Licensed moneylenders offer an alternative for borrowers who may not qualify for bank loans. They are regulated by the Ministry of Law and adhere to guidelines for interest rates, fees, and business practices. This ensures borrowers are protected from predatory practices by unlicensed ah longs or loan sharks.
A reputable licensed moneylender will clearly explain their terms and conditions, interest rates, and late fee to the borrower in a manner that is easy to understand. They should also provide a physical office address and be willing to meet the borrower in person for verification. If a moneylender is reluctant to disclose their address or ask to verify the borrower in-person, it is a red flag that they are not legitimate.
In addition, a legitimate moneylender will not charge any administrative or processing fees before the loan is disbursed to the borrower. They will only collect the agreed upon principal and interest once the loan is fully paid off. Moreover, they will never request the borrower to make a deposit or payment in lieu of the loan. If a moneylender does charge an admin or processing fee, it must be deducted from the loan principal and will not exceed 10% of the principal amount.
Lastly, licensed moneylenders are only allowed to advertise their services through business and consumer directories and within or on their business premise. They are not allowed to send SMS, WhatsApp, or email advertisements. If you receive any unsolicited messages promoting a cheap and fast loan, it is probably from an illegal money lender or loan shark who is violating the Ministry of Law’s advertising rules. moneylender singapore