How To Check And Verify If A Singapore Money Lender Is Licensed
August 31, 2022
Moneylending is a service that has been in place for many years, but with the introduction of technology, the industry has seen great changes.
It is now easy to apply for loans through online portals.
There has also been an increase in the number of lenders recently, making it crucial to ensure your preferred lender is licensed.
There are many benefits to using a money lender from a licensed and regulated company in Singapore. You will find their interest rates more competitive than those of unlicensed money lenders.
Plus, the lender will have a better understanding of your needs and offer suggestions if it sees some risk or an opportunity.
With this in mind, it’s important to do research on these types of companies before signing up with such a lender.
In this article, we look at how you can check and verify the status of a money lender in Singapore before you take a loan.
Where Can I Find A List Of Licensed Money Lenders?
There has been an increase in the number of lenders that are unlicensed.
They deceive borrowers into taking loans, which they only discover when paying as the terms and conditions become evident. Most unlicensed lenders will market their products through SMS and emails.
Unlicensed lenders will ask the borrower to pay loan processing fees in advance. Don’t fall for that. They are scams.
A licensed lender will not ask you to pay anything upfront. Report any unlicensed moneylending activities to the police.
The good thing is that you can verify whether a lender is licensed or not. Before you apply for any loan, it’s advisable to verify whether the lender is licensed.
You can verify this by visiting the Ministry of Law website and downloading the list of licensed money lenders. Check to see whether your preferred lender appears on the website.
What Licensed Money Lenders Can And Cannot Do
Licensed money lenders are regulated by the Registry of Moneylenders on what they can and cannot do.
The lenders have to adhere to rules set out in the Moneylenders Act. In this section, we will look at the rules licensed lenders should adhere to when lending money.
A Licensed Lender Is Expected To Secure The Privacy Of The Borrower And Their Integrity
The lender should ensure the data and information the borrower provides remains private. If the borrower defaults, the lender will use debt collectors to follow up on the money.
The debt collectors are regulated by the Credit Collection Agency of Singapore (CCAS).
Explain The Terms And Conditions Of The Loan It Is Offering
The licensed lender is required to explain the terms and conditions of the contract loan in the simplest terms possible.
It must ensure the borrower understands the terms and conditions of the loan before they sign the contract.
Only Charge An Interest Rate Of 4% Per Month
Licensed lenders are not allowed to charge an interest rate that is higher than 4% per month. They can only charge a 10% administration fee.
In the event a borrower defaults, the lender is allowed to charge 4% of the outstanding amount per month.
The interest and fees should not be more than the principal borrowed.
Lend Based On The Income Of The Borrower
A licensed lender is allowed to grant a loan to a borrower based on the income he or she earns.
Borrowers earning $20,000 a year and below can get up to $3,000 from the licensed lender. Those earning more than $20,000 a year can get a loan that is up to six times their salary.
What A Licensed Lender Cannot Do
A licensed lender is required to follow the rules. It cannot do the following:
Harass Or Intimidate The Borrower
In the event the borrower defaults or fails to pay their loan, the lender is not allowed to harass, intimidate, or cause harm to the borrower or his family.
If the lender uses debt collectors to follow up on the money, it is required to follow the rules.
However, the lender or debt collector is not allowed to seize the property of the buyer without a writ of seizure and sale.
Engage In Unlawful Assembly During Debt Collection
The lender is not allowed to come looking for you in a mob-style as it tries to collect its money. This is unlawful behaviour.
Send Emails And SMSes To Advertise Their Products
It’s a violation of the law if a licensed lender sends a borrower an SMS, email, or flyer advertising its loan products.
A licensed lender is only allowed to advertise its products through consumer directories, its website, and within its work premises.
How Much Can You Borrow From A Licensed Money Lender?
The amount you can get from a licensed lender depends on your income.
If you have a yearly income of $20,000 and below, you are eligible for a loan of up to $3,000. Here is a summary table of the loan amounts you can expect based on your annual income.
|The annual income of the borrower||Singapore citizens and permanent residents||Foreigners residing in Singapore|
|Income less than $10,000||$3,000||$500|
|Income between $10,000 to |
|Above $20,000||6x the monthly income||6x the monthly income|
The amount you can get from a lender depends on how much it trusts you to repay the loan.
