As you most likely have read in the news regarding the changes in moneylending rules in Singapore. The slew of changes demanded Oct 2015, has led to into a change in how their borrowers are managed by moneylenders.
The Insolvency & Public Trustee’s Office (IPTO) supervises the administration of individual and corporate insolvencies, the management of small intestate estates and un-nominated Central Provident Fund (CPF) monies, along with the licensing and regulation of moneylenders and pawnbrokers.
So there’s IPTO, which assists the Registrar of Moneylenders along with the Registrar of Pawnbrokers in controlling and licensing moneylenders and pawnbrokers. IPTO additionally safeguards borrowers if any accredited moneylender violate the Moneylenders Act.
Simplified MinLaw moneylending rules and recommendations
You are obliged to fulfil any loan contract made with an authorized moneylender. So essentially, see the fine print and allow loan officer explain the loan conditions to you.
Think about any current debts and loan obligations such as fees that are continual. Be smart about the contractual provisions, and compute out the late payment fees and interest repayment.
Always be reminded, that the law requires moneylenders to explain the terms of a loan in a language that’s clear by you. Plus you are to be provided a copy of loan contract.
How much are you allowed to borrow?
Licensed moneylenders offer unsecured loans which allows you to get the following:
– Up to $3,000, if your annual income is less than $20,000;
– Up to 2 months’ income, in case your yearly income is $20,000 or more but less than $30,000;
– Up to 4 months’ income, if your annual income is $30,000 or more but less than $120,000; and
– Any amount, if your yearly income is $120,000 or more.
Which are the Interest Rates Moneylenders can charge?
Previously, loans contracted between 1 June 2012 and 30 September 2015, licensed moneylenders are required to compute and reveal the Effective Interest Rate (EIR) of the loan, prior to the loan is granted. Nevertheless in case your yearly income exceeds $30,000, the interest caps don’t apply and is to be agreed upon the moneylender and the borrower.
With effect from 1 October 2015, the utmost interest rate accredited moneylenders can charge is 4% per month.
What are the fees that moneylenders can charge?
For loans contracted between 1 June 2012 and 30 September 2015, moneylenders are only permitted to charge six types of fees in the following:
– For each occasion of late repayment of interest or principal;
– For each occasion the terms of the loan contract are varied at your request;
– For each dishonored cheque
– For each unsuccessful GIRO deduction as payment to the moneylender, from a bank account;
– For early redemption of the outstanding loan or early settlement of the contract; and
– Legal costs incurred for the retrieval of the outstanding loan.
Any other fees will not be allowed, and are consequently not enforceable by the moneylender.
With effect from 1 October 2015, all moneylenders are only allowed to levy the following charges and expenses:
– a fee not exceeding $60 as late payment on each month
– a fee not exceeding 10% of the principal of the loan when loan is granted; and
– legal prices ordered by the court to get an effective claim by the moneylender for the retrieval of the loan. The overall fees imposed by a moneylender comprising interest, late interest, upfront administrative and late fee also cannot exceed an amount equivalent to the principal of the outstanding loan.