Get the best guide to licensed moneylenders in Singapore

Complete Guide to Licensed Moneylenders in Singapore in 2016

We are counting down to the last weeks of 2016, and like every industry out there, it’s always good to do a recap on what has happened in this past year so as to keep everyone on the same page. On the new rules and regulations reminder on some of the pointers to look out for when borrowing from licensed moneylenders in Singapore.

The launch of Singapore Moneylender Credit Bureau in March 2016

This is one of the most important development for the year because finally, all the licensed moneylenders in Singapore would have access to a borrower’s past and current borrowing history. This is especially useful in identifying errant borrowers who are likely to default on their loans.

Most Licensed moneylender benefit from this new act, as they can now tap onto the information by the Moneylenders Credit Bureau to affirm their loan assessment.

This will curb excessive borrowing and “help debtors to keep their loan commitments at a more manageable level”, DP Info said.

“We’ll be able to know how much a borrower has borrowed from other moneylenders, so that we won’t over-extend the loan,” said Mr Peter Tan, vice-president of the Moneylender’s Association of Singapore.

We will be able to see the overall effect of this later when after we do a cover on the 4% interest rate cap.

Teenagers are Increasingly Being Lured to Take Part in Loansharking Activities in June 2016

Compared to the same period last year, there is an 600% increase of youth loanshark runners. This is due to several reasons such as new method of recruiting via social media. These advertisements are usually very vague on the job scope but promises high returns for a small amount of work.

After luring students in, they will then try to entice them to do the job by offering huge amount of cash.

This showed that while the licensed money lending industry is controlled by the government, the government still didn’t manage to completely weed out unlicensed moneylenders in Singapore.

Implementation of 4% Interest Rate Cap for Licensed Moneylenders in Singapore (July 2016)

July is the start of the gradual implementation of 4% interest rate for licensed moneylenders in Singapore.

Before this rule was implemented, there was no interest rate cap for borrowers earning more than $30,000 annually. This led to exorbitant interest rate of as high as 1000% per year by some erratic moneylenders.

With the new measures kicking in, licensed moneylenders in Singapore will be restricted to maximum rates. This include the new ruling that they cannot charge interest of more than 4 per cent per month plus this has to be on a reducing balance basis.

Should a borrower be late in his repayments, licensed moneylender can then charge a late interest, however this late interest must not exceed more than 4 per cent.

The limit extends to charges on late payments: A similar maximum interest rate of 4 per cent a month, while late fees will not exceed S$60 a month.

The total borrowing cost will be capped at 100 per cent of the original loan to keep debts from spiraling. Additional fees for, say, early loan redemption or unsuccessful GIRO deductions will not be allowed.

This has caused some repercussion within the industry, which we will see in the last pointer.

Reduced Debtor Loans Due to Cap on Interest Rate

Blessed Grace Social Service, an organisation that helps debtors to negotiate their borrowing deals, said that there has been a reduction in loan amounts since the introduction of the 4% cap — from $3-5k to about $1.5k on average.

The number of moneylender that one debtors owe also reduced from 10-15 to about 5-8.

This also led the moneylending industry to be more careful as they are more likely to make loses due to defaults because of the lower interest rate. Hence, some licensed moneylender in Singapore isn’t willing to lend to new customers due to the higher risk.

Johnny (not real name), a director of a licensed moneylending firm, said “I believe the loan sharks are benefiting from this because (for) the licensed moneylenders, nobody wants to give out loans to new customers,” he said.

To sum it off, 2016 has been a year of change, due to the implementation of new rules and regulations. Most of it has been set in place to help control debtor’s borrowing amount and borrowing ability.

But the restriction might have also start pushing some borrowers back to loan sharks and unlicensed moneylenders. So how do we find a balance between all of these in 2017? It will be something for the government to ponder on.

Money Express Options in Singapore

Popular Year-End Money Express Options in Singapore

It’s the jolly time of the year again! While this means tons of celebrations, awesome food, gift exchanges and long holidays, it also meant that you have to spend lots of money. So planning your finance properly will definitely help you not to hurt your pockets during this holiday season.

