What Constitutes a Good Money Lender?

What Constitutes a Good Money Lender?

Between the floundering economy and incessant rising cost of living, it might be inevitable that bills are piling up with no means of resolving them. In such cases, most people tend to turn to money lenders to provide some form of relief to the impounding stress faced by the stack of bills.

Money lenders maybe a better choice as compared to banks as they provide a less messy and much quicker alternative especially since one is strapped for cash. To ensure that the entire process remains as pleasant as possible, one must be careful when choosing their money lenders. However, with the wide variety of money lenders available today, how does one distinguish between a ‘good’ or ‘bad’ money lender?

First and foremost, before heading down to any money lender, it would be wise to check for their license number and ensure that their license number is (still) valid. You can do so by checking it with the list of registered licensed moneylenders in Singapore with the Ministry of Law.

Interest rates
With effect from 1 October 2015, the maximum interest rate moneylenders can charge is 4% per month. This cap applies regardless of the borrower’s income and whether the loan is an unsecured or secured one. 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 computation of interest charged on the loan must be based on the amount of principal remaining after deducting from the original principal the total payments made by or on behalf of the borrower which are appropriated to principal.

The late interest can only be charged on an amount that is repaid late. The moneylender cannot charge on amounts that are outstanding but not yet due to be repaid.

In addition, with effect from 1 October 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 costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

The total charges imposed by a moneylender on any loan, consisting of interest, late interest, upfront administrative and late fee also cannot exceed an amount equivalent to the principal of the loan.

*Taken with reference from: https://www.mlaw.gov.sg/content/rom/en/information-for-borrowers/guide-to-borrowing-from-licensed-moneylenders-english.html

Last but not the least, before making a decision, you will need to ensure that the repayment method offered by the money lender is something that is feasible and well within your means. If not, this will likely cause you to land deeper into debt as the months go by. Be sure to discuss with the lender and come up with terms that are agreeable to both sides.

Hence, before choosing any money lender, be sure to do the required research and to look for reviews to help cement the credibility of the firm.


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