Major changes to moneylenders industry in 2017 and 2018

Major Changes to Moneylenders Industry 2017 and 2018

Loan Cap

One of the most impactful change would be the loan cap that moneylenders can dish out to borrowers. The current practice allows an individual licensed moneylender has a loan cap to each borrower, however, each borrower can borrow from multiple moneylenders.

The new practise proposed on Monday (Nov 6) in Parliament, was to impose an aggregate loan cap to each individual thus limiting the total amount that the borrower intends to borrow.

For example with the new loan cap in place, a borrower with an annual income of less than $20,000 may borrow up to $3,000 from all licensed moneylenders combine. For individuals with annual income of more than $20,000, they may borrow up to six times their monthly income from all money lenders.

For each borrower, before each loan is issued, it is now mandatory for money lenders to obtain credit reports from the Moneylenders Credit Bureau (MLCB) to check if a borrower has exceeded their loan cap limits.

These reports (50cents per report) are to be obtained online and money lenders have to update the Moneylenders Credit Bureau after each loan is issued.

Regulatory Framework for Moneylenders

A new regulatory framework will be established to allow MLCB to impose rules on money lenders to protect borrower data. This is to improve regulation of the industry.

With new rules, comes new changes in borrowers mentality. Ms Jolene Ong, chairman of Arise2care Community Services, which conducts debt counselling, mentioned that the new changes will prevent people from over-borrowing. However, for those in serial debt, they might just turn to unlicensed money lenders.

Regulation in Moneylenders Company Profile

Moneylenders must get the Registrar’s approval before employing or engaging any assistants. Approval must be sought before anyone can be a major shareholder or to increase shareholdings.

This new move is to allow the Registrar to cancel approvals for loan assistants or shareholders should they deemed as “unsavoury” or those with previous convictions in unlicensed moneylending.

Money lenders will then be required to be incorporated and submit annual audited accounts to the Registry for Moneylenders. This is to professionalise the industry and improve transparency and accountability. More than two-thirds of 160 existing licensed moneylenders have been registered as companies.

Empire Global a True Financing Center

Although the Bill has not been approved yet, with the new slew of upcoming potential changes, the loan and money lenders industry is set for disruption. We at Empire Global is pretty equipped to handle such disruption and are ever ready to serve our customers better.

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.

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.

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.

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 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

Singapore Moneylenders Credit Bureau to Launch in 2016.

Singapore Moneylenders Credit Bureau Launch in 2016

 It’s official! Things are set to change in the moneylending industry in Singapore. Licensed moneylenders like us at Empire Global will face stricter rules from the government. The Singapore Ministry of Law (MinLaw) has appointed DP Information Group (DP Info) to run the Moneylenders Credit Bureau (MLCB).

The much talked about Moneylenders Credit Bureau will need all licensed moneylenders to provide information on their loans and the borrowers repayment details. This was announced after the 4% interest rate cap.

Individuals used to be able to take up multiple loans from different moneylenders, without proper checks conducted on their repayment ability. Most of the time, it depends on the loan officer assessment of the borrower. Now, with the implementation of the Moneylenders Credit Bureau, licensed moneylenders will get the latest information of the borrower’s credit risk and their debt servicing ratio. This allows a better assessment of the borrower’s loan situation and ensure that borrowers do not borrow beyond their repayment ability.

We do understand the government standing on this as it primarily educates the borrowers on a larger scale. We have rejected borrowers before just by assessing their current withstanding loans. We also support this movement as this provides a safety net for businesses like us in the moneylending industry as this will prevent a percentage of borrowers who could not repay their debts from over borrowing. Financial institutions and licensed moneylenders would not want to overwrite bad debts as it leads to high overheads.

Moneylenders avoid over borrowers from getting loans with Credit Bureau

Moneylenders avoid over borrowers from getting loans with Credit Bureau

Moneylenders Credit Bureau in Singapore

The main goal of the Moneylenders Credit Bureau is to protect borrowers. This was due to many complaints from the public on errant companies making borrowers lending money beyond their means. Errant companies also charge overly high interest rates leading to borrowers being unable to repay.

Licensed moneylenders 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.

