Acquiring cash in times of need can be tough, especially if you need the money quickly. On the bright side, there are licensed private money lenders in Singapore who can quickly assist you with your financial needs. Although licensed lenders are legitimate and regulated businesses, many people still confuse them with loan sharks.
This, in turn, has affected the image of the entire legal money lending industry. Illegal money lenders have been around for decades, before credible licensed businesses even had the chance to establish themselves.
And contrary to popular belief, obtaining a loan is practical for a good number of situations. Additionally, the loan application process with a legal money lender is a safe and seamless process.
Authorised lenders are regulated financial institutions who provide various types of personal and business loans. Compared to banks, taking up a loan from a money lender can be simpler and quicker.
Furthermore, the increase in demand for loans has made it possible for licensed lenders to propagate. Case in point? There are over 150 of them operating throughout Singapore. This also creates an environment where people can obtain safe, accessible, and legal money lending services.
On the surface, getting a personal loan can seem complicated, but it’s actually not. As mentioned earlier on, the process is safe and simple. The only reason why money lending has a poor reputation among Singaporeans is because of the myths that people spread.
Legitimate lenders will not hesitate to provide proof that they are indeed licensed. However, in Singapore, there are still many loan sharks who prey on desperate and unknowing borrowers. This all happens despite the presence of licensed lenders. In this article, we’ll lay out the must-know facts and myths about licensed moneylending entities in Singapore:
Myth: The interest rates of licensed lenders are the same as the illegal ones, if not higher
One myth about licensed lenders is that their interest rates are sky-high. People tend to get easily intimidated by legal companies that have formal loan application processes, so they tend to approach the individuals who offer a less formal, unsecured loan.
The truth is, unlike illegal money lenders, licensed businesses in Singapore follow a strict ceiling for the interest rate they charge. To be exact, this is capped at 4% per month, no matter your loan amount and tenure.
When you obtain a loan from a licensed lender, rest assured that the interest rates and charges are fair. This applies to both secured and unsecured loans. Conversely, loan sharks may offer attractive interest rates, but include hidden fees and charges that are illegal under Singapore’s money lending regulations.
Fact: A licensed lender’s loan application process is quick and simple
In the digital age, it’s easy to apply for a loan whenever you need to. Although you’ll ultimately need to visit a licensed lender’s office to have your identity verified and sign off on the approved loan offer, you can easily reach out to any one of the best money lenders in Singapore via their website and submit your application first.
From there, you can easily compare between businesses and decide whose loan package best suits your needs. That saves you a tonne of time and effort, not to mention money because of the travelling costs incurred. You’ll only need to make a single trip to review the final loan offer, sign it, and receive your funds on the spot.
Additionally, more licensed lenders are incorporating Singpass into their application process. This allows you to provide multiple supporting details without manually submitting a soft or hard copy. Easy, right?
Myth: Licensed lenders only offer secured loans
Secured loans require you to put up collateral in order to get approved. However, licensed lenders do offer both secured and unsecured loans. When you speak with the company’s loan officers, they’ll recommend the right one based on your financial needs and situation.
If you’re wondering, the most common secured loans that people would take up are either housing loans or vehicle loans. Alternatively, unsecured loans do not require any form of collateral from you, consisting of personal loans, debt consolidation loans, and even renovation loans.
Fact: Licensed lenders in Singapore are transparent
Every single licensed lender in Singapore is strictly regulated by the Ministry of Law. Not only are there limits to the maximum interest rate they can charge per month, but also there are limits to late interest fees, late repayment penalties, and processing charges.
Furthermore, you’re required to review the loan offer with the licensed lender’s staff and actually sign off on it before it’s considered valid. The loan officer is required to answer any questions you might have regarding the offer, and the contract must clearly state every detail of the loan.
Transparency is a key advantage that licensed lenders have over their unlicensed counterparts. This gives borrowers peace of mind while ensuring that they are trustworthy.
Myth: A bad credit score will get your loan application rejected
One myth that’s been holding people back from taking up a loan is that a bad credit score will greatly affect their loan application. With a licensed lender, your credit score does factor into the loan package that’s offered to you, but will loan approval be affected if you’re applying for a loan with poor credit rating? The answer is no, it will not get your application rejected for the most part.
That being said, you will still need to prove that you’re a reliable borrower who will make your repayments on time. This is done when you provide your proof of income during the application process. If you’re drawing a stable income, it increases the odds of your loan getting approved despite a less than stellar credit rating.
Fact: Not all money lenders in Singapore are loan sharks
Sadly, loan sharks have existed for years in Singapore. However, prior research and lots of fact-checking with the lending entity you’re contacting allows you to verify a lender’s authenticity, such as through their money lender licence.
A licensed lender can immediately provide you with proof of legitimacy, such as its business registration number, licence number, or any other document which proves that they are regulated under the Ministry of Law.
Since licensed lenders are regulated by an official governing body, borrowers are protected from any kind of threat or harassment. Collateral is not even a requirement when applying for an unsecured loan.
Legal lenders in Singapore are confident in their legitimacy because they are strictly regulated. Any type of violation can be reported to the Ministry of Law and Registry of Moneylenders, and the relevant authorities will act swiftly.
Myth: Loans are only for emergencies
Some people think that legal lenders only approve loans for emergencies, but this is far from the truth. Licensed lenders offer a wide range of loans that help you ease your cash flow.
Take a renovation loan for instance, which helps you transform a large upfront payment into manageable monthly instalments. How about a study loan, which serves the same purpose but for your higher education fees instead.
Loans are indeed best obtained when you have an emergency, but they also come in handy to help you out with other financial needs in your life, including big-ticket expenses that improve the quality of your life.
Fact: It’s easy to repay a loan from a licensed lender
People assume that having debt is a death sentence. The truth is, if you take up a loan from a licensed lender, you can easily pay it off. Reputable companies practise good after-sales processes and repayments can be made conveniently via mobile banking applications.
Furthermore, you’ll receive both a hard and soft copy of your signed loan offer. This allows you to easily keep track of your repayment schedule and make additional copies as needed.
Myth: Licensed lenders are pushy
One persistent myth about licensed lenders would be their excessive and pushy marketing. In reality, licensed lenders would never push people to get a loan. The messages and emails you’re thinking of are from illegal money lenders or scammers.
Licensed lenders are only allowed to advertise in websites that belong to them, within and on the exterior of their business premises, and through business or consumer directories. Any advertisement that falls outside of these three platforms would be considered as flouting the rules. Naturally, this includes messages, emails and SMSes.
In conclusion
Now that you’re caught up on the facts and myths about licensed lenders, you can take up a loan from these regulated companies with full confidence whenever you find yourself in need of funds urgently. Do avoid getting caught up with loan sharks, even if you’re in desperate need of cash.
Remember, if you’re ever unsure whether a money lender you’re transacting with is licensed, you can easily search it up in the Registry of Moneylenders. Alternatively, you can request its staff members to show you the company’s licence number certificate, and other business details.
If you’re in need of a loan, particularly from a lender in the Eastern region of Singapore, UK Credit is a great choice! We’re a money lender in Bedok that’s only a 5-minute fully sheltered walk away from both Bedok MRT station and Bedok interchange. We’ve been in business since 2008 and offer a wide range of business and personal loans. Contact us here and our experienced loan executives will reach out to you with a personalised quote as soon as possible.
