Moneylenders act amended on 1st June 2012

Rules governing moneylenders in Singapore are being tightened to further improve protection for borrowers, especially for those in the lower-income group.

The Moneylenders Act has been amended to strengthen the enforcement powers of the Registry of Moneylenders and safeguard borrowers' information from unlicensed moneylenders.

The change means the registry can now engage any person, for example, auxiliary police officers, to help conduct more frequent and thorough enforcement checks on moneylenders.

The amended law makes it a criminal offence to share information on borrowers with unlicensed moneylenders. It is also an offence for moneylenders to carry on their moneylending business at an unauthorised place of business regardless of when it commenced.

Senior Parliamentary Secretary for Law Sim Ann said changes are also made to the Moneylenders Rules.

The changes include mandating the use of an Effective Interest Rate instead of a Nominal Interest Rate for loans borrowed.The Effective Interest Rate takes into account the compounding effect of the frequency of the instalments, thus, better reflecting the actual cost of borrowing.

Meanwhile, three fees which moneylenders currently charge are removed.

They include fees for the acceptance or renewal of a revolving credit loan, a fee for accepting the loan application, and a fee for payment not being made by the electronic funds transfer.

The rules will affect nearly 243 moneylenders in Singapore and take effect from the June 1 this year, to give the industry sufficient time to adjust to the changes.

Now the law change seem to impact these moneylenders to come up with more tricks and explore the loopholes. Without acceptance fee and other 'hidden' charges.. How far can they go now?

The aftermath of non advertising

Things seems gone quiet after the authorities banned these legal moneylenders to advertise on newspaper, tv and SMS.
They explore other way by acting on existing customers. Simply asking them to collect some statements and even telling them for their current promotion.
These group of customers are already the foundation of their business.

There are still new customers though but a lot of marketing gimmick is no longer available to lure them into their business.
In the nutshell, people who are new to borrow from them is now spreading all over and even the market,
No matter what, these loanshark can still advertisement on the website which 2 of the best known moneylenders are doing all along.

Yes they have the lowest monthly interest in the market but please include the acceptance fee which is now stablize at 20% of your loan amount. So it is actually the minimium 20% interest aka acceptance fee u have to pay even when they claim 0% interest when u repay in 7 to 14 days. .

New advertisement rules for moneylenders

By Sophie Hong
my paper
Friday, Oct 14, 2011
Advertisments by licensed moneylenders promising "fast and easy cash", "instant approval" and "low interest rates" will be prohibited from Nov 1, as a result of new measures introduced by the Registry of Moneylenders and Pawnbrokers.

Senior Parliamentary Secretary for Education and Law Sim Ann, who announced this yesterday, said the new measures are aimed at tightening the regulation of licensed moneylenders and safeguarding the interests of borrowers.

A spokesman for the registry said: "Based on our monitoring of the conduct of the business, we felt that more needed to be done to ensure professional conduct among industry players."

Under the new directive, licensed moneylenders are allowed only three advertising channels. They can do so through business and consumer directories in print or online media, via their business website and on the premises of their approved place of business.

Any other forms of advertising, such as on fliers, in text messages and even newspaper classified ads, will be illegal.

Besides regulating where licensed moneylenders can place ads, the registry also laid out directives on the ad content.

For example, licensed moneylenders are required to state a fixed telephone line - if they wish to include a contact number - instead of a cellphone number.

The ads must not have misrepresentations, omissions of material fact, and information which cannot be verified. They must also not create unjustified expectations or have graphics that convey inaccurate impressions.

Licensed moneylenders who advertise beyond the three allowed channels may be fined up to $20,000, have their licences revoked or suspended, and have their security deposit of $20,000 forfeited.

Those who breach the rules on ad content may be fined up to $20,000 and face a jail term of up to six months.

"In 2009, we lifted the restriction on advertising, with the intention of allowing the borrower to obtain information about licensed moneylenders, as well as the loan interest that they offer, so that an informed decision can be made on the part of the borrower, before he or she decides to take up a loan," said Ms Sim.

