FAQs When Borrowing From A Licensed Moneylender In Singapore

Written by 1AP Credit on July 5, 2022

When you’re in a bind and need some money quickly, it’s tempting to go to a moneylender for help.

But how can you be sure that the moneylender you choose is reliable and won’t take advantage of your situation?

It can be tough to know who to trust when borrowing money. You don’t want to end up dealing with a shady, unlicensed moneylender who might try to take advantage of your situation.

Read the money lender’s customer reviews to find out how they operate.

Next, use our handy guide on how to tell a reliable licensed moneylender apart from a loan shark. We’ll help you make an informed decision about who to borrow from so that you can avoid getting scammed.

What Are the Signs Of A Reliable Licensed Moneylender?

There are a few key things to look out for when trying to determine if a licensed moneylender is reliable or not. Here are some things to keep in mind:

1. A reliable licensed moneylender should have a physical office that you can visit.

This is important because it shows that the moneylender is legitimate and running a real business. Besides, MinLaw has made face-to-face verifications compulsory. Visit our shop near Tanjong Pagar MRT here.

A legal moneylender will never ask to meet you at night in a shady park or approve your loan via SMS.

2. The moneylender should be licensed by the Singapore government.

You can check this by asking to see their moneylender license or by searching for the moneylender’s name on the Ministry of Law’s website.

3. A reliable lender should have positive reviews online.

Simply typing in “moneylender near me” isn’t enough. You should also search for reviews of the moneylender on Google or other search engines to ensure they’re legit. View their customer reviews here.

4. A licensed moneylender should be transparent about their legal fees and interest rates.

They should also have a straightforward and easy-to-understand contract that you can read before you sign anything.

 

How Do I Tell If They Are A Loan Scam?

Latest loan scam: Scammers have been asking for borrowers’ Singpass details via WhatsApp or SMS. Next, they will ask the victims to transfer money for their loan to be approved or for administrative purposes. Victims realise the scam when they don’t get their loan as promised.

A legal money lender will never ask for your Singpass details over the phone, nor will they ask you to make any payment before disbursing your loan. The loan processing will be deducted when they disburse your loan to you.

There are other red flags that you should be aware of when trying to avoid loan scams:

1. The moneylender doesn’t have a physical office.

A trustworthy licensed moneylender will have a physical office in Singapore. They will also have a landline and you can easily contact them.

2. The moneylender isn’t licensed by the government.

Can’t find their name on MinLaw’s list of licensed moneylenders? Don’t be fooled if they say that the system is not updated. MinLaw updates their list monthly. The lack of a money lender license can’t simply be explained away as a system error, so don’t fall for that trap.

3. The moneylender has negative reviews online.

A loan shark or an unreliable moneylender will have mostly 1-star and 2-star reviews. By contrast, a reliable licensed moneylender like 1AP Capital has mostly 4- and 5-star reviews. Even so, we take all feedback very seriously and strive to improve our customers’ experience according to their needs.

4. The moneylender charges high fees or interest rates. Here are the legal money lender Singapore limits:

  • Monthly interest rates: 4% maximum
  • Late interest rates: 4% maximum for each late repayment
  • Late fee: $60 maximum
  • Administrative fee: A maximum of 10% of the principal amount
  • No other fees are allowed unless a court has decided them after a trial.

5. The moneylender isn’t transparent about their legal fees and interest rates.

A loan shark won’t discuss all their charges from the get-go, so you can quickly wake up with your loan being doubled overnight. Many Singaporeans have also experienced harassment or have been asked for four-figure late fees when they’ve just missed their payment by a day.

6. The moneylender has a complicated, confusing, or non-existent contract.

Ah Longs don’t have contracts because that wouldn’t be in their best interest. So, they try to wiggle out of this responsibility by handing you an incomplete/blank agreement to sign – or none at all. By contrast, a reliable licensed moneylender will always explain the terms of your contract thoroughly and patiently.

7. You notice ads.

We see ads for everything these days – on the street, on TV, and even on social media. So it may not surprise you to see ads for loans. However, that’s a red flag. A legal moneylender can’t use social media, flyers, or TV spots for advertising their business. And they certainly can’t send you spammy messages. Legal money lender Singapore ads are limited to:

  • Business directories
  • Consumer directories
  • The licensed moneylender’s website
  • The legal moneylender’s place of business (their physical shop)

Remember: Loan sharks are not the friend you want to have!

They use abusive language or behave in a threatening manner; they ask for your SingPass ID/password and retain any personal documents like NRIC cards or passports.

Besides, Ah Longs give out loans without following standard processes. For instance, many will approve your loan over the phone or in a text. That’s the first sign of a scam!

If you see any of these red flags, it’s best to avoid that moneylender altogether. There are many other reputable and reliable licensed moneylenders out there, so there’s no need to take the risk of dealing with a loan scam.

 

How To Borrow Safely From A Legal Moneylender?

With so many loan scams, one wrong step might cause you terrible repercussions.

If you’ve decided to borrow from a licensed moneylender, there are a few things you can do to ensure that you’re borrowing safely and responsibly. Here are some tips:

1. Only borrow what you need.

Don’t take out more than you can afford to repay because missing any installments snowballs your debt with late payment fees and interest rates. That only makes it harder to reimburse your loan in the future.

Besides, borrowing more than you can afford to repay means restricting your other essential expenses, such as utility bills or food charges. As a result, you can either decrease your life quality or get further into debt. Or both.

2. Ensure you understand the terms of your loan before you sign anything.

Read the contract carefully and ask questions if there’s anything you don’t understand. A good licensed moneylender will be patient enough to explain every single detail to you.

3. Keep up with your repayments.

Missing a payment can damage your credit score and make it more difficult to borrow in the future.

4. Contact your legal moneylender immediately if you’re having trouble making your repayments.

Don’t wait until you’re behind on payments to reach out for help. Your licensed moneylender will try to help you.

 

Borrowing From Licensed Moneylenders In Singapore Safely

Borrowing from a licensed moneylender can be a great way to get the financial assistance you need. Just make sure that you’re doing it safely and responsibly.

Avoiding loan sharks is only the first step, though.

The second is finding a reliable licensed moneylender that fits your needs.

1AP Capital can be that partner for you.

We customise all our financial options to your needs and lifestyle. We also tailor repayment plans to ensure all our customers can fit their instalments comfortably into their monthly budgets. And, you can get fast loan approval and disbursement legally, with due diligence, in just 24 hours.

Apply here.

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