Statements from DP Info

Said Lincoln Teo, chief operating officer of DP Info: “The information provided will help promote responsible borrowing. The transparency also means that individuals, when seeking to buy a credit product from a moneylender, will be more likely to take their personal and financial circumstances into account when making their decision. This initiative will eventually see a reduction in the number of defaults. The introduction of the Moneylenders Credit Bureau brings us even closer to a holistic assessment of a borrower’s credit worthiness and repayment abilities.”

“Coupled with our other bureaux and through DP Info’s sophisticated technology, we hope to provide the licensed moneylending community with more data and information to make better decisions. The information will help promote responsible borrowing.”

“This initiative will eventually see a reduction in the number of defaults.”

DP Info currently operates two other credit bureaus – the DP Credit Bureau and the DP SME Commercial Credit Bureau. Read more on DP Info announcement on the new ruling of the Moneylenders Credit Bureau.

Licensed Moneylending News

27 Nov 2015: With the Credit Bureau, has now benefited welfare organisations.Two voluntary welfare organisations (VWOs)- Blessed Grace Social Services and Adullam Life Counselling – can now, with a borrower’s consent, refer to a credit bureau to get a clearer picture of his/her credit records. This is from a new memorandum of understanding signed between VWOs and the Moneylender’s Association of Singapore (MLAS) and DP Information Network.

These VWOs, work as mediators between debtors and licensed moneylenders as they work out structured repayment programmes agreeable to affected parties.

The DP SME Commercial Credit Bureau contains over 15million payment records of Singaporeans and Singapore businesses. This information can be accessed by the VWOs, and the information is gathered monthly from bureau members.

MLAS president Peter Tan said: “We hope that by working together with the VWOs, most debtors will be able to settle their debts in a restructured repayment scheme.”

General Elections Singapore 2015. Money Matters & How it Affects You.

General Elections & Money Matters. How it Affects You!

General Elections 2015 begins! It’s time to cast your votes! This time to your political party in Singapore. The General Elections of 2015 are just around the corner and it has caused quite a sensational stir here in Singapore. With the added usage of social media and the gen-y kids with their first foray into the voting cycle, it’s no wonder every news platform is publishing about the general elections.

Well, here at Empire Global we are under the Bishan-Toa Payoh GRC. Which is the political fight between the incumbents PAP versus the SPP-DPP joint party. It will be an exciting fight as strong leaders of the PAP have stepped down to make way for new leaders. Of course, we will not tell you which party we are voting for (voting is secret).

General Elections 2015 & Money

Money has always been on every Singaporeans minds especially in regards to housing loans, loans and CPF. Debates have been launched on such topics and it will always be the talk of the town. This is important as the  cost of living in Singapore is set to rise, the thought of having to work till old end is certainly scaring the younger generation to build families.

It has been significant in our population numbers as the number of new births are on the decline. Even with subsidies and incentives setup for families, Singaporeans at large are still on a worrying mindset of money and trying to keep up with their loans.

And yet the cost of living is one of the most complained issue during the general elections. Furthermore, the widening income gap has made the situation worse. Some of our customers mentioned about the cost of living in Singapore and how it had affected them when they come to our loan officers.

“It’s not just about people paying more. The deeper unhappiness is the sense that economic growth and wealth have not been suitably shared.” – SMU law don Eugene Tan.

This has probably got people to pay more attention to what the different political parties have to say on the different heartland issues in Singapore during the general elections campaign. It is clearly evident this time round as crowds had turned up during the Worker’s Party first campaign.

Huge Crowds at Worker's Party first election rally at Hougang GE 2015.

Huge Crowds at Worker’s Party first election rally at Hougang GE 2015.

Government Policies & General Elections

Like you, we are concerned about business. In terms of employment as an employer, we do have issues in hiring and maintaining our staff at times. We also look towards the different policies that the government intends to implement. Such as the much talked about 4% interest rate on money lending. That has caused quite a stir within our moneylending industry. Even at Empire Global, we have to make a couple of changes in terms of our business. We of course want what is best for our borrower clients.

