- 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.
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?
- 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.
There are many different types of loans and different schemes that are tagged to each loan type. This may confuse borrowers who are seeking out the best loan type on their loan. Today, we discuss about how to get low interest on your personal loans.
Personal Loans Demystified
A personal loan may very well be the best loan type when emergency cash is needed. The fast service and fast cash advances provided by money lenders allows you to put your mind at ease.
Repayments are worked out mainly based on your salary and some other factors. Hence its still possible to get low interest on your personal loans.
As personal loans are mostly unsecured, borrowers in Singapore will not be required to put up any form of collateral or mortgages to take up a loan.
Low Interest Loan Factors and Eligibility
As mentioned, the major factor in determining loan eligibility largely lies in the borrowers’ source of income and income level.
The higher a borrower earns, the higher the loan amount that a borrower is able to get. This main factor determines the increased chances of loan approval with low interest rates and is common in both banks and money lending institutions.
A common practise is that most banks and money lenders will allow borrowers to lend up to four times 4x of the borrower’s monthly salary. Further which, if a borrower is able to show that they are able to repay loans on time, the personal loan contract could be better.
When a Loan Offer is too Irresistible
The revision of the Moneylender Act in 2010 has led to money lending firms to start in neighbourhood and suburbs. They offer a variety of loan services.
However, it’s noted that the rulings and the increased number of money lenders with bad practises and many new unlicensed moneylenders who sometimes claim that they are licensed. These errant lenders target on borrowers who needed cash urgently hence landing themselves in bad loan debts.
More often than not, errant lenders will offer extremely low interest rates but implement fees or give difficult repayment terms that the borrower can’t match up.
Make Loan Comparison Before Borrowing
Always compare. That’s the simple rule of a consumer. There are varying personal loan interest rates from different financial institutions hence compare and choose amongst those with low interest rates.
Find out their loan offerings and as a borrower, best in mind your debt servicing ratio. This is the total amount of debt (monthly repayments to all your bills) in comparison to your total income.
This calculation technique allows you to check whether you are able to incur more debt and whether you are able to meet your monthly repayments on your personal loan.
Most importantly, check that your debt servicing ratio does not exceed 50% of your total income. Otherwise, banks and lender might not allow you to take up the loans or offer you a higher interest rate instead.
Get the Right Money Lender for Low Interest Rate Loan
Once you have fully considered your debt amount and the monthly repayments you can manage with, plus your outstanding debts owing each month, then you can finalize your decision on getting the right licensed money lender.
Get the money lender that offers the best low interest rate on your personal loan in Singapore.
Ensure that the lender is reliable and honest with you. The loan officer will well advice on your loan amount, interest rates and repayment amount and schedule.
Ensuring that the money lender company is trustable and licensed is very important. Most licensed lenders will work out the repayment package to best suit your current needs.
Go to a money lender with good reviews and rose your time to compare the loan interest rates between companies.
As a borrower, ensure that you meet the repayments on time!
Use our online loan application form too and our friendly loan officer will best advise you on your loan.
More often than not we get asked what is a personal loan and how do we differ from a bank in Singapore. Basically licensed money lenders just work similarly to banks here.
So what is a personal loan company in Singapore really mean and how does the personal loan work out from these money lenders.
Looking for a personal loan company? When exactly?
With the current cost of living rising and jobs being harder to find, more and more people who aren’t so prudent with their finances end up in debts. When one’s financial situation gets out of hand, one turns to friends or families and if that doesn’t work out, you turn to banks.
At times, a person’s credit report or rep sheet is not so great and in turn there’s the licensed moneylender option.
So how does one know that a company operating a licensed money lender is good? Do what a shopper would do. Check out their personal loan rates, ask for their best loan terms & loan period.
Do not forget to ask about the effective interest rate. And just do a simple comparison of what you have.
Lender policies differ between lender to lender, more often than not its the loan terms and interest rates that sets them apart.
Some lenders will be able to offer a flexible personal loan period to suit your needs even. Always shop around and of course customer service plays an important role.
