A licensed moneylender is a legal entity that is regulated by the government. They follow strict rules and laws to help you with your financial needs. They can also recover their money by employing debt collection agencies if you can’t repay your loan.
They also must be transparent about the terms of the loan. You can find the list of licensed moneylenders by visiting the Ministry of Law website.
They offer loans to individuals and businesses
Licensed money lenders are registered with a number of regulatory agencies and are obligated to follow the rules set by the government and other laws regarding their operations, lending requirements, and interest rates. To verify that a lender is licensed, check the registry’s website or call the agency to inquire about their registration status. Licensed moneylenders are also required to give borrowers a complete loan contract before disbursement.
Unlike unlicensed moneylenders, licensed moneylenders are not allowed to charge excessive fees and interest. In addition, they cannot offer top-up loans or a second loan to pay off the first one. Furthermore, the total amount of late payment fees, up-front administrative fee, and legal costs must not exceed 4% per month.
Moreover, licensed moneylenders are not allowed harass borrowers or use scare tactics to collect their debts. In case of default, they are legally prohibited from sending hate mail, spraying their names on a borrower’s door or neighbours’ doors, confiscating ID documents, or contacting a borrower’s family members or employers.
They are regulated by the government
Licensed moneylenders are registered with various government agencies and are required to comply with certain rules and regulations set by the government. These rules and regulations are designed to protect consumers and ensure that moneylenders do their work responsibly and professionally. These include general principles, which require moneylenders to treat their consumers fairly and with respect.
In addition, licensed moneylenders are prohibited from withholding information such as your NRIC number, driver’s license, or passport as it is against the law. They must also provide you with a receipt for every payment you make. It is a good idea to keep these receipts as proof of your repayments.
Be sure to consider your financial situation before obtaining a loan from a licensed moneylender. You are legally obligated to fulfil any loan contract you enter into, so be sure that you can meet the terms of the loan and repay it within the stipulated timeframe. Otherwise, you could face financial hardship if you fail to repay your debts on time.
They charge interest rates
Licensed moneylenders charge interest on a reducing balance basis and may also impose upfront administrative and late fees. However, their total charges cannot exceed the amount of the principal loan amount. They also must follow the rules of advertising – they can only advertise through business or consumer directories, websites owned by them, and advertisements placed within or on their place of business premises. Moreover, they cannot solicit loans through text messages, WhatsApp, social media platforms, direct phone calls, or email.
Licensed moneylenders are regulated by the government and must adhere to strict legal guidelines. They typically offer low rates and can process loan applications in a short period of time. They are also more flexible with their lending criteria than banks. However, you should always compare rates before borrowing from a moneylender. Additionally, you should stay away from loan sharks who are often unlicensed and illegally collect debts. Their tactics include threatening borrowers, bullying them, and using illegal collection practices.
They offer secured loans
Licensed money lenders offer secured loans, which are backed by collateral such as your car or property. They also charge a lower interest rate than banks, which makes them a good option if you need quick access to cash. However, you should always weigh your options carefully before taking a loan.
Unlike illegal debt collectors, licensed moneylenders are unable to contact or visit borrowers repeatedly or at odd hours, nor can they threaten violence or confiscate a borrower’s personal belongings. However, some unscrupulous licensed moneylenders have been known to employ scare tactics such as telling a borrower they’ll lose their job if they don’t pay up, even though this is against the law.
When borrowing from a licensed moneylender, be sure to understand the contractual terms and fees thoroughly. If you’re unsure of any aspect, ask the loan officer to clarify. You should also keep receipts and statements of account as proof of payments. In addition, make sure the moneylender doesn’t withhold your NRIC, driver’s license, or passport as this is against the law.