The Moneylenders Act is a government regulation under the Ministry of Law in Singapore that aims to protect the interest of the borrowers of its citizens, and the foreigners that inhabit it.
The Moneylenders Act Singapore has been already enacted a long time ago, but there have been a lot of amendments since it was first passed into law. Essentially, this act exists to guide borrowers in Singapore from falling onto the debt traps of loan sharks (or ah longs).
How to Know If a Moneylender Is Licensed?
To start with, moneylenders need to be affiliated with the Ministry of Law in Singapore. Their business names must be registered along with the number of their license. You should also check on their place of business, as this should be declared on the registry of moneylenders as well.
To confirm if a moneylender is licensed you can click this link.
NOTE: Borrowing from loan sharks will definitely affect your financial standing in the long run. You might even fall under a debt trap, with countless harassments from them if you do fail to pay your high-interest amortizations to them on time.
How Much Can You Borrow?
How much you can borrow depends on which type of loan you would want to apply for. When it comes to secured loans, you can be offered by money lenders and banks of cash of up to any approvable amount.
However, for unsecured loans where collaterals are no longer needed from you, a maximum loanable amount is imposed for all money lenders and borrowers in Singapore.
Let’s refer to the table below:
|Your Annual Income||Loanable Amount for Singapore Citizens and Permanent Residents||Loanable Amount for Foreigners Working, Studying, or Residing in Singapore|
|If less than SGD 10,000.00||SGD 3,000.00||SGD 500.00|
|If at least SGD 10,000 but less than SGD 20,000||SGD 3,000.00||SGD 3,000.00|
|If SGD 20,000 or more||Up to 6x worth your monthly income||Up to 6x worth your monthly income|
What Are the Interest Rates & Other Charges Money Lenders Can Charge?
The registry of moneylenders have only allowed the maximum interest rate that moneylenders can now charge in Singapore, which is at 4% per calendar month.
This cap applies to all transactions, regardless of what your annual income is. Furthermore, it also applies to all types of loans, even if the loan is a secured or unsecured loan.
What if I Fail to Repay My Loan in Time?
Now, if the borrower has failed to repay their loans on time, the maximum late payment charge that a moneylending business can charge is up to 4% per month. This applies on each month the borrower fails to repay the loan on time. You can only be charged for unpaid amortizations that have exceeded their due date.
Also, you have to be aware that the late interest can only be charged onto the payment that has been repaid late. For example, the moneylender cannot charge on amounts that are outstanding but are not yet due for repayment.
Moneylenders in Singapore Can Also Charge the Following Expenses Against You:
- Fees not exceeding 10% of the initial amount of the loan when the loan is granted;
- Legal costs as ordered by your case in court, especially when a successful claim by the moneylender when they have recovered the loan; and
- A fee that should not exceed more than SGD 60.00 for each month of the late repayment
Remember that under the Moneylenders Act, you cannot be charged fees (including interest, late payment fees, administrative fees) that exceed an amount equivalent to your principal loan amount. So, if you have borrowed SGD 10,000 for example, your interest, administrative fees and other charges should not exceed SGD 10,000 as well.
This is why it is important to keep track of the terms on your contract for the loan, so you are fully aware about the charges against you as the borrower.
How to Know If the Advertisement Is Legitimate
The Registry of Moneylenders and the credit bureau only permits licensed moneylenders to advertise through legitimate means. These are as follows:
- Websites that belong to the moneylender, (that must have their business name on it)
- Official business or official consumer directories, whether these be on online media or in print;
- Advertisements that are placed within or on the exterior of the moneylender’s business address.
Pro Tip: For your security, you might be transacting with an illegitimate moneylending industry if you see loaning advertisements that are being published outside the approval of the means discussed above.
It is also important not to rely on the content of the advertisements of the licensed moneylender, but also to review and seek clarifications on specific conditions, fees, and information on your loan contract before signing up with licensed moneylenders.
Unlike some industries, Raffles Credit, one of the most reputable licensed moneylending companies in Singapore makes sure that you get your terms, benefits, and services exactly as advertised.
What Moneylenders Should Provide to Borrowers After Being Granted a Loan
Businesses in the legitimate moneylending industry should be able to make sure that they give you the correct and the exact principal loan money value. If you borrowed SGD 3,000, you should get exactly that. In some cases the moneylending business may still charge you an approval fee of up to 10% of the principal loan, and may be charged upfront.
Under the Moneylenders Act, they should also:
- Give you a legitimate Note of Contract on your loan that will contain information on your pay date terms, legal payments for interests, and other part credit information;
- Explain all these to you in terms that you fully understand;
- Issue official receipts to you as the borrower each time you make your loan amount repayments; and
- Give you updated borrower statement of accounts when you request for it, with complete documentation on the evidence for your payment.
Pro Tip: As a borrower, you should keep all your account statements as well as your receipts and other payment documentation so that you won’t have much problems in settling disputes whenever needed.
How to Report a Licensed Moneylender or Its Unfair Practices
Borrowers will always have the right to report illegal practices caused by a licensed moneylender. You can contact the Registry of Moneylenders to report these to 1800-2255-529.
Borrowers need not worry because the Registry will not disclose your details or other information to the Singapore moneylenders you have transacted with without your consent.
The Ministry of Law and it’s Registry of licensed moneylenders takes all complaints against moneylenders very seriously. If a moneylender still transacted illegally against you and the law, you can also pursue legal action through the Small Claims Tribunal, as covered by the Consumer Protection Act.
What If You Can’t Pay the Loan?
You may approach various social service institutions that can help you with information on serious debt problems. There are tons of agencies that you can search for online on these things.
Additionally, you should know that the Registry of Moneylenders is not an authorized agency to help you out in negotiating with your moneylenders regarding the money you will borrow. Every loan you put into account is something private between you, the borrower, and the moneylending institution.
What Can You Do If the Moneylender Is Harassing or Threatening You?
If licensed moneylenders have been harassing you, you can report them to the Registry at 1800-2255-529.
Again, you wouldn’t need to worry about your information being disclosed to the money lending business once you have lodged your complaint. All information made on the date and time of your complaint is, without a doubt, confidential and will not be released to other parties without your consent.
Before the Moneylenders Act was enacted, it was very easy for the unlicensed moneylender to imitate legitimate and licensed moneylenders.
However, because of the Ministry’s very strict licensed moneylender requirements, registration, regulation as well as certification, you can trust that you wouldn’t have a problem in trusting the business of moneylending for your borrowing needs. Raffles Credit, a licensed moneylender, is one of the standard companies you can look forward to. They have been in the market for almost a decade already, and have been continuously getting positive reviews and feedback from clients all throughout the years.