However, more aggressive advertising was observed after that, she added.

"This brings about another concern, which is that with excessive advertising, it may inadvertently encourage people to borrow beyond their means to repay, and encourage a reckless borrowing culture."

For more information on the new measures, visit www.ipto. gov.sg

What happened if you default payment?

What do the moneylenders do if debtors fail to pay up? Unlike illegal loansharks, they refrain from traditional methods like splashing paint on doors and embarrassing their debtors by writing “O$P$” graffiti with names and phone numbers attached. Instead, all loan applicants are required to sign a form addressed to their employers and authorize the moneylender to claim the debt deductable from their monthly salary.
 
This way, debtors are unlikely to default by the prospect of embarrassment and humiliation in the event that the forms are sent to their employers and the possibility of losing their jobs. This carries precisely the same effect as the traditional loan shark tactics – they heap intense psychological pressure on the debtor, who has to worry about the consequences of not paying up. However this will be the last resort as causing the debtor to lose their job will make it even harder to recover the loan.
 
After all the procedure are carried, the moneylender will engage the services of a debt collection company to recover the debt. But this is an expensive option they have to pay the debt collector 50 per cent of whatever amount he manages to recover.
 
It is understood that the “debt collection companies” also adopt the usual tactics including repeated harrassment of the debtor, his neighbours and his family members. Here are some case studies taken from some forum on the website.

"Dear Sir,

I am a female age 42. I want to lodge a complaint against a Licensed Money Lender " ??? Money Lender . On the 21/04/2011, I went to ?? Credit at ??? Jurong East #??-????. I meet 2 uncivilised man called Steve and William which previously I meet at ??? Money Lender at 511 Grandlink Square #??-??. They used vulgar language to scold my mother when they threaten me to make payment.  Is this the Licensed Money Lender way of doing ?  Should I called them " LICENSED LOANSHARK."  As I've owe ??? Money Lender ( S$800.00). Before that, I've went to their office last month to plead for minimum payment as I know that I am unable to pay them. They give me terms of 11th months to S$200.00 monthly. On the 05/04/2011, this is my first payment. When I got difficulties to make first payment. They sent the Tianlong Debt collectors to my house and bang hard on the door.
They threaten to said if I dont pay on 30/04/2011, they will wait for me at my place. They also called my office for payment and used vulgar language. I've also owe some other licensed money lender, when I go their place for negotiating, they are more polite and we came out for a win-win solution. I should condem this Steve & William as barbarians or uncivilised . They must mind their speech . It is not that I dont want to pay, I cant pay S$200.00 monthly as I've too many debts to pay. I borrow money from them is for my family and children as my husband is another bastard who never take responsibility for the home.  This is my 3rd re-loan from ??? moneylender.  I hope that as Members of Singapore Moneylenders Association, you would come forward to help me settle this dispute in a win-win solution. If there is no response from your association, or no one else I could turned to,  I would bring up this matter to High Government Authority. Hope to hear from you soon . Thank you."


CaseStudy 2

"Please help. I am really stressed out. My marriage is on the verge of a breakdown, my family is in a mess. There is really no one that i can talk to.

It all happens when i started taking loans from licensed money lenders in Singapore. All went well with the weekly repayments until recently when Iras froze my bank accounts due to tax matters. I have had about 8k of working capital seized from the accounts and was not able to service the weekly repayments. I have negotiated with some of my creditors and have been able to settle the loans amicably except for others.
 
They simply would not accept the there will be a delay in the repayments or any deferments that i proposed. They continue to load the late payment charges, offset my earlier repayments at an exorbitant rate and worst, sent debt collectors to my house.
 
There was even an incident whereby a debt collector took a photograph with his mobile phone of my wife receiving the letter of demand on my behalf. (i was out at work during that time). I called up the credit company on this issue and was informed that that is a standard procedure despite the fact that i have already paid an installment the day before but was not updated in their computer system.
 