In 2015, a survey done by UOB showed that Singaporeans are spending close to $800 on their festive shopping trips. While it is close to the year-end bonus time but you probably wonder, how did people manage to get that extra cash before collecting their bonus?

Here are some of the money express options that might give you the answers. While it is great to have a great holiday season but always plan within your means.

Asking for an advancement from your boss.

This is the best and most cost effective money expression option out of all. It grants you a cash advancement at 0% interest rate, and best of all, you don’t even have to return it at all! However, this depends a lot on your working relationship with your boss, your working attitude and most of all, your boss’s willingness to part of that sum of money so early.

This is not uncommon as there are companies which practise early pay advancement during festive months. It also means that you need to set aside your finance for the following month since advancing your pay early.

Using your credit card

This is the most commonly accessed money express options for most Singaporeans. Unsurprising as you can see from the newspaper to all the advertisements from banks on credit cards promotion for retail to meals and holidays travels. Not only will you be able to enjoy certain credit card promotion discounts, you will also be able to rack up points for your air miles. What a great way to kill two birds with one stone!

But spending electronic money meant that it’s harder for you to control your spending because it’s much harder to track what you have spent. So, if you are going for this option, just make sure you keep a close eye on what you have spent on.

Getting a short term loan

These that do not enjoy the perks of having pay advancement, or don’t have a credit card? Usually end up with a money express option with a short term loan from either a bank or a licensed money lender.

These loan options include personal loans from a bank, payday loans or short-term loans that are designed to help individuals tide over short period financial needs. While this option is easily available, it should be carefully considered due to the interest rates.

Yes, it is the end of year festive seasons and you are properly getting your bonuses. But we have seen examples of person over spending with their credit cards or cash advances that result in bad financial situations.

Therefore, even though there are lots of popular money express options in Singapore, you should always start to lay out your finances and evaluate the best option. The first step should be towards identifying and clearing all the outstanding bills and payments. Only through this exercise would you truly know how much you will be able to spend for the holiday seasons.

It’s better to spend lesser and have a modest celebration than to indulge in an extravagant one that leave you in debts and worries later. With this message in mind, we would like to wish everyone a great festive seasons ahead in December.

Learn about personal loan and how to leverage on its advantages.

How to Use Personal Loan to Your Advantage?

Personal loan is readily available to anyone via multiple financial institutions such as banks and moneylenders. With such flexibility, it also meant that individuals now have the capability to spend first and think about the consequences later. But as the cliché saying goes, with “great power, comes great responsibility”. So here’s how to borrow responsibly so that you don’t regret your decision later.

Always Borrow for Needs, Never for Wants

There are a few reasons why people would end up over borrowing on personal loan and it almost always have to do with materials wants rather than need.

It was recently reported in the news that a couple landed themselves in more than $100,000 worth of debt with personal loan after their wedding.

While marriage is a once-in-a-lifetime affair and many dream of having a dream wedding, planning one without the consideration of cost will guarantee to kick-off your marriage with a rocky start.

Here’s what Mr Lee, 35, told The New Paper,

“We have had more fights since our wedding than in the six years that we were dating.

Most times, it was over money… and we’d end up blaming each other for the situation.”

So, how we can make sure we don’t land ourselves in such a situation?

Plan Your Personal Loan Carefully

Reasons why people tend to over borrow is because they plan with the mind-set of achieving a material want. We often tend to convince ourselves that we will be able to take care of the debt later on when all is over, but it has been proven over and over again that it’s not the case.

Once you have land yourself in debt, you will find it harder to keep up with your current lifestyle with a smaller amount of budget every month. And more often than not, you will borrow to fulfil that particular lifestyle, landing yourself in even more debt.

Such as the case of a couple who landed themselves in debt after their marriage and proceed on to buy a five room flat and had a child. They got so much debt that it threatened their marriage.

So instead, when planning for major life events, such as buying a flat or having a child, always try to plan your finances beforehand. Sit down with your partner and separate items between wants and need. (e.g. do you really need to hold your banquet at a hotel instead of a restaurant?)

