Approved lenders are commonly seen as they sprout all over the country, come knocking on your neighbor’s door, and are seen all over the neighborhoods of the heartland.
In this article, we consulted the Credit Bureau Singapore on the different types of pawnbrokers, how you can differentiate between approved and unapproved lenders, and how borrowing from approved lenders will affect you.
We do not encourage excessive borrowing. However, if you need to borrow money from pawnbrokers, do it properly and safely with our guide.
What are Approved Lenders?
Under the Ministry of Justice, there is actually a Pawnbrokers Registry that oversees the registration and regulation of pawnbrokers in Singapore.
The purpose of this very special registry is to cultivate a safe and professional money lending industry.
The Pawnbrokers Act defines a licensed pawnbroker as a person, whether as principal or agent, who is authorized to engage in moneylending business in Singapore under a license. Is presumed to be any person, other than the exempt lenders, who lends a sum of money in return for a larger sum to be repaid.
Where to find approved lenders?
Do not respond to those loan text messages or free money scam Telegram messages. Instead, check out this list of Department of Justice approved lenders here.
There are currently 153 approved lenders in Singapore, such as:
- Accredit Sdt. Limit
- Credit King Pte. ltd.
- Ez Loan Pte. ltd.
- Fast Money Pte. ltd.
- Gold Credit (S) Pte. ltd.
- Happy Cash Pte. ltd.
- I-Credit Pte. ltd.
- JD Credit Pte. ltd.
- Money Loan Karthik Pte. ltd.
- Ready Bee Pte. ltd.
- Credit Max Pte. ltd.
- Credit Orange Pte. ltd.
- Prosper Credit Pte. ltd.
- Quick Credit Pte. ltd.
- and more…
You’re better off with one of these licensed lenders than with an unlicensed… type of fish.
How to borrow money from approved lenders?
Now that you know how to check which lender is approved, check their website for their interest rates and terms.
Approved lenders are allowed to advertise their products on their own websites.
However, Approved Lenders are not allowed to advertise via SMS or social media. If they’re on social media, stay away – they’re either unlicensed or flouting the rules.
Finally, make sure lenders arrange an in-person appointment at their registered office address here. Online loans are not allowed. Most likely, the approved lender will require you to visit the Credit Bureau Singapore and also pay for a credit report.
Difference Between Approved and Unapproved Lenders
According to the Moneylenders Credit Bureau, here are the top 4 differences between approved and unapproved lenders that you should look out for:
- Approved Lenders may only advertise in business or consumer directories (in print or online media), lender-owned websites, and advertisements placed inside or outside the premises lender’s business.
- Advertising channels such as text messages, phone calls, social media platforms, flyers, emails or other forms of advertising would come either from approved lenders operating in violation of the rules or from unapproved lenders*.
- Approved lenders are also required to meet the borrower in person at the approved place of business to conduct a face-to-face physical verification of their identity before granting a loan.
- A loan transaction conducted entirely online and in locations other than approved places of business is prohibited.
But since there are banks, why would one borrow from approved lenders?
Reasons why Singaporeans borrow from approved lenders
Banks and their personal loans may have been your first choice. However, some of us may have reached our unsecured borrowing limit with banks.
In addition to this, licensed lenders offer different types of loans compared to banks. They also have different repayment schemes and interest plans.
For example, a payday loan pictured above on the Cash Mart website is usually paid off the following month without interest charges. However, an administrative fee of 10% of the loan principal amount applies.
Other approved lenders, such as 118 Credit, also offer a wider range of loan products, such as “Fast Urgent Cash”. Which brings us to the next point.
The decision to borrow from a bank or approved lender may also depend on different factors such as:
- urgency of funds (banks usually need a few working days and do not operate on weekends)
- Repayment period
- Amount of the loan
- interest rate
Because retail banks and licensed lenders have different risk appetites, they operate under different lending guidelines. For example, their risk assessment on salary, loan duration and repayment history may be more flexible with approved lenders.
In exchange for a faster processing time and more flexible borrowing criteria, expect a higher interest rate or administrative fee when borrowing from an approved lender.
Assess your repayment capacity and keep monthly repayment within a comfortable range to avoid a bad repayment record on your credit report and/or loan information report!
7 things to know before borrowing from approved lenders
If you decide to borrow from approved lenders, here’s what you need to know:
- Make sure the lender gives you the correct principal amount of the loan. The initial loan approval fee deduction is capped at 10% of the principal amount.
- Pay loan installments on time to avoid incurring late fees and additional late payment interest.
- The lender must issue you a receipt each time you repay your loan. Check its accuracy (eg name, amount, date).
- Check that you receive an account statement for all your loans at least once every January and July and check that it is correct (eg name, amount, date); and
- Keep all account statements and payment receipts as documents and proof of payment.
- All lenders are allowed to charge a fee not exceeding $60 for each month of late repayment.
- All lenders are permitted to impose court-ordered litigation costs for a successful claim by the lender for loan recovery.
All of your borrowing records from approved lenders will then be consolidated by the lenders’ credit bureau. If you’ve lost track of which lenders you’ve been with, or need to review your repayment history with approved lenders, you can get a copy of your $0.50 Loan Information Report at www.mlcb.com.sg.
If you encounter unauthorized money lending activity, report it to the police hotline at 1800-255-0000 or submit the information online at www.police.gov.sg/iwitness. Members of the public can also call the National Crime Prevention Council’s X-Ah Long hotline at 1800-924-5664.
ALSO READ: Bank Loans vs Approved Lenders: Which is Better?
This article was first published in MoneySmart.