on Sep 4, 2020
Mention the word ‘moneylender’ 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 moneylenders. In this period where cash is tight and people seek additional funds for payments and purchases, we debunk 5 moneylender myths, showing how they are a legitimate option when applying for legal loans.
1. They offer unreasonable interest rates.
Many people avoid moneylenders due to the perception of unreasonably high interest rates. In reality, since 2015, Singapore’s law dictates that licensed moneylenders can only charge a maximum of 4% interest rate per month, preventing borrowers from being caught in a cycle of unreasonable interest payments.
The market also ensures that moneylenders compete against each other to offer competitive prices, allowing borrowers to benefit from faster approval and more lenient repayment agreements. On top of that, the Internet has made it easy to compare between various legal moneylenders, letting you decide on 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 loaning services. Every legal moneylender has to apply for a license, go through various legislation and be certified for good conduct before opening. Moneylenders are also expected to maintain their reputation and honesty before they can continue renewing their license.
With an official listing of licensed moneylenders, one way for easy peace of mind is to ensure that your chosen moneylender is on that list before committing.
3. They are inflexible.
Moneylenders don’t just offer one-size-fits-all monetary loans at a fixed interest rate. In actual fact, just like banks, licensed moneylenders offer a wide variety of loans at different rates and repayment schemes for their clients.
From 1-month long payday loans, to large-sum wedding loans, along with student loans that only start charging interest when the recipient graduates. It’s easy to find a loan for each person’s unique needs. They also offer various payment plans and affordable interest rates too.
4. They have many hidden charges.
Another concern prospective borrowers have is that moneylenders may not be transparent, and end up incurring many additional costs on top of paying the interest, which can potentially hurt borrowers in the long-run.
By Singapore law, licensed moneylenders 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, and court-ordered legal fees for legal action to recover a defaulted loan. Do check that your moneylender does not go beyond these and charge you unfair rates and fees.
5. They require a high credit rating.
While banks demand exhaustive background checks and insist on a solid credit rating before approving a loan, licensed moneylenders are far more relaxed in this area, being willing to loan to almost any individual.
All that’s required is your personal details and proof of employment. With loans often being approved on the same day as the application, they provide swift funds for your various needs.
Get in touch with R2D Credit today to learn more about what our loans can do for you.