The Moneylender’s Act specifies the regulations that moneylenders must adhere to, to operate legally in Singapore. To be a licensed moneylender, an applicant must be a citizen of Singapore or a permanent resident and have a good credit history.
Moneylenders must also be adequately insured and are subject to regular audits by the authorities. A news article reported a total of 189 people, between 12 and 78 years old, are being investigated for their involvement in unlicensed money lending activities in Singapore.
Here’s how the Moneylender’s Act regulate the licensed moneylenders in the country:
Interest Rates
Moneylenders can charge a maximum interest rate of 4% per month on loans.
It protects borrowers from excessive interest rates, which can lead to debt bondage.
Loan Terms
Moneylenders are not allowed to give loans that have terms of less than one month. They are not allowed to offer loans with terms that exceed 60 months.
The limit is in place to prevent moneylenders from trapping borrowers in a cycle of debt.
Loan Caps
The Moneylenders Act specifies the amount that money lenders can lend to each borrower:
- For unsecured loans (i.e., cash loans), individual borrowers are capped at $10,000 per loan and $20,000 per borrower within 12 months.
- For secured loans (for example, mortgages), the loan amount is capped at four times the value of the security offered.
Borrower Requirements
To protect borrowers from unscrupulous moneylenders, the Moneylenders Act requires that borrowers meet specific requirements before they can obtain a loan:
- Borrowers must be at least 21 years old to obtain a loan from a licensed moneylender.
- Licensed moneylenders must verify the employment status before making a loan and may not lend if they suspect that the borrower is unemployed.
- Moneylenders must also ensure that borrowers can afford to repay their loans before sanctioning the sum. It is done by assessing the borrower’s income and debt levels.
Collection Practices
You can find the list of licensed moneylenders in Singapore on the Ministry of Law website.
Moneylenders are not allowed to harass or threaten borrowers to recover overdue payments. They are also prohibited from seizing personal property or assets to repay loans.
Promotion of Loans
Moneylenders are not allowed to promote loans to the public through advertisement. It is done to prevent over-indebtedness and prevent moneylenders from taking advantage of borrowers who cannot repay their loans.
Loans with Multiple Agents
Moneylenders cannot work with more than one agent or acquirer to avoid collusion.
It prevents moneylenders from passing on costs to borrowers to increase agents’ profits.
Investigation of Moneylender Offenses
A list of offenses under the Moneylenders Act is shown below.
- Offenses for Agents of Licensed Moneylenders
- Offense to pay or agree to pay brokerage fee in respect of loans or credit transactions
- For agents, broking fees cannot exceed 1% per month
- Failure by licensees not responsible for acts done without their knowledge by agents or employees
- Offenses for Borrowers
- Agents/employees not personally liable for acts done without the knowledge of the licensee
Money lending offenses are compoundable offenses. Borrowers should seek assistance from a lawyer if they wish to pursue charges against moneylenders who have engaged in illegal collection practices.
The Moneylender’s Act regulates the activities of licensed moneylenders in Singapore.
The act is in place to protect borrowers from excessive interest rates and unscrupulous moneylenders.
How Can a Licensed Moneylender Help You Secure a Loan You Need?
A licensed moneylender can help you secure many loans – from personal loans to credit cards and even mortgages.
A moneylender will assess your income levels before determining what loan products are available for you. If you maintain a good credit history, your mortgage’s cost could be lower compared to someone with bad credit.
What Should You Know When Looking for a Licensed Moneylender in Singapore?
When looking for a licensed moneylender, it is essential to do your research. You should check the list of licensed moneylenders on the Registry of Moneylenders website and read up on the terms and conditions of each loan before making a decision.
It is essential to know that licensed moneylenders cannot advertise loans to the public.
So, be wary of any advertisements you may see for “easy” or “fast” loans – these could be from unlicensed moneylenders and may come with high-interest rates and other hidden charges.
You must remember that you should only borrow an amount that you can afford to repay and that you should meet the requirements set out by the Moneylenders Act.
Borrowers should be aware that they have recourse under the law if they experience harassment or abuse from moneylenders.
Most importantly, it is best to stay away from loan sharks. These unlicensed moneylenders often charge exorbitant interest rates and engage in illegal collection practices. It is advisable to always go to a licensed moneylender to avoid getting scammed if you need a loan.
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