Disputes with private money lenders in Singapore, although rare, do happen for several reasons. From payment issues to unlawful practices by the lenders, learn how you can how to settle licensed money lenders effectively now.
Why do licensed money lender disputes arise?
The first step toward solving disputes is to find out why they happen in the first place. There are several reasons why licensed money lender disputes arise.
The foremost reason is when borrowers fail to make timely payments. This makes lenders more prone to apply pressure on the borrower. This “pressure” can be as simple as employing a more urgent tone in their communication, or sending multiple reminders for you to make your payment. Such increased tension between the two parties can lead to further disputes down the road.
The next reason is when lenders engage in prohibited acts. These behaviours are often intrusive and may even be deemed as harassment, thus leading to disputes. Such acts include:
- The use of abusive language, or threatening behaviours.
- Asking for your SingPass user ID and/or password.
- Holding on to your personal ID documents like NRIC card, passport, or driver’s licence.
- Granting you a loan without proper explanation of all the terms and conditions, or without going through the proper process.
Withholding your principal loan for any reason.
Lastly, some lenders may engage in unfair practices, such as:
- Refusing to provide you with essential information such as the company’s name or address, or refusing to give you copies of your loan agreement.
- Not giving you time to properly read through the loan documents.
- Imposing a late payment penalty not stipulated in the contract.
- Charging an interest rate of more than 48% per annum, which is the maximum per law.
- Charging hidden charges not stipulated in the contract.
Calling out lenders who flout the rules is an important step to safeguarding your own interests.
What goes into licensed money lender debts?
- Loan instalments
- Late fees and charges
- Compound interest
- Late interest
These are typical components that make up licensed money lender debts.
What you should know about money lender debts
To know how to settle licensed money lender disputes, you should be armed with the knowledge of what is fair and legal.
Know that the lender is not to charge more than 4% interest per month, not more than 4% late interest on the missed payment, and not more than $60 for late fees for every month that you make late repayment.
To be clear, here’s an example of late interest payment:
Say you borrowed $5,000 and failed to pay the first installment of $1,000. The lender can only charge the late interest on the $1,000 you were supposed to pay, and not the remaining balance.
Also, remember the maximum that a lender can charge for administrative costs is 10% of your loan principal at the point of loan granting.
How to settle monthly licensed money lender debts responsibly
Firstly, only borrow what you can afford to repay. This way, you will save yourself a lot of headaches and pressure when the deadline for repayment draws near.
Secondly, don’t hesitate to negotiate for a payment due date that is optimal for your circumstances. This date can be right after your payday or after you receive some additional cash flow from other sources.
Lastly, make debt repayment your priority. Remember that the sooner you clear your debt, the less interest you will pay. Therefore, adhere to financial prudence whenever you have a debt. This prudence can come in the form of setting aside your salary, sticking to your debt repayment plan, and setting payment reminders on your phone.
What happens if you can’t settle your licensed money lender debts?
As mentioned, your debt will snowball if you cannot settle your debts and you will end up having to pay more in the long run.
In the event that you default on a loan, there are some things a licensed lender can do.
Firstly, they take you to court or take whatever you had put up as collateral if you’d committed to a secured loan.
Licensed lenders can also hire debt collectors to collect the money you owe, which may lead to unwanted annoyances. Your lender can also come knocking on your door to press you for payment.
Steps to take if you cannot settle your licensed money lender debts
The first thing to do is to communicate with your lender at the earliest possible opportunity. In a calm and friendly manner, let the lender know of your predicament.
A possible solution is payment extension.
Or, the lender can also help you reach a new payment plan that you can fulfil. For example, you can pay your loan in smaller instalments over a longer period, making it more manageable.
If you have multiple debts, debt consolidation can help by making it easier to pay off one debt instead of tracking several payment deadlines.
Additionally, you may apply for a debt repayment scheme, where the government steps in to help structure a feasible payment plan.
What else can you do to settle licensed money lender disputes due to non-payment of debts?
You can also approach the Credit Counselling Singapore (CCS). Services offered include money management seminars, counselling appointments, and debt management courses.
The last resort when you are unable to pay your debt is to file for bankruptcy. Interest on the loan will stop accumulating and the lender will not be able to sue you for the debt. However, your credit score will take a drastic hit.
How to settle licensed money lender disputes due to unfair or prohibited practices?
If the money lender had been errant or had engaged in unfair practices against you, don’t hesitate to make a report with the Registry of Moneylenders to lodge a complaint against the money lender in question.
How to do just that? Simply dial 1800-2255-529 and furnish the Registry of Moneylenders with as many details as possible to facilitate their investigations.
Only borrow from a fair and professional lender
111 Credit is a law-abiding, professional, and compassionate licensed loan company in Singapore, specifically the heart of Singapore in Orchard. As a leader in the industry, 111 Credit upholds positive, win-win relationships and is against unfair practices.
Get in touch with us for an efficient and friendly service now. Our hospitality and experience aren’t our only specialities — we also offer a variety of loan packages, from personal loans to debt consolidation loans. If you’re ready to take up a loan with us, apply online on our website today!