By carefully listing out the items, you can then successfully plan for what is essential, and if necessary, take on a personal loan to achieve what is needed.

If you are only asking for a small loan, your friends and relative might be able to help

Instead of going to financial institution, which charges for interest rates, you may try approaching your family or friends for a personal loan.

Most people are wary about lending to their family because they are afraid of the awkwardness when it’s time to ask for their money back, and also the possibility that they won’t.

However, if you can work out a weekly or monthly return plan, they might just be willing to do so.

So, our advice is to never take on a personal loan for a material want because you tend to overestimate your repayment ability. And even when you need one for a need, make sure you have a plan on how you wish to make the repayment.

Pokemon Go Addiction similar to Over Borrowing Loans Addiction

Pokemon Go Addiction Equivalent to Over Borrowing Loans!

Caught Snorlax yet!? Pokemon Go has taken over the world! Literally. Since the launch of Pokemon Go in Singapore, you will see gamers of all ages swiping their phones “up” to catch their elusive Pokemons. Even aunties, uncles and grandmas are taking part.

There is a big revival of an age old gaming IP “Pokemon” and with Niantic leading the charge with Pokemon Go. However, despite the game’s popularity, it’s starting to draw flak with some members of the public and viewed as a nuisance game. Pokemon Go gamers or “addicts” are taking over parks and popular Pokestop areas. Hundreds gather a certain rest stop knownas a Pokestop to better their chances of getting rare Pokemons.

Caught the elusive Snorlax in Pokemon Go?

Caught the elusive Snorlax in Pokemon Go?

Pokemon Go Popularity

Even though the authorities have been called in to monitor the situation, there is nothing damaging with gathering and playing silently on their phones. Some gamers play way into the wee hours to catch their Pokemon and being glued on their screens. One might think that kids are the ones addicted to the new craze, but adults are jumping on the bandwagon in their quest to catch and train their Pokemons.

The game is ultra-fun and is really family friendly as one’s quest is to the collect Pokemon and at the same time, one is “forced” to walked around or explore new areas in town to catch Pokemon. The fast growing game has topped the Apple Store and Google Play Store and does not seem to drop the slightest bit. It has grown to be the number 1. game in almost all the countries it launched in.

The Bad side of Pokemon Go

The Pokemon Go addiction is very much akin and applicable to loan over borrowers. Addicted Pokemon Go players explore popular areas late into the night, affecting their studies or the adults have their work affected.

The constant vibration to hint on a nearby Pokemon location and urge to capture more Pokemons to level up or to increase their Pokedex numbers. Parents are seeing it as a worrying trend due to the nature of the game, which requires you to travel to hotspots to get rare Pokemons. These hotspots could have dangerous people who prey on kids and may seem normal in appearance.

How Pokemon Go Games is Equivalent to Over Borrowers

We at Empire Global have seen time and again, borrowers who borrow beyond what they can pay for or are repeat borrowers who even owe a large debt. Over borrowing can get dangerous, as the borrower might over estimate his repayment capability and incur large penalties resulting in longer repayments.
One of the reasons was that borrowers were using the loans to service their own lavish lifestyles, leading them to becoming repeat borrowers. Such addiction to maintaining their lifestyle is very much alike to addicted gamers who can’t leave their screens. Some Pokemon Go gamers go to the extent to hire chauffeur services to bring them to elusive spots in a bid to better their gaming abilities.
Several players are having their workloads affected as they play during their working or schooling hours thus affecting their usual routines. The resultant effect in terms of loans are when borrowers turn to loansharks when they are unable to curb their addiction. Many have turned into repeat borrowers whom are unable to sustain their loan repayments.

Know the problem. Understand your limits.

With every addiction, you need to first understand yourself and identity the problem. Know the problem. Quite often, borrowers who come in with money issues do not  know of their dire situation plus they didn’t seek proper help to address the problem. One needs to understand the limits especially when dealing with financial products such as personal loans or unsecured loans.

By borrowing beyond your limits, one would quite often fall into dire straits and seek borrowing from unlicensed lenders or even from their network of friends. This could further lead down to social and economic issues that affects not only the borrower but the people around him.

