5 Things Young Borrowers Should Know About Moneylenders

Most local money lenders here in Singapore are honest and ethical in their business. However, there are a few lenders that are less than ethical, and they mostly prey on young people aged 17 to 25. These are young, working adults, and usually, they are still unmarried, which gives them more spending power as they have fewer responsibilities than married adults.

If you belong to that age group, it’s wise to know what to watch out for when dealing with moneylenders. Before deciding to take out a loan from any lender, here are five things you ought to know.

Legitimate lenders are registered with the MinLaw

All money lending activities are governed by the Ministry of Law (MinLaw). If a moneylender is legitimate, you must be able to find them in the MinLaw’s database. If not, that lender may be an ah long or a scammer. 

Before deciding to visit any moneylender, make sure that they are registered with MinLaw first. That way, you can be sure they will not try to scam you or give you ridiculous loan terms.

Lenders may charge various extra fees when taking out a loan

Most people look at two things before taking out a loan – interest rate and repayment period. But these are not the only important things to consider. 

Lenders may charge administrative fees, late payment charges, prepayment penalties, and other extra fees for their loan products. Read the loan contract terms carefully – you will find these extra charges in the fine print. 

If you think the lender is charging too much extra fees, it’s time to find another lender.

Lenders can only charge up to 4% interest per month

This is a regulation put forth by the MinLaw for all moneylenders. They are only allowed to charge you a maximum of 4% interest per month – no higher.

Any lender who charges more than this should rouse suspicion. Either they are not following the rules, or they are illegal lenders.

You can negotiate loan terms

Moneylenders can be more accommodating than banks when it comes to loan applications. You can even negotiate the terms of the loan you are about to take out, making the terms a better fit for your financial situation.

Good lenders will adjust to their borrowers’ needs and situations. With that, you can design loans that you can pay off with more certainty and less worry.

Lenders are not allowed to harass you

Most importantly, the MinLaw does not allow lenders to intimidate, threaten, or physically hurt you to make you pay them back. They can only ask for repayment through ethical means, such as direct mail, email, or SMS. 

Any legitimate lender must abide by this rule. If your lender behaves in a way that makes you fear for your safety or your life, report them immediately.

Conclusion

If you’re a young adult looking to apply for a loan, moneylenders can be good choices. You can find a licensed money lender in Orchard and many other areas in Singapore. Shop around so you can find the best loan that will fit your needs. Also, remember that you can negotiate with your lender for better terms before signing the loan contract. This way, you can tailor the loan to favor your present financial situation.