If you have a bad credit history, there is a good chance you will not get a loan.
What Are The Interest Rates And Fees A Licensed Money Lender Charge?
The Ministry of Law allows licensed lenders to charge the following fees and interest:
- An interest rate of 4% per month
- In case of default, the lender is allowed to charge an interest rate of 4% on outstanding amounts
- Late fee charges not exceeding $60 per month
- Administration fees should not exceed 10% of the principal amount
- Legal cost ordered by the court. These are cost the lender incurs to recover the loan
The total cost the lender charges should not be more than the principal amount. These costs include interest, admin fees, late fees, and any other costs.
How To Tell If A Money Lender Is Licensed
Before you borrow from a lender, you should ensure it is licensed. Here are some ways to tell if a lender is licensed.
Check If The Licensed Lender Appears In The Ministry Of Law List
The first place to check when you want to verify the registration of a lender is the Ministry of Law’s list of licensed lenders. Check the lender’s license to confirm its validity.
At the end of each month, the Ministry of Law ensures the list of registered lenders is kept up to date.
Look At How The Lender Advertises Its Products
Licensed lenders are allowed to advertise on consumer directories, their websites, and their premises. Any other form of advertisement is a violation of the law.
In contrast, unlicensed lenders will send you SMSes, emails, or flyers trying to convince you to take a loan.
Confirm The Fees And Interest Rates Charged By The Lender
The interest rate and fees the licensed lender charges are imposed by the Registry of Moneylenders. Here are the charges and interest:
- An interest rate of 4% per month
- A late interest of 4% for outstanding amounts
- Late fees of not more than $60 per month
- Admin fee not more than 10% of the principal amount
Any lender who charges anything else than the listed above is probably a loan shark or a licensed lender violating the regulations.
Confirm The Physical Address Of The Lender
A licensed lender is required to carry out physical verification before it can offer a borrower the loan.
This means it must have a physical address. You can check and verify this address from the Ministry of Law’s list of licensed money lenders.
If you are given a loan over the phone or email without any physical verification, then you are dealing with an unlicensed lender.
The Lender Issues You With A Contract Document
A licensed lender will issue you with a loan contract stating all the terms and conditions.
The interest rates, loan tenure, and payment schedule must be clearly stated in the contract. The lender must ensure you understand all the terms in the contract before it gives you the loan.
Licensed lenders will require documents such as your NRIC payslips. They will use the documents to determine how much you are eligible for and then return them to you.
On the contrary, unlicensed lenders will not issue a contract and they may not return your documents.
What To Do After Your Loan Is Granted
After the money lender has approved your loan, you need to make sure you have received the correct principal amount.
Ensure it has charged the correct fees. After you sign the loan contract, keep the following documents for reference:
- Copy of the loan contract
- Payment receipts
- Statement of account
- Copies of any other relevant document
Make sure you pay your loan in time. Remember that any late payment will incur late interest and fees.
Lodging a Complaint Against A Licensed Money Lender
You can report a licensed lender to the Registry of Moneylenders for harassment, overcharging interest, and other malpractices.
When making the complaint, you will need to have the business name, license, and contact number of the lender.
You can report the lender via the Registry’s website or give it a call.
The details you provide will be kept confidential. However, you may be required to attend an interview and give more information to facilitate the investigation.
It’s important to be careful when taking out a loan, and one way to do that is to make sure the money lender you are working with is licensed.
In Singapore, all money lenders must be licensed by the Registry of Moneylenders to operate legally.
Checking the Ministry of Law’s list of licensed money lenders is a simple process, and can give you peace of mind knowing that you’re working with a legitimate lender.
If you are considering taking a loan, visit GS Credit.
We are a highly rated licensed money lender that offers loans at low interest rates and with longer repayment terms.
Apply now to get the money you need from one of the best lenders in the market.