An Easy-To-Understand Guide on Singapore’s Moneylenders Act

lender is discussing a Singapore's Moneylenders Act

It’s really great that in Singapore, you can approach any moneylender from the Ministry of Law’s Registry of Moneylenders and get guaranteed financing without fear of any repercussions and changing interest fees. In fact, it’s great that the Singaporean government protects the rights of foreign borrowers too.
When the government enacted the Moneylenders Act on May 29, 2015, borrowers have extended protection in both passive and active forms. Passive protection meant providing loan limits that ensures borrowers can get out of debt and moneylenders will receive the indebted’s payment. In addition, it allows the Registry of Moneylenders and Ministry of Law to have better powers that reduce any possible oversight on all operations.
If you’re confused about the final recommendations on the Moneylenders Act 2015, here’s a condensed and convenient version that can help you make sense of it.

Giving a cash

It’s All About Loan Caps

The biggest benefit the Moneylenders Act gave Singaporeans and foreign borrowers is limitation. Loan sharks allow borrowers who earn very low higher amounts that can be impossible to pay. Doing this allows loan sharks to harass, abuse, or even exploit the indebted. Now, low-income borrowers that make only S$20,000 a year can only borrow S$3,000 from legitimate moneylenders.
On the other hand, those who earn above the low-tier borrower’s annual income can borrow up to six times their monthly income. Foreigners who earn less than S$10,000 can only borrow S$1,500 maximum and S$3,000 if they earn between S$10,000 and S$20,000.

Expanded Role for Credit Reports

the borrowers is showing the proof of his income
The Moneylenders Act gave rise to the importance of credit reports and scores for moneylenders. While it won’t play a big role for usual loan applications once the borrower shows proof of their income, lenders must evaluate a borrower’s credit report from the Moneylender’s Credit Bureau before approving any application.
In doing so, they can estimate whether an adequate-income borrower has the means and discipline to repay their financing. It might sound like moneylenders are depending on credit scores and reports similar to banks, but on the contrary, they only use it as a reference and not a pivotal decision metric for loan applications after the establishment of the Moneylenders act.

A Protective Self-Exclusion List

The Act enforced self-exclusion listing and frameworks that allowed borrowers autonomy over their actions in preventing high debt due to excessive borrowing. All moneylending debt consolidation and reconciliation services required deeply-indebted borrowers to include themselves on the self-exclusion list to curb their borrowing.
Debt consolidation services have become more effective with the self-exclusion list requirement. Without the means to take out additional third-party financing and sticking only to the debt forgiveness plan, borrowers can get out of debt and learn more about financial discipline in the process.

Office Lady

Increased Registrar Powers Over Moneylending Operations

The Moneylenders Act asks for all moneylenders to apply for the Registrar of Moneylender’s approval in hiring and employing business assistants. These include accountants and other personnel who will handle money and financial records of the business. In doing so, the Registrar can prevent the entry of illegitimate and undesirable individuals into the moneylending industry.
The parameters the Registrar will use to qualify the individual, they have yet to make public. However, past employment records, education, experience, and a possible test might be the Registrar’s filters to sort out individuals competent to have responsibilities in the moneylending industry.

Marketing Strategy

Moneylending Advertising and Marketing Limitations

Foreign domestic workers in Singapore became victim of many moneylending scams by unscrupulous loan sharks who had trapped foreign workers who earn less than S$10,000 yearly. These domestic workers from different countries often send majority of their earnings back to their families.
Understanding their plight, illegitimate moneylenders have targeted them with their online and website advertisements. The alarming rate of domestic workers indebted to loan sharks and legitimate moneylenders gave rise to marketing limitations as well as the lending caps we’ve mentioned above.

Contract Signing up

Why Did They Update The Moneylender’s Act?

  • Protection Against Unscrupulous Moneylenders

    Loan sharks have become plenty, and they work alongside organised criminal families and mobs. To ensure Singaporean and foreign borrowers won’t use unregistered and illegitimate moneylenders. The Moneylenders Act enforces better overseeing powers for the Registrar, which include registering qualified and capable personnel into the moneylending industry that genuinely want to help borrowers.
    Before the Moneylenders Act, it was easy for loan sharks to imitate legitimate moneylenders. However, with the Registrar’s strict moneylender registration requirements and an ultimate list of moneylenders with registration, certification, and regulation to operate in Singapore, you won’t have any problem trusting them for your borrowing needs.

Contract Signing up

  • Improved Regulation of Moneylending Activities

    Licensed moneylenders must register and comply with the Ministry of Law and Registry of Moneylender’s requirements before they can register. The Registry will display the business address and the license number of legitimate moneylenders — and they themselves will display this license number on their respective website.
    Additionally, ensuring that only qualified and competent personnel will serve borrowers is a great way for the Registry and MinLaw to oversee all activity when it comes to regulating moneylending activities.
    Furthermore, having moneylenders require customers to exclude themselves from having additional financing is a great way to make debt consolidation effective and help improve their personal credit scores.

Moneylender agent & Client

  • Prevent Endangering First-Time Moneylending Borrowers

    It’s easy to ask around for a moneylender in Singapore. Unfortunately, most borrowers — especially foreign domestic workers — fall prey to illegitimate moneylenders in the country. Furthermore, the continuous advertisement of moneylending in television and the Internet has made it easy for loan sharks to trap Singaporeans and foreign domestic workers in a lifetime of payment.
    With the new legal updates through the Act, first-time borrowers will know they’re working with moneylenders that intend to make their lives better and their financial state bearable for the meantime. In doing so, they can be confident and will know who to use as moneylenders should they need financial support in the future.

In Summary

The Moneylenders Act is clearly beneficial to all borrowers who need financial reprieve to resolve their present situation through the use of a moneylender. Furthermore, it makes licensed money lender a safe and secure option and alternative to Singapore’s banks.

About GM Creditz

GM Creditz is a low-cost and flexible loan provider.

Our aim is to give you the money you want, when it’s needed, whether you have a sudden emergency that has set you back financially or if you want a boost to help kick start your future plans. Put simply, we cater for individuals with different financial situations, whether you have a good credit report or one where other lenders are unwilling to offer you a loan, we want to help.

We have built our business on solid principles by offering a fair and transparent service, and, as a reputable lender, we make sure you can afford your repayments. Depending on the amount, we offer unsecured loans so you don’t need to secure an asset like your house or car against the loan. You don’t need a guarantor either as we work hard to provide you with the money you need at a rate you can afford.

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