I have no qualms about them doing anything to me as i am the borrower but to do anything to my family which is an innocent party is definitely not acceptable. The hard tactic employed by the debt collectors we strongly feels tantamount to harrassment and i have lodged a police report.
 
Because of these issues, my daughters dare not stay home and my wife has suggested a divorce.
All for a 1.5k loan.
 
I have borrowed from illegal monely lenders before till they were wiped out by the government. The interest they charged is cheaper than the legalised money lenders without the acceptance fees,upfront payment and exorbitant late payment charges. But i have never felt so stressed out.
 
Of course all these information is made known to me prior my borrowing and i do not deny the fact that i am not responsible. O$P$, that i know and i do not have the intention not to pay the creditors.
 
I am on track to settle most of the debts but the continual accrued late payment charges on daily basis charged by some credit companies will not only handicap my plans but make my mission impossible.
 
I sincerely need arbitration with these hardcore credit companies. What is taken will be repaid. What they need to make will be made. All i am asking for is a deferred payment with minimal late payment charges to settle the debts amicably.
 
Besides here, please advise where else or who else can help with the mediation with the creditors.
 
Please help. On the way to a breakdown!"

Defaultors down by half and acceptance fee up by 2 times

More moneylenders doing checks on loan applicants
from CNA
Posted: 14 June 2011 1425 hrs
Singapore dollar
--------------------------------------------------------------------------------
SINGAPORE: Licensed moneylenders are becoming more careful about who they lend money to. Over half of them have joined credit bureaus, giving them access to credit checks and the payment history of individuals applying for loans.

The DP SME Commercial Credit Bureau said moneylenders are the fastest growing group of new members, with more than 200 joining in the last 12 months.

One licensed moneylender, I-Credit, said the number of defaults across its portfolio of loans has dropped by more than half since joining the credit bureau.

It said the ability to do a credit check is also a benefit to the applicant.

The company said as a responsible business, it does not want to lend money to individuals who can't manage their debts.

- CNA/cc

The number of defaultors down by half and acceptance fee up by 2 times?
What is the rational?

Only I-credit's default figure down by half? or the rest of the licenced moneylenders loan blindly?

Legal Moneylender - prepare to pay them 50% more for what you borrow

Despite claim that they are finding hard to run this business, there are more companies showing up in advertisement in the Newpaper. It is obvious that some are under the same 'boss'. My recent finding really horrifying me...

With no deduction of first payment, prepare to pay additional 6% interest. On top of that the acceptance fee rocket from 5% to 15-20%. which is 3-4 times more. Adding the interest for 5-6 weeks. It is indeed more than 50% more to pay. As such they can offer low interest which is masked inside the acceptance fee. So these legal loansharks are growing fat... Maybe should call them a loan dinosaur. I believe the illegal moneylender do not charge that high interest.

With the recent GE rallying for vote, it is surprise that no one bring up this issue. It is more surprise that such business can be run in broad daylight.

So it is inflation and hope you find this information useful.

Private Moneylender going online.

Surprise Surprise...now the pie has shrunk due to increasing competition.
It is not surprise that with the Internet and latest technology that these legal loanshark are promoting themselves bring their service closer to you from home. Their service are rather fast and some can even approve your loan application online.
Of course you will need to follow up by bring your relevant document to their office as well as signing the IOU before the loan is finalize.

I am rather impressed that some of them do take the effort to beautify their website and I am also glad that some of them do provide the detail on their website. This is in fact what I am looking for as upfront and honesty rather than hiding the facts and getting people to make their way down to their office and wasting their time and give in to their terms.

Talking about how most of them giving general statement and sweeping advertising slogan..lowest interest and flexible repayment. The catch is on the acceptance fee. This acceptance is really what goes into their pocket so they make the smart move to collect the interest and profit first and play around and market with the then interest rate. Despair some providing transparency, most of them still hide the ugly fact on the interest detail.

