Singapore is a potential country, bearing opportunities in abundance. However, it is also a bit expensive. It can be challenging to pay off all your debts and obligations without getting financial help. Not to mention, medical bills, wedding expenses, travel spend, operational expenses, university fees, and other emergencies can break the bank.
If there isn’t enough money in the savings to cover these urgent obligations, your only choice is to apply for a personal loan from a Singaporean credit institution. Banks typically have a more lengthy and strict approval process, which may not be useful if you need immediate cash. Therefore, moneylenders are quite prevalent in Singapore.
In this blog, we present a comprehensive guide to help you understand how you can get a loan in Singapore.
How to Borrow Personal Loans from Moneylenders in Singapore?
Borrowing Personal Loans from Licensed Money Lenders
Licensed money lenders provide loans to Singaporeans holding valid employment permits, permanent residents, and immigrants living in Singapore. They have registered businesses, which hold approval from the Ministry of Law and obey the Moneylenders Act as well as Ministry set norms and regulations.
How Do We Identify If a Moneylender in Singapore is Licensed?
Make a list of the moneylenders you want to borrow from, and then take the time to check their legality before requesting a loan. It is highly recommended that you go to the lender’s website and verify it thoroughly. There are various cases where scammers use borrowers’ personal information for illegal purposes by portraying themselves as licensed moneylenders.
It is forbidden in Singapore for a licensed moneylender to make loan solicitations over the phone, through text messaging, or on social media. They must follow the rules established by the Ministry of Law and avoid activities prohibited for a licensed moneylender.
A Singaporean licensed moneylender is not allowed to engage in the following activities:
- Find your SingPass ID or password by phishing.
- Not returning your passport, NRIC, and other crucial personal identity documents.
- Demanding the sign on an incomplete or blank loan agreement.
- Approving your loan without disclosing the conditions in detail.
- Providing loans over the phone or text messages.
So if someone contrasts any of these parameters, think twice before applying for a loan from them or even better avoid dealing with them.
Ensure the Licensed Money Lender Shares Their Physical Address
If a moneylender has a physical business address, you can consider them licensed. But it is crucial to do a physical verification.
Therefore, if you are receiving personal loan approval without visiting a moneylender’s physical location, you may be dealing with a loan shark.
Additionally, receiving a loan and agreeing to meet up in an unidentified location raises red flags.
Make Sure You Receive the Required Documents
While submitting a loan application, the lender asks you to provide documents to verify your identity. Remember that licensed moneylenders always return your NRIC and other personal identity documents once they review them. Do not leave your original documents with them, even if they ask. In case they ask, it is a red flag.
You’ll also receive a loan contract from moneylenders. They ask you to go through each term in the loan contract and explain it to you before signing it. All essential info, such as the interest rate, the terms of repayment, and the repayment period, should be included in the loan contract.
Licensed money lenders aren’t allowed to advertise themselves on social media. They are only permitted to display adverts on their website, business or consumer directories, or their registered place of business. So if some moneylender is advertising otherwise, they may be involved in some illegal activities.
Elevated Interest Rates
The Ministry of Law’s approved maximum interest rate is 48% per year or 4% monthly. Both the nominal interest rate (loan amount) and the late interest rate are subject to this cap. Take into account that the late interest rates apply to the amount that is past due and not the entire amount that is still owed but not yet due.
Beware of excessively high-interest rates. If a moneylender is quoting freakishly high charges, it’s probably an unlicensed moneylender or a loan shark. Both of them are a no go!
What You Must Do Before Borrowing a Loan From a Singapore Licensed Moneylender?
Choose the Type of Loan You Require from a Licensed Moneylender
Before applying for a personal loan from a moneylender in Singapore, assess your finances to determine the type of loan you should pick. Ask yourself: Is your situation more of a minor or severe emergency?
Personal loans are the best option for minor emergencies that just need a small amount of money. They are also appropriate for settling bills, paying credit card debt, or remodelling your property.
Request Your Credit Report
To get a better understanding of your credit score, you can purchase a credit report from the Moneylenders Credit Bureau (MLCB) or the Credit Bureau Singapore (CBS).
Some licensed moneylenders in Singapore refuse to accept loans to borrowers with poor credit scores, even though many do not verify a borrower’s credit report, particularly for personal loans.
If you have a poor credit rating, it’s best to improve your credit score before applying for a loan.
Make Sure You’re Eligible
Verify your eligibility for the type of loan you are borrowing. Remember that the maximum loan amount you can receive from registered moneylenders in Singapore depends on your annual income and citizenship.
Before Visiting a Licensed Moneylender Office, Gather All Your Necessary Documents
Gather all the documentation you’ll need to apply for the loan. It consists of:
- NRIC as evidence of income and employment
- Credit score at the now and previous CPF statements
- Residency proof
- A lease agreement, employment letter, work permit, and bank statements (for foreigners).
- Licensed moneylenders typically approve unsecured loans, such as personal loans, based on your annual income rather than your credit history. For this reason, lenders typically need payslips to check your capacity to repay the loan.
Are You Looking to Get a Loan from a Reputable, Licensed Money Lender in Singapore?
At SU Credit Pte Ltd, we believe that unforeseen financial obstacles should never prevent you from achieving your goals. We provide our customers with excellent service and hassle-free loans. Contact us, and our experts will address all your needs with our precisely crafted loan packages.