Are you aware of the money lending rules of the Singapore that have been in the news lately? The section in the Singapore is going towards the drastic change and the regulatory body has changed the moneylender’s pattern. The pattern has changed altogether about how they will manage their borrowers. IPTO sees the regulation and licensing of pawnbrokers and moneylenders along with the other duties of administration.
So, IPRO assists the registrar of Pawnbrokers and Money Lenders in licensing and smoother working throughout. They also safeguard the interest of the borrowers to protect them from the faulty practices of moneylenders. They keep a check on money lenders to see that none of them are breaching the act of Money lenders.
Various Simplified MinLaw rules and recommendations:
- The borrowers are legally obliged to fulfill the contract made by the licensed money lender. So, in other words, do read all the terms and conditions before signing off the loan papers. And try to gain the maximum from the loan officers so that you do not face any kind of problem after signing up.
- Things about all, the fact priory only like loan obligations and current debt. And it will be very, much beneficial for you if you calculate the interest repayment and late fees too. It will help you in making your life simpler.
- The borrowers are also provided with the loan copy for their reference. The Moneylenders Act clearly says that you need to explain the borrowers the terms clearly in whichever language he understands.
- Do take a look on almost all the money lender, do not stop at one. Calculate the interest level of all the money lenders before settling on one. We are from Empire Global but do check others as well. And do check with our loan officers about the services that we can offer you.
How much we are allowed to borrow from Moneylenders:
Licensed Moneylender should always look upon to proceed with them. And they allowed the measures according to the below guidelines:
- Up to $3,000, if your annual income is less than $20,000;
- Up to 2 months’ income, if your annual income is $20,000 or more but less than $30,000;
- Up to 4 months’ income, if your annual income is $30,000 or more but less than $120,000; and
- Any amount, if your annual income is $120,000 or more.
What is the different interest rate that the Moneylenders can charge?
In your past the loans contracted between the dates 1st Jun 2012 and 30TH Sept 2015 the licensed moneylenders required to disclose the rates i.e. EIR. If a borrower’s annual income is more than 30,000$, then the money lenders can charge approx. 20% of EIR on any unsecured loans.
You can also visit the below-pasted link to calculate the respective EIR on your own as well since 1st June 2012.
These measures are to find out to calculate the respective EIR i.e. to calculate the effective interest rate. However, you should know that is your annual income is above 30,000 $ then the interest cap is not applicable to you. And these terms should be clear between the borrower and money lender.
However, with the new changes coming into effect from 1st October 2015. The maximum interest rates that money lenders can charge on any borrower is 4%. The interest rate will not change as per the annual income of the borrower or whether he is opting for secured or unsecured loans.
What are the different fees that money lenders can charge from the borrowers?
From the loans that are passed between 1st June 2012 and 30th September 2015, money lenders can charge the borrowers with 6 types of fees are those listed below:
- The Moneylenders can charge the borrowers for every late repayment of interest or principal.
- For every occasion, the loan contract terms can vary according to the request placed by borrower.
- For every dishonored cheques issued by the borrower.
- Various legal costs that will be incurred for the repayment of the loans.
- For early redemption of the loan or early termination of the contract.
- For each unsuccessful GIRO deduction from a bank account, as payment to the moneylender.
Any other fees are not enforceable by any money lenders part of the listed above.
With the effect and regulations of 1st October 2015, all kinds of money lenders are permitted to impose the below expenses and charges from the borrowers:
- They can charge you a fee that is, not exceeding 60$ a month of any late repayment.
- The fees cannot exceed 10% of the principal amount of the loan once the loan is guaranteed
- Moreover, the legal costs for the successful claim for the repayment of the loan will also be heard by the money lender itself. The total charges that the borrower can pay to the money lender for the late repayment, interest, administrative costs, and late interest cannot exceed a specific amount of the loan. The specific amount will be the principal of the loan.
Summary of the various aftereffects of the new Moneylending Rules:
Only the licensed Money lenders will be taken forward by the MinLaw, this will help in giving better structure of the sector. And hopefully, this will also help in making a good name in the sector as well. With the government imposing the hard rules on unlicensed moneylender’s and the other errant licensed moneylenders, the borrowers will also understand their working. These rules will be in the interest of the borrowers and they will also come to know through them about how the licensed money lenders can be beneficial for you.
Maybe going forward the number of licensed money lenders will decrease due to adherence of new rules. Or due to their unavailability for adapting to the new money lending rules as their existing business model ought to change. Do identify only the licensed money lenders for better working and rules.