Even us at Empire Global want you to compare. You can easily submit a loan request to us through our online personal loan application. We will get back to you in the quickest time possible on your loan terms.
What determines the personal loan offer you get in Singapore?
Although money lender have different personal policies, the main factors remain. Companies like us will look at the type of loan you want, your loan period, your base salary.
Loan specialists will evaluate your financial status and recommend a suitable loan amount, rate and tenor based on your financial needs and ability to repay the loan over time.
Scams from Unlicensed Moneylenders
Believe most of you have read about moneylender scams and loan sharks trying to taunt you to pay up.
These online and offline harassment techniques can certainly be irritating. Some come in the form of SMSes that start out with “OWE $ PAY $”, including a “lovely” expletive and ending with “I SURE COME LOCK AND BURN YOUR HOUSE TONIGHT”. That makes one big bad wolf.
Luckily for us, the Singapore government has been tough on cracking down such cases. Licensed moneylenders found to using such techniques will get their licenses suspended or face a hefty fine.
Licenses of moneylenders have become lesser, as some licensed money lenders end up losing their licenses due to bad practises. Loan sharks and unlicensed moneylenders cases have been facing a lot of heat as the police cracks down on them.
There’s lots of publicity on it and the police has taken an active role in educating the public at large.
Foreigners Seeking Loans: Enter Foreigner Loan
Although there’s banks and financial instituations, there are a lot more restrictions in place when they provide personal loans.
If you are a Singaporean or a PR that doesn’t earn more than the $20,000 /yr quantum, it can be quite tough to get a loan.
Furthermore if you are a foreigner with less than $45,000 annual income it gets tough to borrow from the banks. So most of the times, foreigners approach licensed money lenders for a take on loans.
How Much Can you Loan?
As mentioned earlier, if your annual income is less than $20,000, it’s tough to find a bank willing to provide an unsecured loan for you at the best possible rates.
However, most licensed money lenders will be able to legally loan you up to $3,000. If you are earning more than $20,000, a licensed money lender can then loan up to 2 to 4 month’s of you salary. Which is why we ask for a proof of salary at times. The loan amount depends on your repayment period too.
Do contact us if you require a personal loan.
Singapore: Applied lots of credit card recently? Ever had friends who are debt-ridden by their credit cards? The Monetary Authority of Singapore (MAS) will phase in tighter limits on credit card debt and other unsecured credit facilities over four years to allow more time for borrowers to cut their debt.
This was a drastic change instead of the originally imposed idea (20 months ago) of implementing the limit at once this June. The new credit limit change offers a big lifeline to consumers who have overextended.
Unsecured Credit Limit in Numbers in Singapore
Unsecured credit is borrowing that is not backed by collateral. The borrowing limit limit applies only to interest bearing balances incurred on unsecured credit facilities such as credit cards and unsecured personal loans.
These unsecured credit limits are not applicable to loans for medical, educational or business purposes. Borrowers with annual income of S$120,000 or more, or people with net personal assets exceeding S$2 million will not be subjected with the new borrowing limits. Over-extended borrowers in Singapore total 84,000 who owe S$7.5 billion(source MAS).
What does Unsecured Credit Changes
With MAS recent annoucenment, the new limit caps on a person’s total amount of credit card and other unsecured debt will be slowly implemented in phases:
— June 1 2015, the unsecured debt limit will be 24 times the monthly income
— June 1 2017, the unsecured debt limit will be 18 times the monthly income
— June 1 2019, the unsecured debt limit will tightened further to 12 times the monthly income
This new time measures allow borrowers up to June 2019 to make the transition to adjust to the new credit limits. The increased time given were brought about following feedback from the public and the advice of the Association of Banks in Singapore, and Credit Counselling Singapore.
Although most unsecured borrowers in Singapore borrow within their limits, but a small portion still have significant unsecured debts.
How does new Credit Limit Affect You?
What if I Exceed my Unsecured Credit Limit of 12X
There is a help centre whereby one can seek help from the Repayment Assistance Scheme (RAS), a centralised debt repayment solution by Credit Counselling Singapore in partnership with the banking industry.
