Several reports of loan sharks in Singapore, with some even posing themselves as licensed money lender, it is important for prospective borrowers to make inquiries before taking a loan. Here are easy ways to ensure that you are getting a loan from a legitimate and legal source:

Verify their Licence

There are currently 170 certified moneylenders in the list by the Ministry of Law. Refer to their website to check the list of approved moneylenders in Singapore. You should not get a loan from any moneylender that is missing from the list.

Process of Loan Application

A certified money lender should have an open process for handing out loans. The law wants moneylenders to clarify the conditions of a loan to you in a language and comprehensive way. They will have to give you a copy of the loan agreement containing the settlement schedule, rates of interest charged and any other fee that you might incur.

Loan Limits

The amount that can be dispensed by a moneylender has a limit. For loans without security:

If your yearly income is not up to $20,000, you can obtain up to $3000

If your annual income is not up to $30,000 but more than $20,000, you can receive as much as two months’ salary

If your yearly income is not up to $30,000 or more but not up to $120,000, you can obtain as much as four months’ salary

Provided your annual income is up to $120,000 or more, you can get any amount.

If a moneylender is keen to lend you money that is above the legal guideline, something is fishy, and you should avoid borrowing from that lender.

Rates of Interest

Apart from loan limits, legal moneylenders are meant to stick to the legal limits for rates of interest on the money loan they provide as well.

Having been in effect since 1 October 2015, the maximum rate of interest that moneylenders can indict is 4 percent per month. Provided that the borrower refuses to pay back the loan in due time, the moneylender is then permitted to indict a late interest charge for each month the loan is paid back late.

The sum of late interest is simply valid for the amount that hasn’t been paid back. For example, if $5,000 loan is taken and $3,000 has already been paid back on time, the legal moneylender is only allowed to charge late interest fee on the $2,000 left.

Statement of Accounts

After you have received your loan, you should ensure that the licensed moneylender delivers to you the correct amount you have borrowed. Keep in mind that having a loan contract shows that that contract binds you and the money lending company, so what was promised by them to be delivered must be delivered.

When it is time for you to repay the loan, you have to ensure that the licensed moneylender gives you a receipt that includes the date, showing the exact amount that you have paid, plus your name and also a stamp or signature. You should also be given a statement of account in the middle of every year. You should keep all relevant documents in case you need to provide the legal documents.