Know Your Rights– Overview of Borrowing from Accredited Moneylenders in Singapore
What should you do prior to approaching a moneylender? Read The Money Lenders Act in Singapore!
Do consider other means of financial help such as those offered by the various federal government firms. Please keep in mind that you are lawfully obligated to fulfill any loan contracts you get in with a certified money lender. Always bear in mind to ensure you can satisfy your loan commitment (legal and monetary sensible). It is constantly suggested to obtain only exactly what you can repay.
The laws in Singapore needs all certified money lenders to describe the terms of loans to you in a language you understand and are required by law to offer you with a copy of the contract. Do ensure you understand the all terms of the contract including the repayment terms, the rate of interest and all the relevant fees included.
It is wise to search for the best possible deal you can if you require a loan.
What does it cost? can you borrow?
For guaranteed loans, there is no limit to the loan you can protect. For unsecured loans, the quantity you can obtain depends upon your annual earnings:
You can obtain as much as $3,000, if your annual income is less than $20,000;
You can obtain up to 2 months’ earnings if your yearly income is $20,000 or more, however, less than $30,000;
You can obtain approximately 4 months’ earnings if your annual earnings is $30,000 or more, however, less than $120,000; and
You can borrow up any amount if your yearly earnings are $120,000 or more.
Rate of interest That Moneylenders can charge
For loans contracted in between 1 June 2012 and 30 September 2015, lenders are required to disclose and calculate to you the Effective Interest Rate of the loan, before the loan is granted. If your yearly earnings are less than $30,000, the interest rate which lenders can charge, for both secured and unsecured loans, is capped at:
13 percent Effective Interest Rate for protected loans; and
20 percent Effective Interest Rate for unsecured loans.
The Effective Interest Rate takes into account the compounding effect of the frequency of installments over a 1 year period. This implies that Effective Interest Rate better shows the real expense of loaning over a 1 year period. Visit https://www.mlaw.gov.sg/content/rom to find out more about how the Effective Interest Rate is determined from 1 June 2012.
The caps above are not applicable and the interest rate is to be concurred upon in between the lender and the debtor if your annual earnings are $30,000 or more.
With result from 1 October 2015, the maximum rate of interest moneylenders can charge is 4% each month. This cap applies no matter the borrower’s earnings and whether the loan is an unsecured or protected one. If a customer fails to repay the loan on time, the maximum rate of late interest a lender can charge is 4% each month for each month the loan is paid back late.
The calculation of interest charged on the loan must be based on the quantity of primary remaining after deducting from the original principal the overall payments made by or on behalf of the customer which are appropriated to the principal. To highlight, if X takes a loan of $10,000, and X has repaid $4,000, just the remaining $6,000 can be taken into account for the computation of interest.
The moneylender can not charge on amounts that are outstanding however not yet due to being paid back. To illustrate, if X takes a loan of $10,000, and stops working to pay for the very first installment of $2,000, the lender may charge the late interest on $2,000 however not on the remaining $8,000 as it is not due.
How do I understand if a moneylender is licensed?
Never ever borrow from unlicensed moneylenders. Verify and make sure that a moneylender is accredited by checking this website by Ministry of Law Singapore. Secure your rights by obtaining only from licensed money lenders.
When you are getting a loan from a money lender, please do remember the following:
You ought to not provide your SingPass username and password.
They ought to not utilize abusive language or threaten you in any manner
You must never ever sign a blank file or incomplete loan contract.
They have no rights to retain your NRIC or any personal files.
You should decline a loan without comprehending the terms and conditions of the loan agreement or if you did not receive a copy of the loan agreement.
No parts of the principal loan should be kept for any reason.
You ought to decline a loan over the phone, email or SMS without going through the correct procedures in applying for a loan a needed by law.
Please report the moneylender to the Registry of Moneylenders if you encounter any of the practice( s) above.
What are the fees that moneylenders can charge?
For loans contracted between 1 June 2012 and 30 September 2015, moneylenders are only allowed to charge six types of fees:
For each occasion of late repayment of principal or interest;
For each event the terms of the loan contract have differed at your demand;
For each dishonoured cheque released by you;
For each unsuccessful GIRO reduction from a checking account, as payment to the moneylender;
For early redemption of the loan or early termination of the agreement; and
Legal expenses incurred for the recovery of the loan.
Other costs are not allowed and are for this reason not enforceable by the moneylender.
With result from 1 October 2015, all lenders are just permitted to impose the following charges and expenditures.
a fee not going beyond $60 for each month of late repayment;
When a loan is approved; and, a charge not exceeding 10% of the principal of the loan
legal expenses ordered by the court for a successful claim by the lender for the healing of the loan.
The overall charges imposed by a moneylender on any loan, consisting of interest, late interest, in advance administrative and late charge also can not surpass a quantity equivalent to the principal of the loan. [To illustrate, if X takes a loan of $10,000, then the interest, late interest, 10% administrative cost and month-to-month $60 late fees can not go beyond $10,000.]
If 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.
The calculation of interest charged on the loan must be based on the quantity of primary staying after deducting from the initial principal the overall payments made by or on behalf of the borrower which is appropriated to the principal. To highlight, if X takes a loan of $10,000, and fails to pay for the very first installment of $2,000, the lender may charge the late interest on $2,000 however not on the staying $8,000 as it is not due. The total charges enforced by a lender on any loan, consisting of interest, late interest, in advance administrative and late charge likewise can not go beyond a quantity equivalent to the principal of the loan. To highlight, if X takes a loan of $10,000, then the interest, late interest, 10% administrative fee and monthly $60 late fees can not exceed $10,000.