The Borrower must know before taking a loan from Licensed Moneylender.
What are the interest rates moneylenders can charge?
Effective from 1 Oct 2015, the max interest rate moneylenders can charge is 4% per month. This rate is applied regardless of the borrower’s income and secured loan and unsecured loan. In case, a borrower fails to repay the loan on time, the maximum rate of late interest a moneylender can charge is 4% per month for each month the loan is repaid late.
What are the fees that moneylenders can charge?
With effect from 1 Oct 2015, all moneylenders are only permitted to impose the following charges and expenses:
– a fee not exceeding $60 for each month of late repayment;
– a fee not exceeding 10% of the principal of the loan when a loan is granted; and
– Legal Fees
In the event that I am standing as a surety for a loan, what should I look out for?
You should ensure that:
- You understand your responsibilities as a surety;
- You receive a copy of the Note of Contract at the time that the loan is granted to the borrower;
- The moneylender has explained the terms in the Note of Contract in a language that you understand; and
- The moneylender does not keep your NRIC card or any other personal ID documents (e.g.driver’s licence, passport).
- The moneylender does not acquire any information that contains passwords to your user accounts (e.g. Singpass account, Internet banking account, email account).
What should I do after being granted a loan?
- Make sure the moneylender delivers to you the correct principal amount of the loan. The moneylender is only permitted an upfront deduction of a loan approval fee of up to 10% of the principal amount.
- Pay the loan instalments on time to avoid incurring late payment fees and late interest.
- Make sure the moneylender issues you a receipt every time you make any repayment towards your loan, and check it for correctness (e.g. name, amount, date).
- Make sure you receive a statement of account for all your loan(s) at least once every January and July and check it for correctness (e.g. name, amount, date); and
- You should retain all statement of accounts and receipts of payments, as documentation and evidence of payments.
How do I know whether a money lender is licensed or not?
Do not borrow from unlicensed moneylenders. Verify that a moneylender is licensed by checking the list of licensed moneylenders. Click here to access the list of licensed moneylenders. Notwithstanding that the moneylenders are licensed, be mindful if they:
- Use abusive language, or behave in a threatening manner towards you.
- Ask for your SingPass user ID and/or password.
- Retain your NRIC card or any other personal ID documents (e.g. driver’s licence, passport, work permit, employment pass or ATM card).
- Ask you to sign on a blank or incomplete Note of the Contract for the loan.
- Grant you a loan without giving you a copy of the Note of contract for the loan and/or without properly explaining to you all the terms and conditions.
- Grant you a loan without exercising due diligence (e.g. approving a loan over the phone, SMS or email before even receiving your loan application form and supporting documents, such as the income tax assessment and payslips).
- Withhold any part of your principal loan amount for any reason.
Such practices are not acceptable. If you encounter them, you should report the moneylender to the Registry of Moneylenders, with information such as the moneylender’s business name, licence and contact numbers.
To find out more about unlicensed moneylenders, you may click on this link: Unlicensed Moneylending
What should I consider before taking up a loan?
Consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations. Borrow only what you need and are able to repay. Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family.
Before approaching a moneylender, consider other alternatives, such as the various financial assistance schemes offered by various Government agencies. You may contact the agencies to find out more about their schemes. You are legally obliged to fulfill any loan contract you enter into with a licensed moneylender. Consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations. Borrow only what you need and are able to repay. Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family. The law requires moneylenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract. Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable. You should shop around different moneylenders for the most favourable terms. You should not rush into and commit yourself to a loan until you are satisfied with the terms and conditions.