Browsing the site, I found few sites offering payday loan with interest of $2/day. You are to repay the loan fully on you payday or maximum 30 days. What is the catch? Look at the acceptance fee! 20%. No matter what you can't escape from high interest in total.

Going thru this business for some time, I realize that customer service will be grow if you are a genuine and serious customers. Most of the time you can negotiate for discount, better deal such as lower acceptance fee when you reloan and the fact you never give them any problem.

I discover that if you are a good customer and you can repay the loan early, go for those ah Beng people and ah Beng looking office. How to describe ah Beng office is hard to describe until you made a comparisation. But Why? You may ask...
These ah Beng money lender provide and will waive off a lot of fee and sometime waive off the rest of the interest if you made early repayment. But if you go to those 'high class' and formal looking office, they simply go by the book. Meaning that no discount will be given even if you made early repayment and seldom will they waive or lessen the acceptance fee. You also have to provide plenty of document to them.
But if you default, the treatment is likely to be reversed 360 degree and you can work out a solution with them providing that you honor it. They will respect customers who dare to step out and admit they are problem rather than go MIA. But again if you fail so again.. Most likely is the debt collectors' jobs now. You can expect what type of debt collectors you will see and most will visit your workplace first.

So think twice before you seek their 'help'..

Higher interest & higher acceptance fee..

With more private lenders offering no 1st payment, that means additional 1 week interest to be paid. However it's seem the weekly interest has gone up to 6.66% per week of the principle loan. This can easily chalk up to 40% for 1.5 months. I was inform that Illegal Loan shark also up their interest from 20% to 25%. However who is going with inflation of Singapore.

The acceptance fee has gone from 5% from the 1st time I start this blog to as high as 15% or even 20%. Add to the interest it can be as high as 60% interest just for 6 weeks. OMG!

The acceptance fee seem to be their assurance to loan less in case of defaulting and also their form of customer service by charging you less acceptance fee or waive your interest if you repay easy.

Few days back...I personally witness a borrower trying desperately to loan 5k. Haha! Yes I am back for some tour in Peninsula Plaza.. He claim he earn $4k a month and no debt with banks or any other lenders and even tell the counter girl to check. I was wondering why he did not approach the bank. He said he need it only once and that's it. Sadly the staff did not honestly tell him that for first timer it is just $1k loan even you are as rich as Bill Gates. It is still $1k. As their SOP, the staff ask the man to go for coffee and will call him if it is approved or SMS him if it it not. The result Is simple.

Amazing more people are approaching them and it seem this is really a money world, cash in hand with no considerisation it will be going towards the another people hand after that. The best thing is more and more of these companies are surfacing and some of these companies are under the same Boss or management... For some reasons, maybe if their license ger revoked..etc.
This remind me of the bubble tea era but look again... Bubble tea is back. And not forgetting it is one of the oldest trade which can be compete with the lifeline of cockroach. Lol!

Interesting comment from associate of moneylender

Okay, I got a comment from an associate. He claim that the government charge 17% tax regardless of recovery.
I would like to say that this 17% tax is on the PROFIT NoT on the principle loan and this tax apply to all corporate business in Singapore.
if this tax is high... Then they have to make their profit 5 folds? So they need to charge more than 200 for 1k loan.. So they can pay $34 to tax, wow... Good excuse.

Anyway back to the topic.
So comments that some moneylender insist them to go to their office personally even though they know their loan will not be approved. Hence wasting their tine and transport $.

I can't say for all moneylenders, I know there were moneylenders who provide better service and orovide their info honestly. Those do not usually are those that want to end your call early as long as you earn $20k a year. They would just call you to go down personally with some required documents. They will give the interest rate and fee in general or range. These group of people are indeed sickening.

