There are many reputable legal money lenders in Singapore today. But despite that, many people still have much doubt about them.
Take a look at these three common misconceptions about money lenders, as well as the truth about each one.
All money lenders are ah longs
An all-too-common misconception about money lenders in Singapore is they are all loan sharks (“ah longs”). While it’s true that some of them resort to predatory lending practices, only a few of them are like that.
Most lenders are legitimate and registered with the Registry of Moneylenders under the Ministry of Law. That means they are not illegal or underground operations. You can verify this yourself by asking for the lender’s license number. Alternatively, you can find a list of registered money lenders in the MinLaw’s website. To date, there are 154 licensed money lenders in Singapore listed in the MinLaw database.
They are required to comply with stringent laws regarding lending, interest rates, and ethical practices of demanding loan repayments. That means they are not allowed to harass you when it’s time to pay your dues. They cannot call you in ungodly hours, bombard you with SMS messages, or wander around your house. They can only send you notices through post or via email.
Money lenders charge extra-high interest rates
This misconception is related to the first one. Loan sharks are known to charge exorbitant interest rates for their loans. On the other hand, money lenders in Singapore are required by law to charge no higher than 4% interest monthly. It’s higher than the 3 to 11% per year that banks typically charge, but still not as high as others may have you believe.
These interest rates are regulated by the Moneylenders Act, so you can be sure that all legal money lenders will not slap you with ridiculous amounts of interest.
Money lenders will mess up your credit score
Some people think that taking out a loan with a money lender will adversely affect their credit score. Thankfully, there are two reasons why this is not true.
First of all, your credit score depends on your capacity to repay loans and other dues on time. If you are always on top of your monthly payments, your credit score will be fine. Your credit score will only suffer if you miss payments or consistently pay late.
Second, money lenders are licensed with MinLaw, so the loans you take out from them are legal. As long as you keep up with your repayments on time, your credit score will stay healthy.
Money lenders in Singapore are reliable sources of extra cash. Contrary to popular belief, not all of them are loan sharks, their interest rates are modest, and using their services will not negatively affect your credit score.
If you are faced with a financial setback and need a quick source of money, consider going to a reputable money lender. They can offer you the flexibility and ease you need when financial troubles hit.