What Are The Steps You Need To Take Before Borrowing From A Lender?
In this article, we will discuss the steps you need to take before you borrow money from a lender are. Also, we will discuss how to know if a lender is licensed and some practices which they are not allowed to do.
Who are licensed moneylenders?
Licensed moneylenders, according to the money lending act, are those people who give out loans. This means that these are the people who have been allowed by the law to give out loans to people. These are those people who are licensed to carry out the business of moneylending. They can either be a single person or a group of people who can be called a moneylender.
No person is allowed to be a moneylender unless they are allowed by the law to do so. Many people in the market are illegal lenders and trick people. That is why the law has warned the borrowers to check first if the moneylender is licensed or not. This step needs to be done so that you can avoid yourself and others from getting scammed.
There are also pawnshop owners and other people who can apply to be licensed lenders. Moneylenders usually have their office timing in which you can visit them and take a loan. Most of the moneylenders that you find in the market will be closed for the weekend. While some money lender open on Sunday as well due to their business. This is a very serious business and needs to be taken seriously by everyone.
The lenders and also the borrowers need to be on good terms with each other. This is done to avoid any kind of misunderstanding or rivalry between the two of them. Moneylenders are those people to who the government has granted permission to give out loans to people.
How to know if a moneylender is licensed or not?
There are different ways in which a person can find out if a moneylender is legal or not. But the very quickest and simplest way is to check their registration on Minlaw’s website. Here is a list of things you can check to see if a moneylender is licensed or not.
- A licensed moneylender will always want to meet the borrower in person.
- The moneylender is not allowed to contact the customer through phone or Email.
- If you are approached by a lender who has made contact through message, then they are a fraud.
- A licensed lender can advertise about themselves by printing posters and online media.
- They will have their online website named after their company which will be licensed.
- Advertisements like posters and hoarding will be posted around the place where the office is located.
- A licensed moneylender will always make sure to understand the terms and conditions of the borrower.
- They do the above step to make sure that there is no misunderstanding between them.
What are some prohibited practices for licensed lenders?
There are many lenders which you will find in the market who claim to be licensed. Here is the list of practice which a licensed lender is prohibited from doing and you can catch them easily.
- They cannot use abusive or loud tone language with their customers.
- They will never ask for your sign pass ID and password to check details.
- They will give back all the necessary documents which you have provided them with.
- They will never ask you to sign a blank contract or a blank cheque for any reason.
- They will never grant you a loan through SMS, emails, phone calls, or text messages.
- They cannot hold any amount of the principal of the loan with themselves and give you later on.
- They are not allowed to keep any kind of confidential information with themselves.
What are the things to do before you take a loan from a licensed moneylender?
Here is the list of things you need to do before you take a loan from a licensed moneylender.
- Determine your ability to abide by contract terms
This means that before borrowing, you should make sure to read the terms and conditions of the contract. Then you will have to decide whether you can abide by these terms and conditions. A licensed moneylender will tell you the terms and conditions in the language which you understand. Then they will also check on your behalf if you are meeting all the requirements or not.
- What happens if you do not abide by the terms?
If you fail to abide by the terms and conditions of the contract, then the loan will not be given. But if you take a loan and fail to repay the amount on time, then you have to pay late repayment fees also.
- What is interest charged by lenders?
The maximum amount of interest that can be charged by any of the lenders is %4. That is because this is the percentage which has been declared by the government as the highest amount. Those lenders found going above this limit will be declared illegal.
- Other fees that are incurred
The loan approval fees or administrative fees cannot be more than %10 of the principal amount. The late repayment fees charged to any of the borrowers cannot be more than S$60 per month. They will have to pay the legal cost, which will occur when they take this loan.
- Beware of Caveats
This is the thing where if you fail to repay the amount of the loan, the lender can take it from your property. It means that they can take any part of your property and sell them in the market. They will not even want any permission s you have signed the contract.
Many people still wonder how to get personal loan in Singapore. The answer is simple as you can either take this kind of loan online or offline. In online, you have to complete the process in the online format like pictures and all. But offline, you will have to fill out documents and provide proper verification.