COE pricing increase and demands. Learn about car loan changes in Singapore.

COE Pricing Increase & Demand: Car Loan Changes

There has been a lot of buzz circulating around the increase in Certificate of entitlement (COE) supply and demand. With lots of prospective car buyers waiting for COE prices to soften before making their buy, we shall take a look at how COE premiums varied so much this year.

COE premiums ended higher in the tender on 22 Jun 2016 as the easing of car-financing rules by the Monetary Authority of Singapore (MAS) continued to drive demand for COEs. And just recently, COE premiums fell across all categories at the close of the bidding exercise on 7 July 2016.

With COE for small cars having the biggest dip, falling by 5.25 per cent to $52,301. Premiums for big cars (above 1,600CC or 97KW) fell 1.62 per cent to $56,089.

MAS Easing of Car Loans

Just 3 years ago, the MAS imposed guidelines for car loans. This time, car loans have been relaxed to suit the current demands.

For cars with an open market value (OMV) of $20,000 or less, buyers can borrow up to 70 per cent of the purchase price, up from 60 per cent. Buyers of cars with OMVs of more than $20,000 can now borrow up to 60 per cent of the purchase price, up from 50 per cent.

The loans tenure has also been raised to seven years, from five.

This easing of car loans have allowed potential car owners to take up interest in car ownership. Although most car traders have already found ways to circumvent the car loan curbs. With households having healthier balance sheets, potential car buyers will enter the market for COEs due to car loan restrictions being eased up.

According to UniSim’s Adjunct Associate Professor Park Byung Joon: “Everyone predicted that the COE premiums will gradually decline because of the number of COEs. But these private-hire companies are kind of unexpected”.

COE Price Changes: What Next?

With the changes of COEs premiums and car loans being eased up, many are still undecided on purchasing a car.

“If you plan to buy a car, just go ahead and don’t delay your purchase, hoping that something will happen to the COEs”, Mr Park.
Dr Theseria said: “Timing a car purchase is like timing the stock market. It is hard to do and generally doesnt work.”

So what happens next? Basically, plan your finances before making a big purchase. Check out your existing loans, your repayment plans and whether you are able to sustain the big ticket purchase. Like for all loans, read on the terms and conditions properly and check on the interest rates that are given by the loan company.

If you are interested in knowing more about car loans, you could contact us too by speaking to our loan officers on the line. We are able to provide car and personal loans to suit your financial needs.

CarPark Fee Hike: So what if COE drops?

Some people have tried to correlate this drop recently with the car parking fee hike. The government has explained this quite fairly enough. Car park charges have not changed since 2002, yet inflation as well of costs of operating public car parks have increased significantly.

HDB carparks account for 90% of carparks in Singapore, costs have increased due to several factors:

  • Rising overheads in the construction industry;
  • Improvements to new and existing HDB carparks, such as install multi-story carparks with lifts, and providing link bridges to connect carparks to surrounding flats;
  • Additional repair works required to maintain an increasing number of ageing carparks.
Here are some important breakdowns to understand the car park fee changes.
Car parking fee changes imposed by URA

Car parking fee changes imposed by URA

Car park season fee changes 2016

Car park season fee changes 2016

New Car Loan Changes in Singapore affects many

Car Loan Changes: How it Affects you

The recent big news on loosening of car loan policies have cause a little “hoo-ha” in the car industry and car watchers. The easing of car loan guidelines by the Monetary Authority of Singapore (MAS) caught many by surprise, as strict car loan guidelines were only implemented just three years ago.

New Car Loan Changes in 2016

MAS  mentioned that the adjustments is based on the sustained moderation in certificate of entitlement (COE) premiums and in the resulting inflationary pressures over the last three years. The revised rules allow higher borrowing limits, and longer loan tenures.

Car buyers can now take a bigger loan. Rules have been relaxed to allow buyers to borrow up to 70 per cent of the car price and pay it back over a maximum of seven years, instead of five.

This applies to cars with an open market value (OMV) of up to $20,000. Previously, the maximum loan-to-value (LTV) ratio of such cars was just 60 per cent.

