Earlier this month, a friend received an SMS that started out “OWE $ PAY $”, included a lovely expletive and ended with “I SURE COME LOCK AND BURN YOUR HOUSE TONIGHT”.
Thankfully, it turned to be just a scam, but it was a reminder of the harassment tactics of an unlicensed money lender. Or, to use a term that most Singaporeans should be familiar with – “Ah Long”.
Banks and financial institutions have a lot of restrictions when they provide personal loans. You’re a Singaporean or PR but don’t earn more than $20,000 a year?
You’re a foreigner with less than $45,000 annual income? You’ve recently defaulted on all your credit cards and are trying to borrow money from the same bank to pay it back?
If your bank has taken out a restraining order on you, and your family has started cutting your face out of their photos, who do you have left to turn to for your money woes?
Legally speaking, your only option is the licensed money lender.
1. Where do you find a licensed money lender?
Ever since laws were passed that prevented them from advertising their services, many now turn to the Internet to ensure that interested clients have the convenience of making an enquiry via an online loan application form.
Currently there are 173 licensed money lenders in Singapore. Of course, you should always check the Ministry of Law website and make sure their license is still valid before you approach one.
2. How much can you loan?
As we said earlier, if your annual income is less than $20,000, it’s almost impossible for you to find a bank that is willing to give you an unsecured loan, even with the best personal loan rates.
However, a licensed money lender is legally allowed to loan you up to $3,000.
If you earn more than $20,000, a licensed money lender can give you a loan of up to 2 to 4 months’ salary. That doesn’t mean they will, of course. Ultimately, it depends on how much they trust you to repay them back.
3. When can I get my loan?
This is the question that most people asked. A licensed money lender can give you cash fast, sometimes even within the hour once you’ve provided the required documentation. Which means if you need the money urgently, you’re probably get cash on the same day for your emergency needs.
(Licensed money lenders aren’t allowed to chop off your arm and your leg, of course. That doesn’t mean you can get loan defaulted)
Ultimately, interest rates for licensed moneylenders in Singapore is definitely higher then banks and credit cards.