Regardless of your life situation now, one seldom cannot run away from the usage of money. In today’s fast-growing economy with increasing global changes to market needs and demands, you probably worry about your financial situation at some point. Aside from that, you probably would have gotten a form of personal loan from a company (e.g home loan, car loan, renovation loan, bank loan).
Or you would need to pay a large upfront amount like hospitalisation for the birth of your newborn, purchase of a new BTO flat, your wedding plans or the down-payment of a car. All these are personal loans or big expenses to meet your needs but not the unexpected needs that may arise. These cash flow issues can come at any moment, say an emergency hospitalisation stay (god bless that this does not happen), a sudden shortage in financial income like a job loss (retrenchment).
This is when you would need to ready your emergency or rainy day funds, which is recommended to be 6 months of your monthly salary. Hence regardless of your life stage, having access to finance is crucial.
Should you run into such cash flow issues, you might turn to your family members or relatives, your friends or colleagues for financial help. Some may be afraid to do so or are shunned away or no one in their network can provide any help. Some turn to banks or loan sharks for fast personal loans should they want immediate cash access. Those who turn to loan sharks might do so because of their financial standings not meeting the bank needs or they have no other means. Some turn to licensed money lenders instead, which are quite often a misunderstood lot given the bad rep it is given from the media.
Seriously?! Wut? Getting a personal loan from licensed money lenders? YES!
Aren’t they loan sharks? No!
Personal Loans from Licensed Money Lenders
Yep! Licensed Money Lenders are completely legit, registered firms and in fact undergo a stringent checklist under the Ministry of Law (MinLaw). It is often misunderstood term due to the phrase “Money Lenders” linking them to loan sharks or the typical ah long 大耳窿.
In fact, licensed money lenders adhere strictly to the rules and terms set upon them and licenses are given only to firms that pass these standards. New licenses are seldom issued and standards are getting tighter every year as new rules bound them. Min Law depicts the terms, one such term is the 4% maximum interest rate per month. This was created in the plight of the public concerns on the misapplication of interest rates by licensed money lenders and to prevent borrowers from over-borrowing and lenders from over lending.
Aren’t they loan sharks? No!
Where can I find Legit Licensed Money Lenders?
So how does one know whether a firm is operating a licensed money lending business? Simply check the full list of licensed moneylenders on MinLaw website. As of September 2019, there are 158 licensed money lenders in Singapore. This list is updated frequently, so the first thing to do before heading down to a moneylender for a personal loan is to check it’s license against the MinLaw site.
The Must-Have Checklist to identify Licensed Money Lender
- All licensed money lenders have a unique license number which you can verify against the MinLaw website.
- Licensed money lenders will not use abusive language, or behave in a threatening manner to you. We are a pretty happy bunch.
- Will never ask for your SingPass user id or password. There have been cases in the past whereby illegal money lenders asked for it and used it for other means.
- Will never retain your NRIC card or personal document (driver’s license, passport, work permit, employment pass)
- Licensed money lenders must issue you a proper Note of Contract for the loan. They are to explain to you the legal terms behind it. A borrower has to
- Licensed money lenders are not allowed to solicit loans, or SMS or WhatsApp potential borrowers about loans. They are only allowed to advertise on their own property, website or in directories. Should you receive such messages, it is from an unlicensed moneylender.
- Licensed money lenders do not transfer loan amounts immediately. Do not be enticed by scammish and misleading sales tactics such as “Immediate Cash”, “Instant Cash”.
- Licensed money lenders are only allowed to charge a monthly interest rate of not more than 4%.
- Licensed money lenders in Singapore can only charge a fee of not more than 10% of the principal granted loan amount. For late fees, the maximum amount they can charge is capped at $60.
Money lender licenses are difficult to obtain and maintain at the same time, hence these moneylending firms would not want to risk losing their licenses due to quick gains.