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Facts You Must Know When Applying Loan for foreigners in singapore

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1. What should I consider before taking up a loan?

You should keep these in mind:

  • Have you consider other alternatives before approaching a moneylender.
    There are various financial assistance schemes offered by various Government agencies that you may contact them for assistance.
  • You are Legally obliged to fulfil any loan contract you enter into with a licensed moneylender.
  • Alway borrow only what you need and your ability to repay.
    Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family.
  • The law requires moneylenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract.
    Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable.
  • Consider carefully before agreeing to any contractual term which allows a moneylender to lodge a caveat on the sale proceeds of your real estate property upon default of the loan repayment.
    When a caveat is lodged against your property, you will not be able to sell it without first repaying the moneylender in full.
    If the repayment is taken from the net proceeds from the sale of the property, it can wipe out all or a substantial portion of the proceeds.
  • DO NOT commit yourself to a loan until you are satisfied with the terms and conditions.

2. How much can I borrow?

For secured loans, you can obtain a loan of any amount.
For unsecured loans, you can obtain:

  • Up to $3,000, if your annual income is less than $20,000;
  • Up to 2 months’ income, if your annual income is $20,000 or more but less than $30,000;
  • Up to 4 months’ income, if your annual income is $30,000 or more but less than $120,000; and
  • Any amount, if your annual income is $120,000 or more.

3. What are the interest rates moneylenders can charge?

For loans contracted between 1 June 2012 and 30 September 2015, moneylenders are required to compute and disclose to you the Effective Interest Rate of the loan, before the loan is granted. If your annual income is less than $30,000, the interest rate which moneylenders can charge, for both secured and unsecured loans, is capped at:

  • 13 per cent Effective Interest Rate for secured loans; and
  • 20 per cent Effective Interest Rate for unsecured loans.

The Effective Interest Rate takes into account the compounding effect of the frequency of instalments over a one-year period. This means that Effective Interest Rate better reflects the actual cost of borrowing over a one-year period. Visit https://www.mlaw.gov.sg/content/rom to find out more about how the Effective Interest Rate is calculated from 1 June 2012.

If your annual income is $30,000 or more, the caps above are not applicable and interest rate is to be agreed upon between the moneylender and the borrower.

 

With effect from 1 October 2015, the maximum interest rate moneylenders can charge is 4% per month. This cap applies regardless of the borrower’s income and whether the loan is an unsecured or secured one. If a borrower fails to repay the loan on time, the maximum rate of late interest a moneylender can charge is 4% per month for each month the loan is repaid late.

4. What should I do after being granted a loan?

  • Make sure the moneylender delivers to you the full principal amount of the loan as stipulated in the Note of Contract, there should be no instalments or fees deducted up‐front.
  • Pay the loan instalments on time to avoid incurring late payment fees and late interest.
  • Make sure the moneylender issues to you a dated and signed receipt every time you repay your loan or pay any fees in cash, and check it for correctness (e.g. name, amount, date).
  • Make sure you receive a statement of account for all your loan(s) at least once every 6 months, and check it for correctness (e.g. name, amount, date); and
  • You should retain all statement of accounts and receipts of payments, as documentation and evidence of payments.

6. How can I tell whether an advertisement is from a licensed moneylender or an unlicensed moneylender?

Licensed moneylenders are permitted to advertise only through these three channels:

(a) business or consumer directories (in print or online media);

(b) websites belonging to the moneylender; and

(c) advertisements placed within or on the exterior of the moneylender’s business premises.

ALL OTHER CHANNELS ARE PROHIBITED.