For those who do not know much about private moneylenders in Singapore, common misconceptions of them include unreliability and costly interests. However, these myths are far from the truth. Authorised moneylenders in Singapore are regulated by the Ministry of Law’s Registry of Moneylenders, which means their enterprises are completely legal and legitimate. Moreover, some of the best licensed moneylenders offer rates that are cheaper than your local bank. These common myths about moneylenders may deter many from approaching one even if they are in dire need of some cash.
Read on as we debunk the five myths about licensed moneylenders in Singapore and how they may actually be the better choice for getting a loan.
1. Moneylenders are illegal and not trustworthy
Infamously affiliated with ‘Ah Longs’, also known as loan sharks, licensed moneylender are a far cry from these illegal organisations. As mentioned before, all licensed moneylenders are monitored by lawful ministries in Singapore and have to maintain a high standing and credibility with their clients. You can differentiate legal moneylenders from illegal ones through a couple of identifying points. For example, legal moneylenders in Singapore will always require proper paperwork and appointments before offering a loan while illegal moneylenders prefer online transactions and usually refuse to meet in person. With licensed moneylenders closely following the strict rules authorised by the ministry, you do not ever have to worry that taking a loan from these moneylenders in Singapore is illegitimate and illegal.
2. Moneylenders offer higher interest rates compared to local banks
The unreasonable interest rates of moneylenders may be the most misjudged myth of them all. Being an authorised enterprise under Singapore law, their interest rates are also audited to prevent unfair increases in prices. According to Singapore’s law, licensed moneylenders can only charge a maximum interest of 4% per month. Moreover, with many moneylenders in the market, they have to maintain competitive prices that are attractive and affordable. With some simple research, you can find the best licensed moneylender that caters to your needs. In comparison, bank loans can change their interest rates annually resulting in harder financial planning in the future.
3. There are hidden fees included when loaning from moneylenders
Loans that are not taken from established banks are seen as misleading or ambiguous when it comes to the breakdown of their fees. On the flipside, authorised moneylenders in Singapore have licensed loan experts that meet with each of their clients to go over their financial needs. This would mean drawing up a loan that suits your financial capabilities and not one that exceeds your capacity. Some licensed moneylenders also do not have a minimum loan amount, unlike banks, so that you can avoid taking a loan amount higher than you need. With every authorised transaction, paperwork and a breakdown of all the costs will be shared, allowing you to go through the various charges before collecting your loan.
4. Moneylenders only offer personal loans
While personal loans are the most popular type of loan to get, moneylenders in Singapore are definitely not limited to it. Instead, they offer loans for all types of situations and needs such as medical, business, study and even wedding loans. If you need quick cash or are planning for the long term, licensed moneylenders have a whole range of options for you. Contrary to popular belief, authorised moneylenders also provide both secured and unsecured loans. Similar to bank loans, your loan amount is usually dependent on your regular income.
5. Moneylenders will harass you for repayment
Loan sharks are known for vandalising your homes and harassing your loved ones when chasing for repayments. Fortunately, it is illegal for private moneylenders in Singapore to do the same and they will never intimidate using violence or damage your belongings. Instead, if you are struggling to pay off your debt, moneylenders are open to negotiating the repayment terms that are within your financial means. This would include proposing a new repayment plan or you could also have a repayment installment plan drawn up to come to a mutual agreement. A lot of the time, moneylenders have affordable and flexible loan repayment options that allow you to manage your finances efficiently.