If you do not qualify for a loan at the bank, then your best bet in obtaining a personal loan is probably from a licensed moneylender in Singapore.
Who are the moneylenders in Singapore?
Moneylenders are a group of people who provide financial aid with higher interest rates. Moneylenders often target those who do not have an excellent credit history and have little interest in the Debt Service Coverage Ratio (DCSR), which is the ratio of available funds for debt servicing. In short, it is the ability for a person to produce sufficient cash to repay the loan. It is said to be 1.20 times here in Singapore.
How can I obtain a loan from a licensed moneylender?
There are two types of loans which you can obtain from a licensed moneylender – Secured Loans and Unsecured Loans.
Secured loans are when the borrower has already pledged their assets to the lender for security as well as for collateral. For secured loans, you can borrow as much as you like.
Unsecured loans are loans whereby the borrower did not declare or pledge their assets of any kind to the lender, therefore there is a cap to how much you can borrow.
What’s the maximum amount of loan that I can borrow from a moneylender?
For most moneylenders, you can borrow up to $S3,000 if your annual income is less than S$2,000.
Up to 2 months of your income if your annual income exceeds S$20,000 but is less than S$30,000.
Up to 4 months on your annual income if your annual income is S$30,000 but is less than S$120,000 and any amount if your annual income is S$120,000 or beyond.
What are the interest rates?
There are also two different kinds of interest rates that is charged by the moneylenders. All moneylenders are required to show you the Effective Interest Rate (E.I.R) before grating you the loan. For secured loans it is capped at 13% E.I.R and 20% for unsecured loans. If your annual income exceeds S$30,000, then the caps of interest no longer apply.
What are the fees involved?
Moneylenders in Singapore are only allowed to charge 6 types of fees:
1. A fee is charged for every late payment either on the principal or interest.
2. A fee is charged when the terms of the loan is requested by you to be varied.
3. A fee is charged for every dishonored cheque issued by you.
4. A fee is charged for every unsuccessful GIRO deduction, which is a transfer from one bank to another to the moneylender.
5. A fee is for every early redemption of the loan or early termination of the contract.
6. A fee is charged for any related legal costs incurred for recovery of the loan.
Be careful if your moneylender uses abusive language or threatens you in any way. Also, beware if they ask for your personal documents such as your NRIC card, passport, employment pass, work permits or ATM card. You should also be suspicious if they grant you a loan without giving you a copy of the contract or loan terms, or if they withold any valuable information in regard to your principal loan amount for any reason whatsoever.
If you must obtain a loan from a moneylender, make sure you verify his license by checking the list of licensed moneylender at www.ipto.gov.sg
Where can I find a licensed moneylender in Singapore?
Some of the recommended moneylenders in Singapore include:
1.101 Credit Pte Ltd, 101 A Upper Cross Street, licence number 56/2013.
2. 1133 Moneylenders, 8 Burn Road, license number 57/2013.
3. 96 Credit located at 883 North Bridge Road, licence number 175/2013
4. 77 Moneylender Pte Ltd, license number 27/2013.