In many situations you encounter in life, you won’t always need an enormous financing amount most banks in Singapore offer. Aside from the unnecessary cash you have on hand, you’ll need to comply with terms and conditions that might not agree with you. Moneylenders became appealing to many Singaporeans and foreigners because they’re accessible and had flexible payment options. Unfortunately, the unregulated market led to many extortion and harassment cases, urging the Ministry of Law to implement the Moneylenders Act of 2008.
Thanks to the act, hundreds of licensed moneylenders offer fair and dependable service to Singaporeans and foreigners. Additionally, moneylenders often have better products and terms than banks, such as a lower maximum interest rate and short-term loans whose purpose is to tide borrowers over during financial troubles. However, with hundreds of moneylenders in Singapore, you may find it difficult to find the best one that works for you.
Here’s a complete guide to help you find the best moneylender in Singapore.
Check The Registry of Moneylenders
The Ministry of Law’s implementation of the 2008 act led to the Registry of Moneylender’s creation. The Registry’s responsibility includes providing licenses to prospective moneylending business owners in Singapore, regulating their activities, revoking licenses, and certifying owners through a series of examinations.
The Registry remains the most dependable source of licensed moneylender information. Upon downloading their list, you’ll find hundreds of licensed moneylenders capable of providing you with excellent service. While they might not seem different at first glance, their helpfulness and dependability set them apart from each other.
The Nearer, The Better
One best way to pick apart the best lenders you can use is to find the ones nearest to your location. For example, suppose you’re near the Peninsula Plaza near North Bridge and Singapore’s City Hall. In that case, you can count on GM Creditz, a licensed moneylender from the area with decades of experience providing top-notch and reliable loan services.
Check for landmarks in your residential area. Alternatively, if you’re out for an adventure and suddenly find yourself low on cash, search for the nearest licensed moneylender. However, don’t forget to check their license number against the Registry of Moneylender’s list of certified and licensed moneylenders. In doing so, you’ll avoid any chance encounter with unscrupulous loan sharks.
Use Loan Comparison Websites To Your Advantage
If you’re in a crunch situation, such as running short of cash during a shopping run, any nearby money lender will do to help your situation. However, if you have enough time, you can use money lender loan comparison websites to your advantage. These money lender comparison sites have a complete list of dependable lenders, too, making it easy to find the perfect lender that can work for all your needs.
By entering your preferred loan amount and tenure, these services can provide you a loan perfectly compatible with your current financial situation. It’ll save you the hassle of collecting loan application information from numerous money lenders and gives you plenty of options to quickly have emergency or investment cash.
Take note: if you apply and do not pursue any licensed money lender loan, the lender’s credit inquiry purchase is a “hard inquiry” that can affect your credit score. The consequence of a hard inquiry is similar to taking on a new loan, neutralizing, or possibly putting your credit rating in the red zone.
Independent financial services review websites are much more reliable than the licensed moneylender’s website reviews. Google Reviews are a great place to start. Read up on the services and helpfulness of licensed moneylenders. Take note of the issues disappointed borrowers had after they worked with specific money lending services.
Make sure to read every review from two perspectives: the moneylender and borrower. Some customers’ poor reviews might be correct or out of place, especially if their request was outrageous. On the other hand, licensed moneylenders do follow a strict conduct code and heavy regulation. However, it doesn’t mean licensed moneylenders get their jobs done right all the time too.
Compare Their Terms and Conditions
Loan comparison websites help with technical loan aspects, such as loan amount, interest rates, loan tenures, and more. However, some small clauses, terms, and conditions can make all the difference in finding the perfect loan. Unfortunately, you’ll need to read every single sentence to learn about these differences.
Fortunately, most money lender terms and conditions are the same because of the Ministry of Law’s regulation and the Registry’s certification procedures. However, they can have different terms and conditions for certain product promotions, making terms, and condition comparisons crucial when finalizing your decision.
Finding the Perfect Loan Product For Your Needs
Your income and budget play a significant role in finding the perfect loan. However, identifying and comparing the following properties will improve your chances of finding a loan that works for all your needs.
Before making a decision after finding the perfect loan, make sure you have your financial priorities in check. A loan from a licensed money lending company is convenient. However, it doesn’t mean that all your expenses should use loans. Remember: it’s easy for loans to blow up even with low interest rates if you don’t have an objective and plan with the financial product.
It’s counter-productive to use a personal loan with the best interest rates if the loan amount cannot pay for a significant chunk of your purchase’s complete cost. You can consider 80% and above as a qualified but incomplete loan payment.
Some borrowers will choose a low-amount loan amount because of their friendly interest rates and loan tenure. In some cases, a high-interest loan with a shorter loan tenure but pays completely for your purchase is a much better choice. Refinancing is always an option, but it has a higher risk of being more expensive.
All licensed moneylenders have a default maximum of 4% interest rate for personal, payday, foreigner, and bridging loans. Comparing this rate against banks’ higher thresholds makes licensed moneylenders a better choice if you compare it to banks. However, banks give you perks if you’re already an existing bank account owner, such as lower interest rates.
Moneylenders in Singapore cannot go beyond their 4% maximum interest rate. On the other hand, standard loan products, such as those we mentioned earlier except for payday loans, can only provide you with six months of your monthly salary as a maximum loan amount.
Banks give you a much longer payment period or loan tenure if you compare them with licensed moneylender loans. Truthfully, the majority of borrowers prefer Singapore banks because of their long loan tenures. However, if borrowers mishandle their loan payments, Singapore banks can charge them hefty penalties and increase the loan’s annual interest rate per year.