Under RAS, debt amount if is in excess of the credit limits of 12x / 18x /24x of your monthly income will be subjected to a lower interest rate of 5% per annum. This amount can be paid in a span of 8years and will certainly help to reduce debt burden. This allows highly indebted borrowers to have a assistance scheme. Borrowers who are eligible for the scheme will get letters from their financial institutions with information on their outstanding credit debt. Learn more about RAS and how it works
The licensed money lender industry in Singapore has gotten its run of bad publicity for 2015 given the recent events occurred amongst debt collection. Debates have been brought up on how debt collection can be made better.
Licensed Money Lender Scene
This was due to a recent scene in the licensed money lender industry in Singapore when seven employees of Double Ace Associates confronted a stall owner at Funan DigitalLife Mall foodcourt and created a big scene during the busy lunch hour. All offenders were charged with unlawful assembly just last month.
Licensing Debt Collection in Singapore
Licensed money lender hire debt-collection companies from time to time for long standing debts that they cannot handle and this incident highlighted on how a loan can go horribly wrong.
“Licensing the debt-collection industry could clean up its image, and clamp down on the use of harassment tactics” – suggested by Mr David Poh, President of the Moneylender’s Association of Singapore, has been backed by the Credit Collection Association of Singapore (CCAS).
This matter of debt collection has been raised in Parliament last month when MP Foo Mee Har mentioned whether debt collectors should abide by a code of conduct, and if the Government of Singapore would consider introducing laws that govern fair deb-collection.
Others have mentioned that should such a code of conduct be in place, there will be a lot of infrastructure that needs to be put up for case investigation. Hence the onus should be on the licensed money lender, to ensure their debt collectors do not use violence or high pressure tactics.
“Moneylenders found to have committed offences may have their licences suspended, not renewed or revoked by the registry,” Senior Minister of State for Law Indranee Rajah
Late Fee Charges by Licensed Money Lender
Late last year, an article about how a borrower got a small loan and incurred a large debt due to the late fee charges.
Suggestions have been made to cap the penalty late charges. However this has led to many licensed money lenders protesting that the new rules could kill their business.
This is why at Empire Global we always encourage borrowers to negotiate early and fully understand the terms involved. Terms from different licensed money lender vary greatly. All these could lead up to you getting into greater debt.
Licensed Money Lender Woes & The Review Committee
With the advisory committee proposing major changes of which a controversial interest rate cap of 4 percent per month has led to an outburst in the licensed moneylending industry.
Many licensed money lender in Singapore have mentioned that the cap will lead to borrowers not paying back instead. Without late penalty charges, it will be tougher to collect back their money.
Borrowers have a higher chance to default on their payments. Leading to lower profit margins by the money lenders.
The advisory committee basis on the proposed interest rates is also referred to prevailing interest rates charged by licensed moneylenders in jurisdictions like Hong Kong, Australia, Japan and Britain, which range from 1.5 to 4 per cent.
We at Empire Global are looking at ways to improve our infrastructure and to work with the interest rate cap. Hopefully, the Ministry of Law considerations on relaxing advertising restrictions on newspapers will be implemented.
Money, money and more money! The recent news about the US interest rates hikes has hit our shores in Singapore and the news is not entirely encouraging.
The three-month Sibor, which is used to price most loans and mortgages here, has been inching its way upwards due to interest rate hike in the United States and a weakening Singapore dollar versus the greenback. The recent announcements by MAS to reduce the Singapore dollar from appreciating aims to keep the Sibor elevated.
The Sibor is fixed daily by the Association of Banks in Singapore based on quotes from banks on what they expect to pay for interbank loans that day. In short, it is affected by liquidity in the banking sector.
“The reduction of the appreciation slope could keep pressure on the US and Singapore dollar exchange rate and thus could ensure Sibor remains at current levels … This move by MAS helps keep Singapore policy on a stable footing, and we expect it to be modestly beneficial for Singapore bank earnings,” analysts from Morgan Stanley said in a research note.
Interest Rate Hike: What does it mean for You?
