From 1st October, 2015, there has been a change in the licensed money lender interest rate. The rate of interest is now 4% for each month along with no caps of income. The amount of the applied loan will depend on the borrower’s annual income along with the fee of administration. If you are looking for the licensed money lender interest rate online, you need to know certain facts. These facts are as stated by the Registry of Moneylenders.
Essential Facts of Licensed money lender interest rate
- Effective Interest rate of about 13% is for assured loans
- Effective Interest rate of about 20% is for uncertain loans like those of personal ones.
If the yearly income of a person is less than $30,000, then the aforesaid rate of interest will be capped. An authorized money lender will reveal to his or her clients about the Effective interest rate of the amount of loan in writings. However, it is important to note that the licensed money lender interest rate might differ from one another for their clients.
The effective rate of interest considers the amalgamate effect of the installment frequency for one year. This means that the Effective rate of interest displays the real borrowing cost of a period of one year.
However, if a person’s annual income is $30,000 or above it, then the aforesaid caps will not be pertinent to the person. There will be a personal agreement about the rate of interest between the borrower and the moneylender. Several licensed money lender interest rate has discounts for their clients if they are repeat ones. However, the repeat customer has to have a good credit history and rating to enjoy the discount.
Other rules and regulations about licensed money lender interest rate
The new rules regarding the licensed money lender interest rate on loans is subjected to various caps. They are like,
- an administrative fee will not be more than 10%,
- each month the interest rate will not be more than 4%,
- each month the late interest will not be more than 4%
- Per month late fee will not be more than S$60%
- Total cost of borrowing will not be more than 100% of loan principle.
These following caps will not be pertinent to the loans given to the business that was registered for about two years prior to granting of loan. At present, if a person earns less than S$20,000, they can take secured or assured loans for S$3,000 maximum. As per the Ministry of Law, the aim of the new rules is to protect the borrowers who have no choice other than going to money lenders.
The Advisory Committee of Money lending has made such recommendations on the licensed money lender interest rate, after which Government accepted it. According to the Association of Money lender in Singapore, the new regulations have created anxiety among the members. However, before signing a contract of loan, it is important first to research about the money lenders to know about the best options of cash loans.