Frequently Overlooked Factors When Choosing Moneylenders
In Singapore, you can find various local money lenders to apply for loans. Many of them offer similar kinds of loans for different purposes. Even then, there are some things you need to watch out for.
When shopping around for lenders, keep these three questions in mind before signing any loan contracts.
Is the lender licensed?
The first question you need to ask is whether or not the moneylender is licensed. The best way to find out is to check the website of the Ministry of Law (MinLaw). Legitimate lenders must be registered with MinLaw and comply with applicable legislation. The MinLaw ensures fair lending terms and interest rates for the benefit of borrowers. The good news is most money lenders in Singapore are licensed.
If you do not find your moneylender’s name in the MinLaw database, you can assume that the lender is not licensed. With that, they may not be following the rules the MinLaw has set. If you take out a loan with these unlicensed lenders, you run the risk of becoming a victim of predatory lending.
Worse still, the lender may be a loan shark in disguise. Loan sharks are dangerous to deal with, and they might even cause you distress in the near future. Loan sharks are known to harass borrowers each time repayments are due.
What additional fees does the lender charge?
Aside from interest, moneylenders often impose admin fees and other charges to your loan. These fees increase the actual cost of the loan. If you’re not careful, you may end up spending more money than you expected when repaying the loan.
For this reason, you need to scrutinise each lender’s charges before signing a loan agreement. Choose a lender who charges minimal fees on top of the principal and interest. This way, you can save money when paying down your debt.
Are the lender’s terms negotiable?
It’s good to have loans with flexible repayment terms and tenures. This way, you can adjust the terms of the loan to fit your current financial situation. Negotiating will make repayments more doable for you.
Before signing your loan contract, review it and ask your lender if you can negotiate the terms. Some lenders are friendly enough to accommodate your requests.
Others may be strict, requiring you to go by their terms only. If you are not comfortable with this, you can always choose not to go through with your application. Find a different lender with more flexible loan terms.
Also, if you find any part of the contract that is not favourable, ask your lender if they can reconsider. If not, walk away and find another lender. Never sign a contract that contains terms you do not agree with.
Conclusion
If you need to take out a loan from an Ubi money lender or other lenders in Singapore, it pays to be vigilant. Be willing to ask these three essential questions before taking out a loan from any lender. This way, you can protect yourself from scams and unnecessarily costly loan products.