Many housing loans offered by banks are tied to three-month Sibor. Oversea-Chinese Banking Corp (OCBC), for example, has 3 types of home loans and one that is currently offering home loans at three-month Sibor plus 0.85 percentage points for the first three years, according to its website. Lending rates are reviewed every three months. As the Sibor is set to increase, so will the interest rate rise. Home owners will eventually face higher mortgage payments.
“We had expected the bullish move in the SOR and Sibor since last year,” says UOB economist Francis Tan (source)
Analysts are looking at further upside to about 1 to 1.2 per cent at the end of the year. Effectively leading to an interest rate of about over 2% for home loans.
Let us assume an outstanding housing loan of S$500,000 and 20 years remaining. With the current interest rate of 1.5 per cent, this works out to a monthly payment of about S$2,410.
If the interest rate is increased to 2 per cent, the monthly payment would rise to around S$2,530. Should the rate rise to 3 per cent, the monthly payment would be S$2,770.
What to Do Next with Higher Interest Rate?
Higher interest rates charged by banks affect your loans directly. Thus you will see your loans, home mortgage loans, renovation loans slowly inching its way up.
Hence start reviewing your loans! For example, review your home loan packages every two to three years. Look at the trends Conventional wisdom has it that you should review your loan package every two to three years, or before the promotional period ends and your bank raises its premium on the interest you pay, which increases your monthly instalments.
In short, think long term and look around for good deals. Always negotiate with the bank on refinancing options.
Latest in Moneylending Industry Singapore
DPM Teo added that the improved situation was due to the tough laws enacted, strong enforcement efforts against loan-shark syndicates and the high level of community support in the fight against unlicensed moneylending activities.
According to DPM Teo, about 1,900 people were arrested for unlicensed moneylending and related harassment offences on average yearly between 2011 and 2014, while about 2,600 were convicted in court for these offences.
Seen the recent hype about public harassment during working hours? Debt collectors created a ruckus at Funan Mall over unpaid debts. Moreover, this was during working hours infront of the public eye.
With clamping down on unlicensed activities and harassment cases, this is looking good for us licensed moneylenders at Empire Global. The image of licensed lenders is changing for the better as tougher laws are weeding out bad lenders. Thankfully, the ruly debt collectors have been arrested for unlawful assembly.
Christmas is coming! All the streets and shopping outlets are getting into the festive mood as we await the new year 2015. We at Empire Global are none the wise too. Some of us have gone on long vacations to soak in the holidays we needed. Most of you are awaiting the year-end bonus or AWS or some would call it the thirteen month bonus.
iPhone6? Holidays in Europe? Can’t wait to spend on those items you want? Let us give you some advise before you think about spending them away.
Review Your Budget
Budgets are important if you want to get your finances in order especially now it’s the year-end frenzied shopping happens when big sales goes on in festive seasons. Take advantage of your bonus, all you need is 4 simple tips from us.
Your bonus might be a sure thing, but don’t ever go spending until it’s yours. You won’t want to land yourself in debt and hate yourself when you don’t get your bonus.
When you receive your bonus, you have to account for the following year’s income tax amount. Set aside a sum of the bonus for income tax. Not to forget, the annual CNY festival can amount to large spendings for the family. Ang baos, family dinners, visiting all are unforeseen costs.
If you had worked out a budget in the earlier part of the year, now’s the best time to look at it again. Have you stuck to your goals and savings policy? Look at the financial goals you have made, the bonus can be used as a boost on your goals.
Spending on Year End Bonus
Considering travelling? Travel tight on a budget, stay in a hostel. Experience the culture right from within.
Learn from billionaire Li Ka-Shing to build up your network and savings using your income. We feel the article is more weighted towards business owners however the common salaryman should saving at least 30-50% of his salary.
Invest in long-term investments to get the compounding effect. Compounding goes a very long way and works most effectively when you are consistent.
Set up your new financial goals for 2015. Write them down and use your bonus as the baby pot of gold for your new plans. A little bit can go a long way.
Making purchases Online: Avoid online cyber scams!
