Red Flags To Notice When Applying For A Personal Loan In Singapore

Latest reports reveal that 1 in 3 Singaporeans have taken out a personal loan in the past year. On the other hand, 1 in 10 locals took personal loans to remain financially afloat or help their close ones.

But, no matter why you need a personal loan, it is best to reach out to a licensed moneylender offering the best personal loan Singapore, suiting your monetary requirements.

While they make the loan application process hassle-free, their loan schemes ensure you successfully overcome your financial setback quickly. But to avoid becoming a victim of a potential loan scam, here are the red flags to observe when applying for a personal loan in Singapore.

Check the Personal Loan Service Advertisements

Under the advertising rules in Singapore, moneylenders can advertise their loan schemes via three channels. A licensed consultant can choose business directories in print and online media, the company website, or ads placed at the or on the exterior of the lender’s work premises as the medium.

However, the moneylender may market the loan plan through text messages, personal emails, or send out flyers outside of their physical office area. These are not the right ways to advertise a personal loan, and it is a red flag you need to be careful about to ensure you don’t engage with a fraudulent moneylender.

Check the Offered Personal Loan Amount

Ideally, for personal loans, the amount you can borrow depends on your annual income. For instance, in Singapore, if your yearly pay is $20k or more, the loanable amount can be six times your monthly income.

Top moneylenders offer personal loans, with loanable amounts ranging from $500 to $50k. When you look for the best personal loan in Singapore, ensure to check for the warning signs of the moneylender not having a limitation on how much you can borrow. They will immediately approve your loan, no matter the amount, which is something you will not expect from a licensed moneylender.

Check the Interest Rate

In Singapore, MinLaw advocates the maximum interest rate that moneylenders can set for personal loans is 4% per month.

And when you fail to repay your loan on time, qualified moneylenders can charge up to 4% for each month you cannot pay the loan.

A clear warning sign will be when you notice the interest rate and late interest rate to be highly unrealistic and above the 4% limit. The loan sharks will approve the personal loan of any amount you request to earn considerable interest in a short duration.

Check for The Applicable Fees

With effect since October 1, 2015, moneylenders in Singapore can impose an administrative fee of not more than 10% of the principal loan amount. And the late repayment fee cannot be more than $60.

Accredited moneylenders remain updated with the moneylending law changes, thus being helpful for the proper functioning of their company and you. Their Charges ideally include only interest, late interest, administrative, and late fees.

But if the fees appear unreasonable, it is a major red flag to note. The unlicensed moneylenders will demand a deposit amount as the loan processing fee. And when you wish to cancel the personal loan they approved, they will harass you to pay an additional cancelation fee.

Check the Personal Loan Qualifying Terms and Conditions

Licensed moneylenders in Singapore require you to produce your NRIC, residency proof, employment proof, and SingPass when applying for a personal loan. They will be transparent about your loan repayment term and schedule, late repayment fees, and late interest charges.

But some moneylenders may not ask for your documents and explain their loan terms and conditions. Moreover, they may ask you to sign a blank personal loan contract or not provide you with a loan contract. Again, these are red flags indicating that you should not take a personal loan from the loan shark in question.

Tips to Choose A Licensed Moneylender to Avoid Red Flags

Reputed moneylenders in Singapore get accredited by the Registry of Moneylenders. You may check their license number on the MinLaw website to confirm their credibility.

And looking for customer reviews online is another way to check their reputation and service quality. On the other hand, licensed moneylenders in Singapore mention their physical office address, which ensures an implication of permanence and reliability.

These measures will ensure you don’t associate with an unlicensed moneylender, who may otherwise attract you with their deceiving personal loan plans.

Consult a Licensed Moneylender

Apart from covering daily living expenses, Singaporeans take personal loans to finance a mortgage, buy a car, or pay off their credit card debt.

If you need a personal loan for any of these reasons, contact a reputed professional. While you can have your required personal loan for a low-interest rate, your information will remain completely confidential.