Adulthood brings a lot of financial responsibilities with it. While we all plan for our financial needs, some of them appear out of thin air. Even if you have enough income, unfortunate incidents can challenge you to need more money than you already have.
What do you do in such situations? You turn your head towards financial lenders.
While people widely know about banks and their loan processes, there is less awareness about private credit companies or licensed moneylenders. Naturally, there are several misconceptions about them, one of which and a rather critical one is whether money lenders are legal in Singapore or not.
To your assurance, yes, money lending from licensed moneylenders is legal in Singapore! The Ministry of law approves the practice of legal money lenders in Singapore.
While banks have restrictions on the amount of money they can lend and repayment periods, licensed moneylenders can lend a considerable amount of money for more extended periods. In addition, moneylenders can quickly disburse loans, so you do not have to wait for days or weeks to receive your funds. Therefore, it is not surprising that people like to consider legal moneylenders to borrow money in Singapore.
However, with the number of unlicensed and illegal moneylenders increasing in Singapore, it is crucial to know how to legally borrow money so that you can avoid being cheated by them.
Before approaching a moneylender, it would be helpful if you check the legality of your selected financial institution in the first place.
Laws and Regulations of Money Lenders in Singapore
Moneylenders in Singapore are highly regulated. The Ministry of Law in Singapore created a set of guidelines for moneylenders to follow (called the Moneylenders Act). They have to be licensed if they want to operate in the country and are not allowed to do business without a license.
If you are thinking of borrowing money, it is crucial that you only deal with licensed lenders. It is illegal to borrow money from a moneylender who has no license from the Registry of Moneylenders.
The Moneylenders Act and Moneylenders Rules cover the regulations for money lenders. The law was first passed in 1936 and was last amended in 2018.
According to the Moneylenders Act, anyone who loans money to another person is considered a moneylender. To ensure that people are protected from abusive practices when they borrow money, the Ministry of Law has set up several rules and guidelines for moneylenders. They exist to protect the borrower’s rights and ensure that the borrower can be confident they get the payback of their loan.
Borrow Money from Legal Moneylender Singapore
With the rising cost of living, many people in Singapore are finding it increasingly difficult to survive on a single income, especially if they have a family. In such situations, they may be left with only one option, taking a loan. However, one must be aware of all the related information before doing so.
Here are things you need to keep in mind when looking to legally borrow money from a legal money lender in Singapore.
- Firstly, make sure that the company is registered with the Ministry of Law. For that, check the Ministry of Law’s website for a list of licensed and legal moneylenders who are allowed to operate in Singapore. The list will show their names, addresses, and contact details so that you may approach them directly.
- Second, check whether or not they have been approved by the Monetary Authority of Singapore (MAS).
- Next, make sure that you ask about their rates, terms, and any other fees that they may charge (e.g., late payment fees) before signing any contract.
- You should also check if there are limits on the maximum amount you can borrow from them and whether there is a minimum period for which you must repay your loan.
- Ensure that all transactions are recorded in writing and have the signatures of both parties. Illegal money lenders always try to avoid keeping things on the record.
When you follow these money borrowing tips, you will find it easier to borrow money from a legal money lender in Singapore.
What are Some Prohibited Practices for Licensed Moneylenders?
Here are some practices that legal money lenders in Singapore are not allowed to do under the Ministry of Law:
- Harass you, use obscene or abusive language, or threaten you with any violent acts.
- Disclose your information to anyone (including family and friends) without your consent.
- Charge interest or fees above the legal limit.
- Ask you to borrow money without explaining all the terms and conditions in the language you can understand.
- Refuse to sign the required documents for money lending.
- Request borrowers to sign blank forms or documents.
- Change the terms and conditions of a loan after the approval.
- Demanding repayment of a loan on any day other than the repayment date specified in the written contract. And charging interest on it when denied.
- Withholding some or all of the principal amount for any reason.
The Moneylending Act has given the Ministry of Law the power to license moneylenders and regulate the money lending business. Above all, it has given borrowers much-needed protection from unscrupulous moneylenders who use threats to collect debts or worse, resort to violence.
Legalizing money lending is an excellent thing that a government does. The Singapore government is well aware of the monetary needs of the citizens of Singapore, especially migrant laborers who work here. It is the reason the government does not outlaw the money lending business. In other words, the existence of a moneylender industry in Singapore is a necessity. It solves the money problems of many individuals in need.
A good loan should give you enough protection when borrowing and make sure it secures your rights at all times.
Wants to borrow money from legal money lenders in Singapore but do not know whom to turn to? OT Credit Pte Ltd is here to fulfill all your money needs legally. Reach out to us to borrow money from a legal money lender in Singapore.