$50 for a camera? Too cheap to be true? Although most of us would have forego such deals, but some of us will still take the bait. There have been several reports of people getting scammed online by deals that seemed too good to be true.
The number of cases in reported crimes have risen from 96-504 and the amount involved has tripled. Singapore Police Force has ramped up on educating the public through various media outlets.
Spending on Year End Bonus: Bottom Line
Ultimately, the bonus is yours. Use your bonus in a way that you feel good about and do something that gets you enthusiastic about your overall financial life. And of course, it’s best to clear as much debt as possible and living a debt-free life is one of the best feelings that you can have.
Singapore – As the nation progresses aggressively and competes against the other countries, there are now an increasing number of new borrowers in the market. This has led to several changes in credit lending rules in the past years and there is are new regulations to look at. More borrowers are exceeding their unsecured debt limits and over borrowing past their financial limits.
Consumer credit trends have stabilised and is in a healthy state, although some borrowers have over-extended themselves. Let us at Empire Global explain further on how individuals are affected.
According the the Monetary Authority of Singapore (MAS), about 3% of unsecured borrowers are in unsecured debts that exceeds their annual incomes. Unsecured debt is money owed that is not tied to any assets, in contrast to secured debt such as housing and car loans. Examples include credit card debt and personal loans.
This prompted the Credit Counselling Singapore (CCS) to look into cutting borrowers debts by offering a centralised repayment solution. CCS will roll out a centralised repayment solution to help borrowers coordinate negotiations across financial institutions and work out a repayment plan.
The plan will take into account a the borrower’s background such as borrower’s income, expenditure, needs and loan obligations. All the leading retail banks have agreed to get on board with the new system by the first quarter of next year. For moneylenders, borrowers are highly encourage to speak to the loan officers to negotiate a suitable loan contract between themselves.
As A Borrower?
Starting from June next year, borrowers will be barred from getting additional credit if their debt exceeds their annual income for three straight months.
With major crackdowns on illegal lending and moneylenders providing bad practises, the various agencies are clamping down hard on offenders. The police in August released its Mid-Year Crime Brief, which revealed that there were 3,235 cases of unlicensed moneylending reported in the first six months of this year. This was down 31.6 per cent from the 4,729 cases reported over the same period last year.
Furthermore, social safeguards such as the continuous crackdown on illegal moneylenders are taking place. There’s many of such lenders providing bad advice and hidden rules + charges that are disallowed by the government.
This is why we at Empire Global strongly emphasize the importance of understanding the terms of borrowing and letting customers know about it. We do not engage in forcing borrowers to sign but instead tell them the best way forward for them.
This is why we value our financial loan officers very much and also why as a borrower you should go only to licensed moneylenders. Always practise financial prudence.
What’s New for Unsecured Lending?
As mentioned before, the advisory committee for moneylenders have now come up with suggestions stating that the total amount that a person can borrow would be just four times the amount of their monthly salary.
Loans for borrowers earning below $20,000 a year will be capped at $3,000. Interest rates are also expected to be changed, as the committee suggest it to be capped at four percent a month. These are actually great news for all borrowers as they are strict rules which prevents moneylenders from illegally charging more than the norm. Least now there’s would be a standard across the board.
Our Advise for Getting Unsecured Loans?
Be smart. Maximise your money by making smart financial decisions. Try to cut your debts quickly and borrow wisely. Only when you need it especially for life emergencies. Learn about the various loan offering available (payday loan, personal loan, unsecured loan, bank loans, etc). Choose on that best suits your financial needs and do not over borrow. Borrow only what you really need.
Should you need credit advise from official channels, you can contact the Credit Counselling Department and they will guide you through. If you need loan advice or how to properly plan the credit you need, you can also contact us at Empire Global and our loan officers will best advise you.
Personal Loans Applicable for Businesses?
What about Personal Loan Singapore? Viable?
Affordability of Personal Loans
Should I Get a Personal Loan?
In Summary: Key Advantages of Personal Loans
Interesting linksHere are some interesting links for you! Enjoy your stay :)
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