By working with anyone in the list of licensed moneylenders the Ministry of Law approves, you only have 12 months to pay for a personal or bridging loan that is usually six months of your monthly income. Plus, you won’t need to wait for an entire week to get your loan released. While the loan tenure can be tight for some, it urges the majority to effectively work with their budgets with minimal interest rate increases.
Regular Monthly Payment
Most loan comparison websites will list the typical monthly payments per bank and money lender. This handy feature makes it easy to compare financial institutions compatible with your current income. As long as you pay your regular dues monthly, you won’t face any enormous penalties unless you have a compounded monthly interest rate from Singapore banks.
The majority of loan comparison, bank, and money lender websites have their respective rough estimation tool. The estimating tool makes budgeting easy for borrowers because you can integrate the possible loan amount and interest rate into a rough timeline with a defined loan tenure. In doing so, you can choose a loan that will have the highest chance of being completely compatible with your financial capabilities.
Increase Your Credit Rating For Better Loan Approval Chances
Licensed money lenders are now performing hard inquiries on any loan application. Therefore, if you applied for a loan application and keep failing within a short span, it will negatively affect your credit scores. If you have bad credit ratings, Singapore banks will most likely disapprove of your loan application.
On the other hand, money lenders are more lenient with poor credit scores. Truthfully, many Singaporeans with bad credit can successfully apply and pay for a loan. However, most moneylending institutions nowadays perform hard inquiries on your credit, which can help elevate your poor credit scores.
Here are tried and proven ways to increase your chances of loan approval success by raising your credit scores.
Clear Existing Debts
The objective of credit recovery and debt consolidation services are simple. If you pay off all your debt, your credit score can reach an ideal figure for Singapore banks and financial institutions. Take note that licensed lenders only perform hard inquiries but will highly likely approve your loan application despite your credit rating.
However, if you plan to compare bank and licensed lender offers, it’s best to clear your existing debts from all lenders. Truthfully, you can use a licensed microlender as your stepping stone towards better credit scores for bank loans. Even if you’ve paid your existing debt, Singapore banks need to see if your loan management skills have improved, and small personal loans are an excellent place to start.
Handle Your Budgets Effectively
Any borrower with an excellent credit rating must persevere in creating an excellent budget that pays all of their monthly dues plus interest rates for long-term annual interest increases. In doing so, they avoid missing loan repayments. Budget-handling is simple if you set a financial objective, and it doesn’t have to focus only on repaying your loan.
For example, suppose your focus is to fund your child’s educational fees through a Singapore personal loan of six months worth of your income. In that case, cutting down on leisurely and self-oriented expenses is a crucial task. Additionally, the most budget and credit-rating-friendly move are to avoid taking on another financing because it will poorly reflect your credit scores.
Always Check Your Debt to Income Ratio
Thankfully, most lenders, including Singapore banks and financial institutions, give you rough loan amount and interest rate figures. The feature can help you derive your debt-to-income ratio quickly. While financial institutions alone finalize your regular monthly payment and interest rates, having an estimate can prepare you mentally and financially for your new commitment.
If your current expenses and loan payments (if any) are exceeding 50% of your monthly savings, your low debt-to-income ratio is incompatible with taking on new financing. A 10-35% debt-to-income ratio is much more manageable for borrowers planning to take on a personal loan payable within 12 months.
Borrow Realistic and Manageable Amounts
Using data from your debt-to-income ratio and current budget, be realistic in the loan amount from your preferred money lender. While a loan capable of a full purchase is ideal for any long-term financial commitment, some benefits, such as lower yearly interest rates for a 90% loan-to-value ratio, might be much more realistic for your current income and budget.
Realistic amounts vary with every borrower. However, the higher your loan amount, your monthly loan payments, and interest rates accordingly increase. Fortunately, a Singapore licensed money lender can limit your loan amounts, helping you avoid a long-term debt in the future.
Make it a Point to Pay Early
Unlike Singapore banks, licensed lenders in Singapore allow you to pay back your loans early without penalties. Truthfully, they encourage doing this because it gives both parties peace of mind. Be warned: licensed lenders in Singapore can claim against you for failing to pay your personal loans. If the claims court decides against you, you will need to pay the outstanding loan balance and all legal fees for you and your lender’s side.
It’s troublesome to pay your loans early with banks. They may add a 10% or higher surcharge for paying your loans. Because their interest and principal figures give them a defined estimate attuned to their financial reserves, recalculating their profits from your loans will use their resources.
Consequences of Working With an Unlicensed Moneylender
In the past, Singaporeans have faced harassment and extortion from numerous loan sharks that served as the major microlending market entities before 2008. These lenders have no regard for your financial stability and only aim to profit and enslave borrowers into perpetual repayment. With their unregulated practice, they can add hidden fees, change contract terms at any time to their advantage, and leave no recourse for borrowers for their unscrupulous activities.
How Are Moneylenders Different From Singapore Banks?
Microlending has become an accessible source of loans for the majority of low to medium-income Singaporeans. Because of their limited bank financing access, many foreigners in Singapore have taken risks by working with loan sharks. Money lenders in Singapore are different from banks because they maintain their accessible services but are now under the MinLaw and Registry’s oversight, regulating all their actions to ensure the fair and just provision of services.
You Can Always Count on Us To Provide You The Best Loans Available
Truthfully, finding the best loan can be difficult because of the hundreds of licensed lenders you can choose to work with. However, comparing their positive reviews, top-quality services, loan products you can count on, and fast-cash services, you will find the best loan compatible with your income and budget by spending enough time on research.
However, with decades of experience providing high-quality loan services, you can always count on GM Creditz to provide you with the best loan services available in the market. Contact us today to learn more about everything that we can achieve with you!