For vehicles with an OMV above $20,000, the LTV is now 60 per cent, up 10 per cent from previous 50 per cent. The maximum loan tenure will also be seven years, also up from five years.

MAS’s deputy managing director Ong Chong Tee said: “In 2013, when we introduced the measures, our immediate aim was to help restrain escalating COE premiums and consequent inflationary pressures.

“Since then, demand conditions have moderated and it is timely to ease the measures.”

The MAS will continue to have the LTV and loan tenure framework in place in the long run, this is done to promote financial prudence and to support the promotion of a “car-lite” society.

Many from the industry called it as “good news”.

Alvyn Ang, Cycle & Carriage’s director of multi-franchise operations, said: “It is definitely good news for the industry because it will help a lot. It should push those buyers still sitting on the fence for whatever reason.”

Mr Ang, who is in charge of the Mitsubishi, Kia and Citroen brands, hailed this as “the best time to come in” to the showroom, especially since passenger car COE premiums have fallen by up about S$30,000 in the last three years.

He added: “We expect the cuts to generate a lot of interest in the market.”

The new measures have boosted affordability for many car watchers.

Revised Car Loan Ruling

The revised financing restrictions will apply to non-MAS regulated entities that extend motor vehicle financing on a hire-purchase basis and licensed moneylenders. This is of course a welcome move by licensed financing companies as it could help them in attracting more borrowers.

COE prices

COE prices have caused a havoc in the car industry. It had spiked to a big high of $92,100 for small cars and $96,210 for big cars which led to debate in the Singapore government on how to control COE prices to keep inflation and Singaporeans in check. Car Loan Cooling measures were introduced to cool down the demand and COE prices.

COE prices have since stabilised from April last year, decreasing steadily until premiums for small cars were below $50,000 for the first time in four years.

However, many experts are also sceptical of the new move which could lead to an immediate increase in demand for cars due to the current economy. The demand of new cars could have been caused by (private-hire firms like) Uber, which could have been causing the COE prices to be held up.

The new car loan changes will definitely affect many especially those in the lower income bracket or young families. The new car loan measures will allow them to pay lesser each month which increasing the affordability of having a car.

Summary: Is it worth to get a Car?

Yes! But only if you had been planning to get one before the announcement. This is because you had the financial and mental preparations for a higher downpayment and higher monthly repayment. With the new measures, one would have better budgeting options.

No, if you hadn’t been planning to get a car. Many experts believe that the revised measures were there for a reason. Most importantly, the loan restrictions were there to enforce Singaporeans to be sure that they can repay their loans.

However even with the new cooling measures, car buyers may need personal loans. In simpler sense: getting a personal loan fro the down-payment, and then apply for the car loan. This is tricky as car loans have a Debt Servicing Ration (DSR) of about 30%.

That means the loan repayment, plus the repayment of any other loans, can’t exceed 30% of your income. If you are getting a personal loan that’s too big, your DSR will shoot up and you won’t qualify for the new car loan.

BEFORE:
Open Market Value (OMV) less than or equal to $20,000
  • Maximum LTV: 60 per cent
  • Maximum loan tenure: 5 years
OMV more than $20,000
  • Maximum LTV: 50 per cent
  • Maximum loan tenure: 5 years
NOW:
OMV less than or equal to $20,000
  • Maximum LTV: 70 per cent
  • Maximum loan tenure: 7 years
OMV more than $20,000
  • Maximum LTV: 60 per cent
  • Maximum loan tenure: 7 years
Learn how to get licensed legal loans in Singapore

How to get Licensed Legal Loans in Singapore

Ever so often, we get customers whom have gone down the path of borrowing from unlicensed moneylenders. We have advised our clients multiple times, to get legal loans from licensed financial institutions in Singapore.

Unlike the major financial institutions in Singapore, the licensed money lending industry has gotten a bad reputation with unlicensed money lenders spoiling the name of legal loans. Some unlicensed money lenders have gone to the extend of bribing employees to release customer phone records just to gather those who are in need.

Furthermore, errant licensed money lenders have also caused a bad rep for us.

