Licensed Money Lenders- What Borrowers Need to Know About the Law
Licensed money lenders in Singapore offer borrowers a safe, and legal way of getting cash, providing a reassuring option in times of need.
But before that, you must understand how the laws were enacted to protect and empower you as a borrower.
Therefore, in this post, we’ll explore everything you need to know about the robust protection the various money lending laws offer you as a borrower, ensuring your financial security.
4 Things You Need to Know About the Law as a Borrower
1. Borrowing Limits
One of the most helpful protections under Singaporean law is the borrowing limit. The borrowing limit determines how much you can borrow based on your income.
If you’re earning less than $20,000 per year, for instance, you can borrow up to $3,000. If you’re earning more than $20,000, you can borrow a higher amount, but it is still limited, so you cannot borrow beyond as much as you can afford to repay.
These limits will help you keep your debt in check. They stop you from borrowing more than you can manage, which is usually the pitfall of emergency borrowing. Therefore, keep these limits in mind every time you go out to borrow a loan.
2. Interest Rates and Charges
Singapore-licensed moneylenders have to follow strict interest rate limits. By law, they are not allowed to charge more than 4% interest per month, irrespective of your income amount or the loan type you take.
Also, fees are limited. For instance, the administrative fee for processing your loan cannot exceed 10% of the principal loan.
These are caps to ensure money lenders don’t charge you high rates that will lead to non-payment loans. Always seek to know about the exact charges in advance of an agreement. A legitimate licensed money lender will always give such information.
3. The Need for a Written Contract
Licensed moneylenders are legally obligated to provide a clear and concise loan contract. The contract must state the loan amount, payment date, interest rate, and other fees. Please read it thoroughly and inquire where something is unclear.
Importantly, never take a loan on credit without a written contract. A signed agreement protects you and gets you on the same page with the lender. A lender who refuses to sign one or tries to bully you into signing is likely a scammer and a red flag.
4. Protection in case you can’t repay the loan as agreed
Licensed money lenders must offer reasonable repayment plans and are not allowed to harass or threaten you.
Therefore, since life is unpredictable, repayment could be difficult at some time or another. But, if you are experiencing issues in repaying your debt, do not hesitate to approach your money lender immediately.
Mainly, Singapore law rigorously stipulates a code of practice for moneylenders to behave towards the borrowers. Importantly, you may complain to the Registry of Moneylenders if you are mistreated or harassed.
Borrow From Licensed Money Lenders
Limiting your borrowing to licensed money lenders will spare you fraud and make your borrowing regulated and safe. The Ministry of Law mainly regulates the lending money operation in Singapore. A licensed money lender is a business operating under strict legal, transparency, and equity control.
Importantly, you can quickly establish whether a money lender is licensed from the Ministry of Law website by checking the official list.
Loan sharks or unlicensed money lenders are illicit and trap the borrower in a debt cycle.
Last Words: Borrow Wisely
Singapore-based licensed money lenders are convenient for helping you access loans legally. However, be informed about the law’s implications for your safety and only deal with licensed lenders.
Importantly, remember that the law protects and guides you in making the right borrowing decision for a better financial future.
Therefore, if you require a loan, start by looking for a reputable and licensed money lender with a good reputation. They will guide you through the process and help you obtain a loan option that will suit you.