Are you on the verge of giving up your search for a legal loan in Singapore? We’ve got you. Let’s face it: finding a legal money lender in Singapore can be an extreme sport. Not only do we have uncountable loan sharks masquerading as legit lenders, but information on the best loans is also quite scarce. Consequently, many Singaporeans have trouble distinguishing between legit lending businesses and illegal ones. Yet, the consequences of using an illegal lender to obtain a personal loan can be dire. For instance, many of them use violent and unscrupulous means to collect their repayments. To avoid finding yourself in such a scenario, use these five tips for distinguishing legal loans in Singapore.
1. A legal Loan Business Should Be Registered with the Ministry of Law
If you’re seeking short-term loans in Singapore for the first time, finding a licensed lender is a good place to start. In Singapore, any lender is required to register their details with the Ministry of Law. This helps with easy tracing in case any issues arise with their operations. But you’re probably asking yourself, “how can I verify that a lender is registered?”
Well, the Ministry of Law plasters the names and details of all legal lenders on their website. Once you identify a lending service that ignites your interest, your first step should be scouring through the Ministry of Law website to verify their legal status. You could even pick a lender from the list of licensed moneylenders on the Ministry of Law’s website.
2. Legal loan Services Adhere to Legal Advertising Channels
Are your eyes sore from skimming through a ton of personal loan Ads? Chances are, those advertisements are from illegal lenders. Singapore has set in place uptight commercial regulations that disallow lending services from aggressive advertising. Specifically, the advertising platforms that are entirely off-limits for licensed lenders include:
- Social media platforms
- Phone SMS or calls
- Email marketing and internet Ads
- Marketing at events
- Door to door lawn hawking
The best way to identify a legal loan service in Singapore is to check the methods they use to sell to you. Licensed lenders will use customer directories, put adverts on their website or inside their business premises.
3. Legal lenders Don’t ask for your Singpass Details Over the Phone
Here’s one thing you should know about illegal loan businesses: they antagonistically ward off in-person meetings. Loan sharks will promise you a swift, unproblematic loan process that doesn’t require you to see their face. Treat this as a red flag.
Anyone who is offering you a genuine loan in Singapore will skip sealing the deal on the phone. This means that they’ll avoid asking for crucial information via phone, especially your Sing pass details. Instead, they’ll invite you to their physical office and take it from there. As a rule of thumb, avoid sharing any personal contact details over the phone. Such information can include your ATM card, Sing pass details, or bank account information.
4. Legal Money lenders Will Provide a Contract in a Familiar Language
When it comes to acquiring the best loan in Singapore, paperwork is paramount. A loan contract should include adequate information about the agreement you’re getting into. Interest rates, repayment window, contact address, and additional fees should be consolidated into one document. If you run into a lending service that does not have its terms and conditions in written form, tread carefully. More so, if they present you with a blank document and ask for your signature, this is definitely not a legal loan business.
5. Licensed moneylenders charge average rates
It should be a no-brainer that any website that’s charging you exorbitant rates for short-term loans is illegal. As per Singapore law, lenders are prohibited from charging an interest rate above 4% per month. Yet, loan sharks have a tendency of eclipsing these set limits, charging up to 30% per month. Also, look out for additional loan fees. Conventionally, legal loans in Singapore should attract only three fees, which include:
- Late payment and interest fees in the case of defaulting or delayed payment. This should not exceed $60 per month.
- Upfront service fees
- Legal fees in the event of a court dispute.