Getting Licensed Legal Loans

So how does one get licensed legal loans? Basically, there are a few touch points that borrowers can look at. Firstly, the local banks and major financial institutions are able to provide legal loans with ease. However, these are usually susceptible to closer inspection from the companies in terms of looking at your financial capability, your salary income and your current liabilities.

Also they tend to be stricter in selecting their borrowers so as to reduce their standing overheads. There are also many financial legal loans to consider when you are getting from banks such as home loans, car loans, home refinancing, renovation loan, personal loans, fast cash loans and many more. One could easily get confused in the financial jargon.

There’s also borrowing from licensed money lenders whom are able to provide licensed legal loans to Singaporeans, PRs and foreigners too. They are slightly more lax in their rules, and with the new regulations imposed by MinLaw, licensed money lenders would not want to risk losing their licenses over giving loans that you cannot sustain or giving overly high interest rates.

The interest rate has been capped to 4% monthly interest rate as set with the new regulations. As licensed moneylenders, this has indeed caused disruptions in our business flow, however we do understand the new rules standpoint and are more than happy to advise our clients on borrowing legal loans.

Legal loans from licensed money lenders could be easier to understand for many as most are geared towards personal loans. Furthermore, there are online financial loan quotation tools like ours that are provided by the licensed moneylenders. This in turn allows borrowers to get a fast selection and review process.

Choosing Legal Loan Provider

So how does on choose a great legal loan provider in Singapore? Firstly, check out the reputation of the licensed money lenders in Singapore. Read the many online reviews and compare between them.

Check for their licenses whether they are still accredited under the Moneylenders Act. Issuance of licenses are very strict, hence companies that remain are the ones that adhere strictly to the rules stipulated by the law.

Next, place online quotation requests with your loan requests to figure out which licensed money lenders provides the best deal for your legal loans.

Last but not least, head down to the few selected licensed money lenders of your choice and talk to the loan officers. They will explain to you the financial terms, the legal standings, and of course assess your loan situation and financial capability.

They will determine a suitable loan amount and repayment mode. Ensure that you are comfortable with this arrangement and get the loan officers to explain any legal documents that you do not understand. And when you are fine with what’s provided by them, it’s time to sign and get your legal loan.

Licensed Money Lenders Review in Singapore. Learn why it is important to compare!

Money Lenders Reviews Singapore: Why it is Important

Licensed money lenders can be helpful and useful at times, especially to borrowers who are in urgent need of cash due to emergencies that occur. There are also times when borrowers could not meet the banks terms and are not legible for bank loans. This is one of the reason some turn to licensed moneylenders.

In Singapore, there’s a long list of companies and directories that contains a listing of money lenders in singapore offering quick loans. Further which, they will offer money lenders reviews Singapore. For consumers, this can be confusing and overwhelming to read. So which moneylender should you trust? You might be worrying whether you will get “cheated” by the many terms and conditions that money lenders lay out.

A simple search could give you a range of results with each money lender promoting their own or some finance directories providing a list of money lenders reviews Singapore. So get smart about searching a money lender.

Do Proper Research on Money Lenders Reviews Singapore

Start with money lender review sites as they serve a good platform for borrowers to learn from others. Learn from other borrowers that share their experiences with the various money lenders in Singapore. Also if you have benefited it yourself, let others know through money lender reviews.

Importance of Money lenders License 

Other than checking money lender reviews Singapore, it is utmost important to evaluate the money lender based on their license.

Firstly, find out the license of the money lender you want to approach. Check the license number with the registrar of money lenders in Singapore. If they do not have a valid license, do find another licensed money lender. The registry updates the list monthly, hence do check the list for valid licenses.

In Singapore, licensed money lenders in Singapore go through a strict license process. Any licensed money lender found flouting rules will be penalised heavily. Hence the creditability of a licensed money lender weighs heavily on it’s ability to have a license. Companies cannot operate as money lenders without a proper license.

When in doubt, ask the licensed money lender for their actual license. Ensure that the license number and exact name matches the registration certificate the lender shows you.

Read the Terms

Besides checking money lender reviews in Singapore, when you are about to borrow from your preferred money lender, it is best to read the terms laid out.