Here are the guidelines to prepare if you insist to visit them.
some moneylenders only do weekly loan even they advertise monthly loan is available. Probably this is less risky and they got more cash to roll.
Need loan more than $1k, if you are 1st time lender, well forget it. The most is 1k and subsequently than you will be given slight yes slightly higher loan cause they are rolling your money with you paid interest and fee.
Be prepare to pay 10%- up to 20% processing fee. Which means at least 10% of the money is gone even they don't deduct your 1st payment.
Do not be naive and fooled by flashy advertisement like no interest, free 3 months interest, these usually apply for short period like no interest for 1 week but 5-6% interest per week after that or no interest for 3month for 6mth to 1 year loan. In the end it's the same or you are paying higher. The interest rate is standard for weekly which is 5-6% per week.. It Per weekly of the principle loan.
For monthly is 10%-15%. But expect a higher processing fee for the lower interest given.

Hope for more feedback from these moneylenders customers.. Cheers.

Invasion of Legal Loanshark

Surprise surprise!

Indeed this has become a very good business and it seems to cover 85% of the classified ads on
The Newpaper and these ad are even more than job recruitment ad.

With repetition of ads by the same moneylender and all the marketing gimmicks..
Free interest, monthly repayment and no admin fee.
I can tell you that they all work the same. The fact that more of these moneylender even operate
In the heartlands has conclude that there is no stopping them at the moment.

But the day will come.. Remember that last time there were a lot of ads on cpf investment where rouge
Financial consultant for cash of up to 200 buck for every $10k invested from cpf. Now it is gone when the government make some adjustment for cpf investment.
Recently all the 'dirty' spa ads are also getting less. No doubt that the police have done their job to raid these business.

Back the how these moneylenders charge. Despite the fact they are seeming trying to compete with each other.
They can't run away from the fact that they are shark.

Free 1st week interest? By not deduct the first payment mean you have to pay interest for another week. So it's the same. Smart huh?
No admin fee? 5% processing fee when your loan is approved. This will mean for every 1k, you are paying at least 50 and usually it will be 70 plus the whatever charge.

On top of that, it is 10-15% interest per month if you are going by monthly installment. It will be 100-150 dollar per month for 1k borrowed.
It may seem less but don't forget your principle loan. for 15% interest, you need to pay 317 per month for 6month. So how much interest is that.? 100% interest rate not forgetting your processing fee.

There is a list for directory of these sharks at sml999 website.
Take care!

Low Interest... whole bunch of craps!!!

Mushrooms of Legal Moneylenders popping up and cover 70% of the classified pages in Newpaper. Offering free interest and interest as low as 10%...

Here is the catch... As interest rate is low is when you are able to return the money within a period of time such as 1 or 2 months. Free interest if you can return in a week.

The Real catch... Where does their earning goes then? It is in the approval fee which is acceptance fee+admin which can be as high as 15% of your loan. add the 10% and and you are actually paying 25% interest for the loan.

What can you say about that?

More Private Money Lenders Popping Up.

It has been long since I blog...

It seems these legal loansharks are getting more and more active. I also found 1 of them adding a comment in this blog. He said to put ourselves in the moneylenders' shoes for those who borrowed and did not return.

There is some logic but they simply expose the loophole in the new law on moneylender act. Thus they open their business only to those who earn $20k per annum so they won't be CAPPED at 18% per annum on interest. Therefore they can charge up to 15% per month. Thus more of these business come by as they do not have to avoid the law anymore.
SO why they do not open their business to those who earn less than 20K per annum? Simple LOANSHARK! add to the loan approval fee of 3% and they are worse than illegal loansharks.

They just paid couple of $k and they can start their business. The only thing i can think of that benefits the government and people of Singapore is they will be paying taxes and reduce the vandalism act and hostile threat to the borrow who default on their payment.

However on the other hand, I witness people who visited their firm which is usually a small office do simple have the look of losers. Apology for me saying that but it certain given me such an impression. Perhaps i do have sympathy on them which they are likely to have no way out.

My conclusion is unless it is matter of life and death, these moneylender should be your LAST solution to all your financial problem or else you are plunging deeper.