In any economy, people resort to taking loans in order to help them sail through many financial liabilities that life throws on them. In Singapore taking short term cash loans, instant cash loans, as well as longer term loans through a legal moneylender, is becoming increasingly popular.
But it is of utmost importance to be sure of the financial institution one is dealing with and to select one with a considerable repute. So, the question arises – how to tell if you are dealing with a best licensed moneylender? But do not worry as before you embark on a journey to find out the best licensed moneylender we acquaint you with all the important things to keep in mind.
What is a licensed moneylender?
Moneylenders are legally licensed lenders or financial organizations that can lend money to either an individual or a group. In Singapore, moneylenders are governed by the Ministry of Law. A licensed moneylender ensures that the borrower is not exploited at the time of their financial need. The Singapore government has set rules to ensure that a licensed moneylender deals in fair practice.
The Ministry of Law has the name of all the licensed moneylenders on its website and the list is updated regularly. Anyone who intends to borrow some money must look up the list on the website to ensure they are dealing with a legal moneylender.
Practices of a legal moneylender
Interest Rate: A licensed moneylender in Singapore is legally allowed to charge only a 4% interest rate. This capping on the amount ensures that one is not charged exorbitantly. Dealing with a legal moneylender ensures best practices for any borrower and keeps their interest safe.
Loan Amount: A legal moneylender can let you borrow a maximum amount of $3000 if their earning is less than $20,000 per annum. Those earning more than $20,000 are allowed to borrow up to six times their salary. An unlicensed moneylender may allow you to borrow an even larger amount of money but a considerably large amount may lead you in a situation where you find yourself unable to pay the huge amount in time and end up paying a hefty penalty or late payment fee.
Documentation: A best legal moneylender would not take any shortcuts when it comes to the right documentation. Whether you are applying for short term cash loans or instant cash loans, a good moneylender will run a background check. For instant cash loans, the moneylender may just need a few basic requirements like a valid Singaporean ID and payslips and will not elongate the process while keeping in check all the due diligence.
The fees: While it may be understood that aside from the interest which will be levied on the borrowed amount you are required to pay a certain processing fee as well as annual charges but not many may know that in Singapore a late repayment fee must not exceed more than $60. This is to ensure that the borrower is not charged an unjustified sum in case of a failure to make the payment on time.
A physical location: One good way to know that you are dealing with the best legal moneylender is that they have a physical office at a location easily accessed by people. Sometimes unlicensed money lenders may try to hide behind a website and keep their identity under wraps. If you see something of this sort, understand it as a red signal and stay away before getting trapped in unethical financial practices.
Easy loan process: A good moneylender will have an easy and hassle-free loan application. Most lenders offer online loan applications for ease. This is particularly important in cases of instant cash loans as the borrower needs to get the loan approved at a short notice. However, at the same time beware of any moneylender offering you an easy loan without any background check at all.
While it may sound tempting to secure a letter with zero formalities, it is going to cause you financial heartburn in the long run. So it is best to go with a licensed moneylender with good reputable practice.