6 Reasons To Borrow Money From An Authorised Lender In Singapore

The popularity of local money lenders in Singapore is soaring. However, are these lenders dependable and legit? The answer is YES. There are many benefits of using a legal lender to obtain an instant loan, including accessibility, affordability, and loan security. However, before deciding on which lender to borrow from, keep these factors in mind to choose the right moneylending company.

A legal lender can provide the financial assistance you need, whether it’s because you’ve reached a tough spot in your business, or just need some quick cash for an emergency. In fact, to make it even more convincing, here are six reasons to reach out to a licensed money lender when you’re looking to borrow money in Singapore.

They welcome foreign borrowers

Banks in Singapore tend to exclude foreign money borrowers, especially those who fall under the lower income group. As a foreigner, your chances of receiving an instant loan from a local bank are pretty slim — this is true if you earn an annual income that falls below $40,000.

This is because banks view your financial stability to be highly volatile, hence imposing doubts on your ability to pay. But fortunately, licensed lenders in Singapore have their doors wide open for financially stranded foreigners. Most personal loan companies have specific loan classifications to suit anyone who is not a citizen. The basic requirements for foreigners to qualify for personal loans in Singapore include:

• A full-time job
• A valid proof of identity
• A valid work pass
• Proof of income for the last 3 months
• Proof of address

They don’t practice harassment tactics

Ever had a bad experience with loan sharks? Thanks to licensed money lenders, you no longer have to worry about rude, abusive, and violent debt recollection experiences.

Licensed lenders must carry out their activities with utmost professionalism and demeanor. For instance, a legal lender is not allowed to hurl insults and employ harassment tactics to pressure their money borrowers when collecting their payments (or at any point in time).

If you’re unable to repay your loan on time, all you need to do is contact the loan company. A lawful and understanding legal money lender will do their best to help you adjust your repayment plan.

The borrowing process is much faster

Before the inception of licensed personal loan companies, money borrowers would have endured lengthy and rigorous processes to acquire loans. A typical borrowing process would involve seeking loan guarantors, presenting a suitable asset as collateral, and signing an endless list of documents.

Fast forward to today’s day and age, licensed lenders have made it much easier to borrow money in Singapore. The review process, especially document verification, is smoother and faster; hence it is very possible to receive instant cash within a day!

“I need urgent money” — a phrase many of us have thought about before, can now be realised thanks to much quicker loan solutions through licensed lenders.

They can’t go against the loan terms

Thanks to the regulatory body that governs them, licensed lenders must conduct business with ultimate integrity. This means it’s illegal for them to tamper with the loan contract once it’s signed.

Also, Singapore’s government has placed a cap on the maximum interest rate that can be charged. So while this interest rate is bound to vary depending on specific individual factors, it should not surpass 4% per month or 48% per annum.

If and when a loan official tries to force upon you a loan contract that contradicts what you had initially signed, you can call 1800-722-6688 — a special hotline set aside by the Police and National Crime Prevention Council for victims to report crime-related information.

They have a physical business address

If you have doubts about a licensed lender in Singapore, you can always visit their physical office for further clarifications. Legal loan companies must have their borrowers sign off on the loan contracts physically in person. This makes it much easier to track down the loan officials in case you feel like it’s a scam. Physical presence also reinforces the credibility of any lender and sets them apart from loan sharks.

The Registry of Moneylenders regulates them

Another reason to borrow money from a licensed money lender is they don’t operate independently. The Registry of Moneylenders acts as a watchdog that defines the scope of operation for lending businesses.

As a result, you’re assured of the government’s protection if anything goes wrong. It doesn’t matter what your income status is, where you work, or whether you’re a citizen or a foreigner, any unfair treatment from a licensed lender can be investigated or battled out in court. After all, signed loan contracts are mutually and legally binding!

Due to the strict government regulations, you are unlikely to run into any legal issues with licensed lenders in Singapore.

Bonus: 4 Tips To Borrow Money Safely From An Authorised Money Lender

Tip 1: Find a licensed lender in Singapore

Before approaching a money lender, the most important thing you have to do is make sure you are dealing with a licensed lender. The way to determine that is by browsing a list of licensed lenders on the Ministry of Law’s website and verifying your choice. Registered money lenders in Singapore have to abide by regulations set forth by the Ministry of Law that protects both the money borrower and lender. If you are unsure, you can always refer to the FAQ list or contact them for enquiries.

Tip 2: Identify the right loans that match your budget

When you apply for a loan, always determine the purpose and need for it. Make a plan of how many loans you need, how much you need and when you need them. Personal loans are a flexible and accessible option for people looking to fund various purposes such as paying off high-interest credit card bills, medical expenses, and so on. Identifying the right loans can help you stay objective and use them wisely to pay off your existing debts or to bridge a temporary financial gap.

On top of that, you will need to calculate your monthly budget to see what you can actually afford. While personal loans are commonly packaged with low-interest rates, your budget will help determine how much you can borrow within your means and if you can repay them on time. The smaller your loan and the shorter your repayment period, the less interest you have to pay. Understanding this simple tip can help you avoid taking on a larger loan and staying in debt for a longer period.

Tip 3: What a registered lender must inform you before granting a loan

Before approving loans, the money lender is required to inform the borrower in writing, the full terms of the loan, including:

• Nominal interest rates
• Late interest charges
• Other permitted fees
• Instalment details, especially in cases where there is a fixed repayment period agreement between both parties, also known as a term loan

Tip 4: Choose a licensed lender you can trust

Now that you know the types of loans you need and the budget you have, it is time to research quotes from different money lenders. One thing you should look out for when discussing loan terms is the interest rate*. Based on the Moneylenders Act, a legal lender in Singapore can only charge a maximum interest rate of 4% monthly as per the borrowed loan amount or late interest from a delayed payment.

*Calculation of the interest charges should be done according to the monthly outstanding balance of the principal loan amount remaining after minusing off the payments done.

For instance, if your loan amount is $20,000 and you have already paid $10,000, then the 4% interest rate should only be computed for the remaining $10,000.

A legal lender can also charge other fees like late fees or legal charges incurred to recover loans if the borrower is unable to make repayment.

Do look out for some shady practices that a licensed lender in Singapore is not allowed to engage in:

• Using abusive or threatening language
• Fishing for your SingPass ID or password
• Failing to return your important personal identification documents such as NRIC and passport
• Asking you to sign a blank or incomplete contract for the loan
• Approving your loan without explaining the terms in detail
• Failing to provide you with a copy of your loan contract
• Soliciting loans via text messages and phone calls

Should you borrow money from a licensed lender in Singapore?

Although there are a few options to consider when you need urgent money, licensed money lenders are still one of the best sources to borrow money from. For starters, they are thoroughly legal.

Feel free to talk to Galaxy Credit, a licensed Ang Mo Kio money lender, about your financial needs. From payday loans, study loans, to wedding loans — we offer different loans for different purposes. Simply get in touch with us and our friendly loan officer will provide assistance to you in a jiffy!

About the Author

With over 5,756 5-star Google reviews and counting since our inception in 2010, Galaxy Credit is more than well-equipped to share our insights on all aspects of loans, both through the content we publish and in conversations with borrowers.