Different from the popular belief that makes some Singaporeans avoid one. Legal moneylenders are out to help you through a financial crisis. Accredited moneylenders are like any other business owner.
Although its true that they want to make money through this business. They definitely do not want to do so at the expense of borrowers. To provide you more confidence in knowing loans.
Below are some moneylender myths. These might be stopping you from getting a personal loan when you really need one.
How To Tell apart a Legal Moneylender From An Illegal One
An authorized moneylender will ask to see an NRIC card. They might also request for other personal identity paperwork. This will be used to help them verify your identity. Even so, they should not want to retain the documents. Some of these documents are passports, driving licenses, ATM cards, work permits, or employment passes.
When the lender needs them, they can use a copy of the ID card for their file. however, they should return to you the original after checks. A few unlicensed moneylenders will slyly ask that you provide them with the SingPass password and Username.
You are not obligated to offer such details to any lender. Even then, this request is highly unusual even as a requirement.
What Makes a Dependable Moneylender
Only seek to deal with a legal moneylender. This is because these lenders have fulfilled all requirements set by law. These regulations are aimed at protecting your interests. These moneylenders will possess all the licenses and permits that prove their compliance.
To ensure that your moneylender of choice is duly registered. Always demand that they show you their registration papers. Importantly check their license number against the one shown at the Moneylenders Registry website. Do not accept only a verbal confirmation.
What Are The Different Types Of Loans?
Do realize that in Singapore there are two kinds of loans. These are unsecured and secure loans. This means that when you are considering taking out a personal loan. The one aspect you will have to think about early in the borrowing cycle. As to whether you want to pledge security for the loan. Or you do not. Collateral or security is a valuable asset. This asset rights will be signed over to the lender in place of a loan.
In simple terms, it means that in case you are not able to repay your personal loan. The moneylender can assume ownership of the asset provided as security. They can choose to sell it and recover their outstanding amount.
When there is no security needed. The loan provided to borrowers will not have security by using an asset. This is what is known as an unsecured loan. When the borrower is unable to repay it, the lender does not have the right to assume their property. However, only when a court order and direction from a judge can the do so.
What Secured Loans Are
Not all assets that an individual owns can be used as collateral for loans. The value of the asset value should be worth a lot more than the borrowed amount. Additionally, it should also cover the entire interest attracted on the loan. For example, you could use your house or car. Also, another realty possession is acceptable. Once you have signed over the rights of an asset. Your lender will place the lien on that asset.
Your lender will then hold on to all the documents of the property. This also includes duly signed forms of transfer. The form will be waiting to take effect should you default your repayments.
Nearly all mainstream lending organizations like banks provide loans that are secured. This is because this decreases the lending risk of their establishment.
What An Unsecured Loan Is
Unsecured loans are loan amounts borrowed without using any assets. This asset is what a borrower pledges to help protect a lender’s investment. This is only in case they default on their payment. In such a situation, the lender’s only help is to begin legal action. This will be done against a defaulter.
In this case, the court can order a defaulter to repay the outstanding loan amount. When the borrower is declared bankrupt, the law court can order their property be sold. The proceeds can be used to settle their debts.
As such a lender still this does not give assurance. Thus they are certain the will regain their investment. This is because the borrower might have other creditors. Yet the creditors have to be repaid first.
What Are The Disadvantages And Advantages Of Unsecured Loans
Advantages of unsecured loans
- These do not put a risk on your assets.
- They are a quick financial solution for individuals with a lower credit score
- They are fast to process. This is because the asset valuation checks are not as strict.
- They attract higher interests compared to corresponding amounts that are secured. This is because they should not take your assets under unforeseen circumstances.
- These are limited depending on the amounts you can borrow. This is normally an upper limit of four times your monthly income.
- They come with stricter repayment plans. The instalments are higher to limit the risk to legal moneylenders
What Types Of Moneylenders Are In Singapore? Are The Lenders All “Ah Longs”?
In reality, they are no many differences between licensed and unlicensed lenders. This you cannot tell instantly. However, here are a few things you could do for background checks. This is before you “sign the papers”
Prior to accepting personal loans from any moneylender. you should ensure that they have a valid license number. Confirm that their certification is legitimate. The Moneylenders’ Registry has the complete list of licensed lenders 2020. This they do on their official website. The registry ensures it is updated each month. They place this list is there to assist customers. Borrowers use this to confirm details provided by prospective moneylenders. Therefore, remember to double check the provided list before you borrow.