r2d logo
Apply Online
r2d logo
Apply Online
5 Myths of Licensed Money Lenders in Singapore, Debunked

5 Myths of Licensed Money Lenders in Singapore, Debunked

Man filling out a loan application form on a laptop
Man filling out a loan application form on a laptop

Quick Jump To

Mention the word “money lender”, and many people imagine a bunch of hot-blooded youngsters who hound families and demand exorbitant payments. That couldn’t be further from the truth with licensed money lenders. In this period where cash is tight and people seek additional funds for payments and purchases, we debunk 5 myths of licensed money lenders, showing how they are a legitimate option when applying for legal loans.

1. They offer unreasonable interest rates.

Many people avoid money lenders due to the perception of unreasonably high interest rates. In reality, since 2015, Singapore’s law dictates that licensed money lenders can only charge a maximum of 4% interest per month, preventing borrowers from being caught in a cycle of unreasonable interest payments.

The market also ensures that money lenders compete against each other to offer competitive prices, allowing borrowers to benefit from faster approval and more lenient repayment terms. On top of that, the internet has made it easy to compare various legal money lenders, letting you pick the one that offers you the best rates for your specific loan needs. 

2. They are unregulated.

Contrary to popular belief, Singapore has stringent regulations on loan services. Every legal money lender has to apply for a licence, go through various checks, and be certified for good conduct before commencing operations. Money lenders are also expected to maintain their reputation and honesty before they can renew their licence.

With the government providing an official list of licensed money lenders, one way to get peace of mind is to ensure that your chosen money lender is on that list before taking a loan from them.

3. They are inflexible.

Money lenders don’t just offer one-size-fits-all monetary loans at a fixed interest rate. In actual fact, just like banks, licensed money lenders offer a wide variety of loans at different rates and repayment schemes for their clients.

From payday loans and wedding loans to student loans, it’s easy to find a loan for each person’s unique needs. Licensed money lenders also offer various payment plans and affordable interest rates.

4. They have many hidden charges.

Another concern prospective borrowers have is that money lenders may not be transparent, and they may end up incurring many additional costs on top of the interest, which can potentially hurt borrowers in the long-run.

However, if you’re late in your repayment, by law, licensed money lenders in Singapore can only charge three types of fees:

  • A maximum of $60 as a late penalty fee for each month’s late repayment.
  • Administrative fees that are capped at 10% of the loan’s principal.
  • Court-ordered legal fees for legal action to recover a defaulted loan.

 
Do check that your money lender does not go beyond these and charge you unfair rates and fees.

5. They require a good credit rating.

While banks demand exhaustive background checks and insist on a solid credit rating before approving a loan, licensed money lenders are far more relaxed in this area, being willing to loan to almost any individual who meets their requirements.

In fact, for licensed money lenders, the borrower’s ability to repay the loan is most important. This is why even those with bad credit history and who may be rejected for a bank loan are likely to get a loan approved by a licensed money lender. All that’s required are your personal details and proof of income. With loans often being approved on the same day as the application, they provide swift funds for your various needs. 

If you’re considering taking out a loan, whether it’s a personal or business one, R2D Credit is here to help. Apply now or get in touch with us today to learn more about what our loans can do for you.

Disclaimer

The information provided on our website is for educational and informational purposes only and is not intended to be a substitute for legal or financial advice. While we try to ensure that information on this website is accurate, we do not warrant that the information will be free from error. We shall not be liable for any loss or damage that may arise from the use of this website.

Related Post
toc-icon

Quick Jump To