If you have not yet tried applying for a personal loan from a licensed moneylender in Singapore, then you might have some apprehensions and questions. Is the process complicated? Is it true that there are numerous fees or questionably high-interest rates? All these questions come into mind when applying for a personal loan from a licensed moneylender, and it is understandable if you have these questions.
To put your mind at ease, here are ten myths you may have heard when applying for a personal loan from a licensed moneylender in Singapore.
Myth # 1: Getting a personal loan is a complicated and lengthy process.
With all of the paperwork and documents moneylenders require from their clients, it may seem that getting a personal loan is complicated. However, applying for a personal loan from a licensed moneylender is a straightforward process as long as you have the proper documents and are eligible for the loan. Most licensed moneylenders in Singapore have a website that allows you to send an email or an online application.
If you are eligible, the licensed moneylender will ask you to come to their office. Once you can produce the needed documents and sign the contract, the licensed moneylender, exercising due diligence, can grant your loan and give you the cash in less an hour.
Myth # 2: You need an excellent credit score.
The advantage of applying for a loan from a licensed moneylender is that they can grant your loan even if you have bad credit. Most licensed moneylenders can grant your loan as long as you have a sustainable income that can meet the repayment schedule. On your part, it is best to disclose to the licensed moneylender if you are still paying for other loans or debt. In this manner, the licensed moneylender can tailor the repayment schedule of your loan in such a way it will not put a financial burden on you.
Myth # 3: Licensed moneylenders have numerous fees and may have hidden charges.
Licensed moneylenders in Singapore are expected to comply with the moneylending laws set by the Singapore Government. According to the law, moneylenders can only charge three types of fees, such as:
- A late penalty fee of not more than $60 for each month of late repayment.
- An administrative fee, which should not exceed 10% of the principal amount of the loan.
- Court-ordered legal fees and costs for a successful claim made by the moneylender in recovering a loan
More importantly, the total amount of the charges of your loan, including interest, late interest, administrative fee, and late fee- should not exceed the amount that is equivalent to the principal amount of your loan.
Myth # 4: Licensed moneylenders in Singapore can offer you a loan via SMS, call, or email.
Licensed moneylenders in Singapore are expected to exercise due diligence when granting a loan. They are prohibited from advertising loans through flyers, SMS, emails, or any form of advertisement not allowed by the Government of Singapore.
For your reference, here are the three permitted channels in which licensed moneylenders can advertise:
- Online or printed business or consumer directories
- Websites owned by the moneylender
- Posted advertisements on the exterior or interior of the business premises of the moneylender
If you encounter any unpermitted advertisement, disregard the advertisement and report the incident to the proper authorities.
Myth # 5: Personal loans need collateral.
Almost all licensed moneylenders offer unsecured personal loans, which means the client or borrower does not have to set collateral before applying for a personal loan.
Myth # 6: Interest rate on personal loans can be high as 5%.
As of October 1, 2015, the maximum interest rate all licensed moneylenders can charge is 4% per month. This rate applies regardless of the income of the borrower, and whether the loan is secured or not.
For interest on late repayments, the moneylender cannot charge an interest rate that exceeds 4% per month for each month the borrower was late in repaying the loan.
Myth # 7: You need to be employed or be in steady employment to apply for a personal loan.
If you are self-employed, then you may be thinking that personal loans are only for people in the employment of others. However, most of the time, this is not the case. Most licensed moneylenders in Singapore offer a personal loan for self-employed Singapore citizens or permanent residents. As long as you are eligible, it can be a straightforward process.
Myth # 8: Foreigners in Singapore cannot apply for a personal loan.
Licensed moneylenders in Singapore offer personal loans for foreigners, which is called a Foreigner Loan. However, most or all licensed moneylenders require the foreigner to be employed, have a valid working pass, submit an employment letter, recent payslips, and potentially other requirements.
Myth # 9: You should apply for more than what you need.
With the low-interest rates licensed moneylenders can offer, you may be tempted to apply for an amount that is more than what you need. However, it is ill-advised to do this. Applying for an amount that is more than what you need can leave you with a loan that can become a financial burden.
Myth # 10: Licensed moneylenders in Singapore can grant your loan online.
Most licensed moneylenders in Singapore have a website in which you can submit an online loan application. However, this is only a preliminary step that can let the licensed moneylender know whether you are eligible for the loan or not. If you are eligible, the licensed moneylender will ask you to go to their office with the required documents. After scrutinizing the required documents and signing the contract, only then can the moneylender grant your loan.
You should avoid moneylenders who decide to grant your loan and give you the money without requiring any form of contract signing or documents. These types of moneylenders can be loan sharks, errant licensed moneylenders, or unlicensed moneylenders.
Looking for the right moneylender in Singapore?
If you are looking for the right moneylender in Singapore, then choose Fortune Credit. The licensed moneylender is one of the most trusted licensed moneylenders in Singapore. They can offer you a personal loan that will not put you in a financial burden.
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