Taking out a loan in Singapore is very easy. This is because you do not have to get a loan only from banking institutions. There are many money lender singapore available within the country that you are now able to approach at any time you are in need of a loan. Nonetheless, it is especially important for you to make sure that your moneylender is accredited by Singapore’s Law Ministry.
This is for the purpose of helping you avoid getting into more serious problems. In addition, it suggested that you take time to care the different interest rates and terms being offered by the money lenders. This way you will better able to choose the loans type that will meet your financial requirements.
Do make sure that you at all times take out a loan from a licensed moneylender who lets you pay off your loan with ease. This means your money lender should not pressurize you in any way or even make sudden changes to the loan agreement.
Before you can accept a loan and sign the loan contract, be certain you understand the terms the agreement requires of you. It is important for you to realize that once you have signed the contract, the contract is binding for you and your lender. And a failure of either of the party to honour their part of the agreement, you can be prosecuted by law.
Therefore, ensure you make your repayments on time and should there be an issue that would make you not make your payments, always talk to your moneylender to adjust for you your repayment terms.
Protection From MAS
The government knows that there are a few licensed moneylenders who are capable of taking advantage of worried borrowers. This they do by charging them really high rates of interest on their loans. In order to ensure that the borrowers are protected the Singaporean government has put in place regulatory measures for the moneylenders to follow. Since the beginning of October 2015, it is illegal for authorized moneylenders to charge interest that is above 4% each month. This regulation applies to personal loans in spite of them being unsecured or secured.
In situations whereby a borrower fails to make their loan payments on schedule, no licensed moneylender permitted to charge fees that exceed 4% for every month the loan amount is overdue. Simply put, all loans taken out from authorized moneylenders in Singapore are capped at a rate of 4% each month irrespective of the current situation. This ensures that no borrower is overcharged or is protected by law in case there is a breach of this regulatory law by a moneylender.
How Interest Is Calculated
The moneylender regulation requires that the rates of interests charged on the money taken out from a legal moneylender need to be calculated using the reducing balance method. In other words, this implies that the calculations of the rates of interest to charge on a moneylender personal loan has to be worked out using the principal outstanding amount after the paid figure of the months preceding has been deducted from the original loan amount issued in form of a loan.
For example, let’s look at a situation whereby borrower X has taken out a loan amount of $20000 and to date has paid off $15000 during the preceding months. Therefore, the interest rate for the present month needs to be calculated on the outstanding $5000, which will now be treated as the current principal.
In Singapore, it is against the law for a licensed moneylender to charge any interest on the remaining loan before it reaches its due date. This is one very significant aspect you need to think about as a borrower when you still have some overdue loan amount. For example, if an individual takes out a personal loan of $20000 from an accredited moneylender and yet he fails to repay his first instalment totalling $4000 on schedule, the moneylender is only allowed to charge interest on the $4000 amount and not the outstanding $16000. The reason for this is the due date for the outstanding $16000 amount has not yet reached. Therefore, this amount cannot draw any interest to itself as yet.
In accordance with the Singaporean Law Ministry, the highest fee that may be charged on a borrower’s late payments is $60. In addition to this, the administrative fees that should be charged on a personal loan approved are not supposed to go over 10 percent of the loan amount.
On the other hand, there is no rule that calls for licensed moneylenders in Singapore to charge borrowers a 4% interest on the loan money they have borrowed. This is a cap interest rate laid down by the Singaporean government to help protect the wellbeing of Singaporean borrowers.
It is, as a result, the responsibility of the borrowers to make comparisons between several moneylenders as well as negotiate for a much lower interest rate for their loan.
The wonderful news is that the competition among Singapore’s licensed moneylenders is high. For this reason, some moneylenders charge interests as low as 2 % for each month. Even then, low-interest rates need not be a reason for borrowers to shop for moneylender personal loans blindly. They also need to look at the other important factors before selecting the most fitting licensed moneylender. Some these other factors you need to carefully consider include things like the loan terms and conditions as well as whether the loan addresses your financial requirements.
Singaporeans are spoilt for choice when it comes to accessing loans. This is because banks are not the only ones that issue loans. There are many moneylenders available within the country that you are now able to approach at any time you are in need of a loan. In order to ensure that the borrowers are protected, the government has put in place regulatory measures for the moneylenders to follow since the beginning of October 2015. The moneylender regulation requires that the rates of interests charged on the money taken out from a legal moneylender need to be calculated using the reducing balance method.