There are dozens of reasons why people in Singapore need to borrow cash at some point in their lives, whether it’s for a major life event, say to cover the cost of a wedding, to pay for something practical, like a car or a new kitchen, or perhaps as a solution to dealing with existing debt – taking a loan with lower interest to pay off other, higher-interest debt, acquired by means of things like credit cards.
Whatever the motivation, the concept of borrowing money isn’t always a bad thing – but what does matter is that the loan you apply for and take up is reasonable and fair, and this is where things tend to go wrong.
For all the decent places to borrow money from there are others who are not as reputable, so it’s really important that before you do anything official you take the time to do plenty of research.
In late 2015 Singapore’s Ministry of Law imposed a set of strict rules to control the money lending industry and offer some level of protection to those who make use of them. In brief, these include:
Caps on interest rates of 4% maximum per month, with compound interest outlawed.
Admin fees (which cannot be more than 10% of the initial total borrowed) can only be applied to the loan itself and must be added to the amount borrowed as soon as it is approved.
Late fee payments are subject to a maximum $60 fee.
All fees (including initial admin/set up, total interest charged and any late payment fees) combined should never total more than the original amount borrowed.
Moneylenders who break any of these rules should be reported to the Ministry of Law.
What to look for in a decent moneylender.
It makes sense to approach finding a decent money lender the same way you would any other major decision – by doing research, asking around, checking unbiased opinions (through reviews), and doing your own checking that all is what it seems.
This means looking at:
The moneylender’s license
They should hold an official government license which allows them to offer this service. This is your proof that the company meets government requirements.
The terms and conditions a moneylender is offering
Read this carefully as it is a legally binding agreement, (so long as it is written within the parameters of the law.) The repayment schedule agreed on should be clearly understandable on this document.
Their fee scale
These are one of the easiest things to compare, and like some areas of business and commerce were going cheap and low can lead to disappointment, this can also be the case when it comes to moneylending fees. Of course, low numbers are good, but be careful that they are not outweighed by higher than usual charges for other elements of the service.
Look at sources like Loan Street for in-depth reviews of particular moneylenders – a great resource for those who are unable to do all the leg work themselves for some reason.