Licensed money lenders have to state the terms properly and explain to borrowers any terms relating to the loan to their customers.

Compare Money Lenders Reviews. Evaluate & Decide

With money lenders reviews easily available, one should compare between them and check against the actual website of the licensed money lender. Besides checking, do proper research by asking for interest rate quotation. Also, check for any payment penalties such as repayment penalties, late payment penalties. Ask directly with the loan officers either through the phone or Internet.

Compare the terms offered by the loan officers against the ones written on their website. Look through the various money lenders reviews in Singapore to get a better and more accurate assessment of the services they offer.

Confirm with the loan officers on the interest rates offered against the ones mentioned by the Singapore government. The interest rates have now changed to 4% monthly interest rate cap with a governing board the Moneylenders Credit Bureau. The bureau was setup to ensure better administration of the licensed money lenders in Singapore.

With these, one should check for licensed money lenders reviews Singapore, licenses of money lenders and confirming loan details with the loan officers.

Borrowers Credit Worth now accessible through Moneylenders Credit Bureau Credit Reports

Borrowers Credit Worth: Data bank on Loan & Repayment

As part of the new measures to aid borrowers at large, the newly setup Moneylenders Credit Bureau (MLCB), will now house records of borrowers’ loans and repayment history with licensed moneylenders, operating from March 1 2016. This was announced by the Law Ministry (MinLaw) on Wednesday (Feb 24).
With the launch of the Moneylenders Credit Bureau, all licensed moneylenders will provide regular updates on borrowers’ loan information. This in part contributes to build a strong data bank on borrowers loan and repayment records. Furtherwich, allowing the generation of credit reports of all borrowers on all their active loans with all licensed moneylenders in Singapore.
The credit report will contain information pertaining to:
  • The loan type and tenure, total outstanding principal amount and total amount payable
  • Details of all active loans the borrower has with licensed moneylenders and the repayment status of each loan.
The credit report information will be made available to both borrowers and licensed moneylenders alike, and for the latter, licensed moneylenders like us at Empire Global to better access the credit risk potential of borrowers and make direct choices on providing loan options.
Plus with these new information, licensed moneylenders can now make faster decisions to deny loans to those borrowing beyond their means.
This helps us, licensed moneylenders fast as we can make direct and better business decisions by better potential borrowers assessments, evaluating the creditworthiness of borrowers.
In turn, lowering our loan defaulters rate thereby reducing our cost of business. Savings! Which we want to past on to our borrowers at times. As licensed lenders, our loan officers at many times have to create solutions for potential borrowers or reassess their repayments so that they can repay and at the same time not borrow beyond their means.
The setup of such a framework, fixes a major problem whereby borrowers may approach different licensed moneylenders to take out multiple loans and moneylenders have no understanding or access whether the borrower is capable of repayment.
Said Mr Billy Lee, founder and executive director of Blessed Grace Social Services: “The MLCB will encourage borrowers to practise greater financial prudence and borrow within their means, given that their loan information will be accessible by all licensed moneylenders.”
Borrowers themselves, can use their own credit report to better manage their finance and loans too.
The Bureau added that it will cost licensed moneylenders S$0.50 and borrowers S$1 to purchase a credit report, it added.
Licensed moneylenders in turn can use credit reports to keep track of their active loan contracts with their existing borrowers and whether the borrowers have taken up other new loans. This allow business decisions such as deciding whether borrowers are capable of keeping up their repayment plans.
To better monitor borrowing and licensed lending activities, the Law Ministry and Registry of Moneylenders will use the Bureau to assess such activities.
Said Mr Peter Tan, president of the Moneylender’s Association of Singapore: “In addition to protecting borrowers from overborrowing, the MLCB can help licensed moneylenders make better informed decisions and credit assessments. It is a positive step towards helping to mitigate the risk in our high risk industry.”
Minlaw licensed moneylender guide to borrowing in Singapore

MinLaw: Moneylending Guide for Borrowers in Singapore

Singapore – As you probably have read in the news about the changes in moneylending rules in Singapore. The slew of changes enforced on 1 Oct 2015, has led to to a change in how moneylenders manage their borrowers. The Insolvency & Public Trustee’s Office (IPTO) in Singapore is a department under the Ministry of Law (MinLaw).

