Interest Rate for unsecured loans.

    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 https://www.mlaw.gov.sg/content/rom 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.

    With effect from 1 October 2015, the maximum interest rate moneylenders can charge is 4% per month. This cap applies regardless of the borrower’s income and whether the loan is an unsecured or secured one. If a borrower fails to repay the loan on time, the maximum rate of late interest a moneylender can charge is 4% per month for each month the loan is repaid late.

    The computation of interest charged on the loan must be based on the amount of principal remaining after deducting from the original principal the total payments made by or on behalf of the borrower which are appropriated to principal. [To illustrate, if X takes a loan of $10,000, and X has repaid $4,000, only the remaining $6,000 can be taken into account for the computation of interest.]

    The late interest can only be charged on an amount that is repaid late. The moneylender cannot charge on amounts that are outstanding but not yet due to be repaid. [To illustrate, if X takes a loan of $10,000, and fails to pay for the first instalment of $2,000, the moneylender may charge the late interest on $2,000 but not on the remaining $8,000 as it is not due yet.]