Whether you need urgent money for emergencies, consolidate some old debts or a get a loan for other things that you need, such as an education loan, a renovation loan or a business loan, getting the loan from a licensed money lender in Singapore is the best idea and the right thing to do, compared to illegal lenders. This article talks about the difference between a legal money lender in Singapore and an illegal one and important things you should analyze before signing a loan contract.

Licensed Money Lender: Definition

According to UnAcademy ( https://unacademy.com/content/bank-exam/study-material/general-awareness/who-are-moneylenders/ ), moneylenders “are individuals or group of individuals lending amounts of money”, sums that can be small or large, usually with a specific amount of interest. Licensed lenders are individuals or companies that are legally allowed by the laws to lend money. You know that they are licensed because they operate under Singapore’s Moneylenders Act and they are a part of the Registry of Moneylenders.

Also, according to the Ministry of Law ( https://omy.sg/licensed-money-lender-new-rules/ ), local laws are focused on protecting the borrowers and are also constantly introducing “new moneylending regulations that make the industry fairer, safer, and more transparent”. Therefore, licensed lenders must have a license so they can offer their borrowing services.

There are several rules that each lender must comply with. Some of these general rules include that each contract must be transparent, meaning that the borrower knows ahead what is the principal amount that he gets and repays, how much is the interest rate and the repayment schedule. Also, the contract needs to show what are the restrictions and penalties for late payments or for advanced repayment of the entire loan.

Each lender must provide professional services and transparency, all within the conditions imposed by the law. The law protects the borrower by providing limits for the interest rate and other specific conditions that delimits a licensed money lender in Singapore ( https://monetiumcredit.com.sg/ ) from an illegal money lender, known as “loan sharks”.

Borrowing from a Legal Money Lender in Singapore

If you decide to get a loan and borrow money from a moneylender that is licensed, these are the most important aspects that you need to know and check before you sign the contract.

Registration

A licensed lender must be registered and also approved by the Minister of Law. You can check the company and see if it’s legal and legitimate. Borrowing money from licensed companies protects you from illegal companies that offer you loans that sound too good to be true, without analyzing your income and eligibility, and you end up signing for an interest rate that is huge.

Strict Rules

They need to follow strict rules about interest rates, fees and other loan terms. There are specific rules that regulate the maximum interest and no matter how much you decide to borrow, you will get the same interest rate, knowing that the maximum amount is allowed by the law and anything else above this rate is illegal and sanctioned.

Transparency

A legal money lender must have transparent terms and clauses within their loan agreement. This means that they must offer clear and written contracts, signed by each party, one for each of them. Singing a clear contract gives you the opportunity to know how much you borrow, what do you need to repay, what is the interest rate and when you need to pay.

Protection

Also, licensed companies in Singapore offer you protection and support. They must explain you the contract and the terms that are specific in a language that you understand before you decide to get the loan. Because of the fact that laws limit interest rates and fees, you get the protection you need.

Applying for a Loan: The Steps

If you decide to apply for a loan from a legal money lender, there are several requirements that you need to check before, to make sure that you qualify for a loan. First of all, you need to be over 21 years old. Then, you have to be a Singaporean citizen or even a foreigner, but with all the work validation approved and of course, you need to have an income, a steady one.

Regarding the documents that you need to apply for a loan, you will need an ID or a passport, proof of income, such as paychecks, bank statements, etc., proof of residence, such as utility bill or a rental agreement. These are the most relevant ones and if some other documents are needed, the lender will let you know.

The process of getting a loan is simple and you can do it online or in person. In both cases, the lender verifies your identity. When you get the loan in person, your identity is verified manually, comparing your ID or passport with your presence and with other documents. When you do it online, special programs and software help establish if the ID you submitted is the same with a selfie and other documents. After all the documents are analyzed, you receive the money, usually on the same day.

Depending on your needs and reasons to get a loan, make sure that you don’t borrow more than you need because it could affect your capacity of paying back the loan. You can try to make a list with all the sums that you need and approximate the total sum of the loan, thus knowing the sum that you need to borrow. After you get the loan, be sure to repay the loan on time, exactly the way the contract provides.

Conclusion

Being extra careful when borrowing money is important because getting a loan from an unlicensed lender can be dangerous and it could seriously affect your financial life. Make sure that you only borrow money from a licensed money lender, being protected from illegal interest rates and other fees or dangerous clauses.