This is the one change that will have the most impact in Singapore. The introduction of a cap on loans offered by moneylenders to borrowers. The current practice lets each legal moneylender hold a loan limit. But only for each borrower. But each borrower may borrow from several moneylenders.
This new practice which was planned on Nov 6 in Parliament. It is aimed at imposing a collective loan limit on each person. Therefore, limiting the sum amount that borrowers can take out.
For instance, the planned loan cap dictates that a borrower making under $20,000 yearly. They can get S$3,000 from all accredited moneylenders combined. For those who earn a salary of $20,000 and above a year. They can borrow 6 times the monthly wages from all moneylenders.
Before issuing a borrower with a loan. Moneylenders are now obligated to get credit records. This is will be obtained from Moneylender’s Bureau (MLCB). This is for checking whether the borrower has gone past their loan limits. You can acquire the reports online (50cents each report). Moneylenders should update the Moneylender Bureau. That is after each personal loan is given.
Also, remember: This cap will only apply to Singaporeans and permanent residents.
Regulative Framework for Moneylenders
From this, a new control structure will get established. This will allow the MLCB to enforce rules on moneylenders. This with aim of safeguarding borrowers’ data. With this, they aim to enhance control of the industry.
New rules, will mean changes in borrowing mentality. The changes will help prevent Singaporeans from over-borrowing. Nonetheless, those with serious outstanding debts. They might end-up dealing with unlicensed moneylenders.
Regulation in Moneylenders Company Profile
This will also affect moneylenders in more ways than one. They will need to get approval from the Registrar. This is before engaging or employing any assistants. Such an approval is necessary before increasing shares or even making anyone a key shareholder.
This move will permit the Registrar to reject approvals. That is for shareholders or loan officers. This is when they are considered to be “unsavoury”. Also for those who have had previous sentences. More so in engaging in unlicensed lending.
Moneylenders will now be dealt with as companies. They will have to submit yearly audited accounts to the Moneylenders’ Registry. This will change the lending industry. Also, it will enhance them being answerable as well as transparency. Over two-thirds of the 160, existing legal moneylenders. They are certified as companies.
Although the new Bill is not approved as yet, the upcoming possible changes are will disrupt many, especially the lending industry.
What It Means For You
Before you visit a moneylender, look at other choices for funding. This may include various financial aid schemes. That is provided by different Government agencies. Please contact the agencies for further details on their funding schemes.
According to the law, you are supposed to meet your loan agreement. This is when you take out a loan from accredited moneylenders.
Moneylenders are by law expected to explain loan terms to borrowers. They have to use easy to understand language. You should also be given a copy of the personal loan agreement. Ensure that you fully understand the contract terms. Also look at the payment plan. Take note of the rates charged and all other applicable fees.
Consider looking around for various moneylenders. Search for one with most fitting terms. Do not be in a hurry to take on the loan. Only after you are satisfied with the loan conditions.
See if you can keep to the contract terms. Look at your pay and financial engagements. Then borrow an amount that you need. That you can repay comfortably. Take note that when you are not able to meet the loan terms. The late repayment charges and interest costs could be a strain. This is financially both for your kin and yourself.
Assess carefully before accepting any loan contractual terms. More so those that allow moneylenders to place a caveat. Especially on any sale yields from your holdings. This in-case you fail to pay off your loan. Having a caveat placed on the property. It then means you cannot sell that property. Not without settling first the loan amount in full.
One key thing to keep in mind is to only deal with licensed lenders. Do your research and confirm that their license is valid. Do all the due diligence to ensure that the lender is registered with the authorities. Look also for a lender who has been in the industry for a long time. This means they have gained a lot of experience overtime.
Why Deal With Licensed Moneylenders
You need basic documents for you to request for loans. It is very easy to collect and submit these documents. Thus making it is very good for borrowers. These include NRIC Card, tax statements, and the CPF statement.
Tailor-made loan deals
When you need a business, payday, foreigner and personal loan. The legal moneylenders have the suitable package. It will be tailor-made for your specific financial needs. With this, you can then choose the ideal payment plan. Therefore, you are let to choose the amount to repay monthly. This needs to be an amount that feels comfortable for you to contribute.
Licensed lenders in Singapore, are more flexible. That is when they are compared to banks. The moneylender’s loan conditions and terms can be reviewed.
Legal moneylenders are perceptive of their customers. They understand a borrower’s financial commitments. For this reason. Most moneylenders have an easy application and approval processes. They even provide you with the option of submitting online applications. This means you save time and also get your loan cash fast.
No security or credit report necessary
It is advisable that you deal with licensed moneylenders. They do not require borrowers to present collateral. Neither is your credit report required to get a loan. Often they will consider your ability to repay the loan at present. Thus making it possible for more Singaporeans to acquire loans.