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.