The debates on foreign talent (FT) is especially obvious. Furious locals are banking on new policies to change the numbers of such foreign talent that seems to be snapping up their jobs. We as employers are more concerned with employing reliable and good people.

It indeed is a complicated case that remains set to be unresolved totally. Read more on a debate that about general elections whether it is able to cause investors to flee if the ruling party loses more than half the votes.

Well what about you? Who’s your favourite political party?

P.S: We have no affiliation with any political party. Just a voice.

Get Low Interest Rates on Personal loans

Get Low Interest on Your Personal Loan

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.

Make Loan repayments on time & know your debt servicing ratio

Make Loan repayments on time & know your debt servicing ratio

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!

If you have the time flexibility, choose wisely on the money lender you are getting for your personal loan.
Be careful and read the credit terms

Be careful and read the credit terms

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Interest rate capped at 4% and many new regulations affecting moneylending industry in Singapore

Moneylending: Interest Capped at 4% per cent Monthly

The government has accepted new proposals on licensed moneylending, together with one of the biggest change amid protests which is the 4% interest rate cap per month.

The Government has accepted most of the recommendations put forth by an advisory committee and these changes will be implemented progressively starting from July this year (2015). And yes this news has caused quite a stir in the moneylending industry but we at Empire Global are well prepared for these changes.

With twelve of the 15 recommendations from the committee being accepted, the new changes has created some news amongst moneylenders. Two of the recommendations – to lift to lift the moratorium on the granting of new licenses and to regulate debt collection behaviour will be reviewed in time as the moneylending industry adapts to the new regulatory changes.

4 Per Cent Interest Rate Cap: How does it affect everyone?

In order to protect borrowers, the new ruling will place caps on interest rates. As of current rules, there is no cap on interest or late interest rates for borrowers earning more than S$30,000 annually. Some licensed moneylenders charge additional fees (e.g when GIRO repayments fail or dishonoured cheques are issued).

There is currently no restrictions on the total borrowing costs for moneylending loans.

With the new measures kicking in, licensed moneylenders 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 moneylenders can then charge a late interest, however this 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.

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

Furthermore, the total borrowing costs will not exceed 100 per cent of the principal loan sum which will prevent debts from getting out of control.

New Moneylending Regulations affecting Moneylenders?

Chairman of the Advisory Committee Manu Bhaskaran said data has been carefully studied to ensure that the industry remains commercially viable, even with the new caps.

“We completely accept that there will always be a class of distressed borrowers who will not be able to secure loans that they need urgently, from banks and other financial institutions,” he said. “So there is a role for a moneylending industry. And once you accept that, you must accept that you should allow them to have a decent return, taking into account the risk that they face, which is much higher.”

Although with the 4 per cent ruling, moneylenders will be allowed to charge an administrative fee up front, capped at 10 per cent of the original loan amount, for legitimate costs such as securing credit reports.

With regard to borrowers earning more than S$20,000 annually, the new rules will cap their loans at six times their salary from all licensed moneylenders. Such borrowers can currently take a loan of up to four times their monthly salary from each moneylender.

What’s Not Including in the Recommendations?

The government did not accept a recommendation that moneylenders be allowed to advertise in newspapers using strict templates, taking the view that advertising could lead to increased borrowing.

Moving Forward

Stiffer Rules on moneylending to be rolled out

Stiffer Rules on moneylending to be rolled out. Photo credit: Straits Times

A new Moneylenders Credit Bureau will also provide a centralised, comprehensive database of borrowers who use licensed moneylending services.

“We set up this committee to come up with recommendations that would help protect the consumer, the borrower. But at the same time, if you kill off the moneylending industry, then the people who need to borrow won’t get access,” Mr K Shanmugan, Minister for Law and Foreign Affairs said. He further mentioned that the new recommendations are centred on how best to balance both.

The 4% interest rate caps would be the first of a list of proposals recommended by the committee to be rolled out within a month by the Law Ministry.

Mr Manu Bhaskaran, director of Centennial Group International and chairman of the committee said, that the committee has decided to accept the moneylenders’ recommendations to help them cover their administration costs incurred in giving out the loans and late payments from borrowers.

More References: TODAY reports on moneylending interest rate cap