FAQ
Frequently Asked Questions
Prior to a loan application from a licensed money lender, there are various things that you need to consider. First, you may seek for other alternatives. For instance, you may ask for financial assistance from Government agencies.
Aside from looking for other options, you must take in mind that getting a loan is a legal obligation. You must fully understand the terms of the loan contract. Failure to make timely payment can incur late fees and interest rates. You may end into a huge financial problem if you cannot manage well your repayments. It may become a financial burden not just for you but also to your family.
Effective on 1st October 2015, a lender can charge a monthly interest rate not exceeding 4%. This rate is applicable to all types of income earners and loan types (secured or unsecured).
On the other hand, late interest rate of up to 4% is applied for each month of late repayment. Loan interest rate and late interest is computed based on the amount of principal remaining.
Effective on 1st October 2015, licensed moneylenders are only allowed to apply the following fees and charges:
- Late repayment fee of up to $60 (for each month of late payment)
- An administrative fee of up to 10% of the principal loan
- Legal charges ordered by the court for moneylender’s successful claim for the loan recovery
Take note that the total charges which consist of interest, late fees and interests, and administrative fee must not exceed to the principal loan.
The best way to verify if a moneylender is a licensed one is by checking the list of Ministry of Law – Registry of Moneylenders. To see the list visit https://rom.mlaw.gov.sg.
Even if the lender is a licensed one, be aware of the following:
- Using abusive language and behaving in a threatening manner with you
- Asking your personal ID such as SingPass User ID and/or password
- Keep your NRIC Card or other personal documents such as driver’s licence, work permit, passport, employment pass, or ATM Card.
- Let you sign on a blank or incomplete Note of Contact
- Granting the loan without providing you the Note of Contract for the loan or failed to fully explain the terms and conditions
- Grant you the loan without following the right process (e.g. they may approve the loan via phone, SMS or email even without first receiving your application form and additional documents.)
- For no reason, they withhold any part of your principal loan amount
Take in mind that those practices are unacceptable. If you have ever experienced them, please report them to the Registry of Moneylenders. Prior to reporting, please prepare the lender’s business name, licence number, and contact information.
Upon granting of the loan, you must come personally to the registered office address of the lender. The licensed moneylender will do the following:
- Will conduct a face-to-face verification with the borrower’s identity against his original identity cards.
- Explains well the Note of Contract of the loan based on the language that you understand.
- Delivers the right principal amount of the loan, take note that a maximum of 10% principal loan will only be deducted as an upfront administrative fee.
As soon as you receive the loan, please be a responsible borrower and take note of the following:
- Repay the loan on time to avoid the late fees and interests.
- The moneylender must give you a dated and signed receipt for each repayment. Always check the receipt for your name, amount, date correctness.
- Receive a copy of your statement of account from the lender at least once every 6 months. Again, check for the correctness of the information.
- Always keep a copy of your statement of account and receipts. This will serve as documents and your payment’s evidence.