IPTO oversees the administration of individual and corporate insolvencies, the administration of small intestate estates and un-nominated Central Provident Fund (CPF) monies, as well as the licensing and regulation of moneylenders and pawnbrokers.

So there’s IPTO, which assists the Registrar of Moneylenders and the Registrar of Pawnbrokers in licensing and regulating moneylenders and pawnbrokers in Singapore.  IPTO also safeguards borrowers should any licensed moneylender breach the Moneylenders Act.

Simplified MinLaw moneylending rules and recommendations

  • You are legally obliged to fulfil any loan contract made with a licensed moneylender. So basically, read the fine print and let the loan officer explain the loan conditions to you.
  • Think about any current debts and loan obligations such as recurrent fees. Be smart about the contractual terms, and calculate out the late payment fees and interest repayment.
  • Always be reminded, that the law requires moneylenders to explain the terms of a loan in a language that is understandable by you. Plus you are to be provided a copy of the loan contract.
  • Shop around for different moneylenders that are able to provide you the best loan terms. Not just us at Empire Global, feel free to check out other licensed moneylenders but also check with our loan officers on what we are able to provide. 

How much are you allowed to borrow?

Licensed moneylenders offer unsecured loans which allows you to obtain the following:
  • Up to $3,000, if your annual income is less than $20,000;
  • Up to 2 months’ income, if your annual income is $20,000 or more but less than $30,000;
  • Up to 4 months’ income, if your annual income is $30,000 or more but less than $120,000; and
  • Any amount, if your annual income is $120,000 or more. 

What are the Interest Rates Moneylenders can charge?

In the past, loans contracted between 1 June 2012 and 30 September 2015, licensed moneylenders are required to compute and disclose the Effective Interest Rate (EIR) of the loan, before the loan is granted. If a borrower’s annual income is less than $30,000, then the interest rate which licensed moneylenders can charge is capped at 20 per cent Effective Interest Rate for unsecured loans.

Visit https://www.mlaw.gov.sg/content/rom to find out how to calculate Effective Interest Rate from 1 June 2012. However if your annual income exceeds $30,000, the interest caps do not apply and is to be agreed upon the moneylender and the borrower.

However with effect from 1 October 2015, the maximum interest rate licensed moneylenders can charge is 4% per month. The interest rate cap applies regardless of a borrower’s income and whether the loan is unsecured or secured. Should a borrower fail to repay the loan, the maximum interest rate is capped at 4%.

What are the fees that moneylenders can charge?

For loans contracted between 1 June 2012 and 30 September 2015, moneylenders are only permitted to charge six types of fees:

  • For each occasion of late repayment of principal or interest;
  • For each occasion the terms of the loan contract are varied at your request;
  • For each dishonoured cheque issued by you;
  • For each unsuccessful GIRO deduction from a bank account, as payment to the moneylender;
  • For early redemption of the loan or early termination of the contract; and
  • Legal costs incurred for the recovery of the loan.

Any other fees are not permitted, and are hence not enforceable by the moneylender.

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.

Summary: After Effects of New Moneylending Rules 

Licensed moneylenders are getting a better structure being laid out by MinLaw and hopefully this will lead to a better name for themselves. With the government cracking down hard on unlicensed moneylenders and errant licensed moneylenders, the public at large will better understand the system that in place.

As licensed moneylenders numbers decreases due to either difficulty in adapting to the new moneylending rules, the remaining licensed moneylenders have quickly switched to a new business model to adapt.

Also learn how to identify licensed moneylenders using 7 simple rules that you really apply before borrowing from them. Most importantly of which, one should not borrow from lenders who advertise their services.

Here’s a little comic from IPTO for an easy guide on borrowing wisely from licensed moneylenders.

Borrow Wisely from Licensed Moneylenders in Singapore by MinLaw

Borrow Wisely from Licensed Moneylenders in Singapore by MinLaw