New Tougher Money Lending Regulations In Singapore
Money lending is a very lucrative business in Singapore. The entire purchase price is often covered, with no money down, and unlike a bank, a private lender will take clients with bad or no credit. Also, a co-signer is usually not required.But such an easy and lax norm also leads to an increased number of defaulters as higher risk factors are involved. Such a situation can lead to unsatisfactory feeling for both the moneylender as well as the loan seeker. The lender loses on the money lend to the defaulters on the other hand the loan seeker loses on paying off the high interest rates. Though the situation might be a little unpleasant for both parties, but still money lending practices keep flourishing in Singapore as the country has no dearth of potential money lenders as well as loam seekers who are eager to take on the risk.
Until 2012, regulations were very lax as far as interest rates, amount of money allowed to be lent, and fees are concerned. As of 2012 the Moneylenders Act mandates that interest rates be no higher than 13 percent for secured loans and 20 percent for unsecured loans, and the maximum loan amount has also been lowered. Also, moneylenders are limited to seek specific fees and are more tightly regulated as far as unfair business practices are concerned. However, these regulations are still quite liberal compared to most norms in America and elsewhere in the West. This the reason why money lending in Singapore remains a very lucrative option for financial sector as the lending companies do make a lot of money out of their lending practice. However, the Moneylenders Association in the country has been lobbying to have these rules relaxed, which would further add to their convenience and profit margins.
In other areas, however, this lending practice is tightly regulated in Singapore. For example, a moneylender in Singapore must be licensed with the Registry of Moneylenders. Unlicensed lenders cannot enforce a loan contract if the borrower defaults. The Ministry of Law (of which the Registry of Moneylenders is a smaller part) is also pushing for a new law to ban advertisements for money lending in authorized spaces. Such stringent laws show that the tide may be changing in favor of tough regulation of moneylenders.
Lending scams, as in other countries, are widely perpetrated in Singapore. These range from emails to potential borrowers promising low rates, to websites advertising fictional companies that really have terrible business practices. Singapore is also a hotbed for companies that like to engage in these practices overseas. However, recipient nations are becoming more adept at recognizing these types of businesses and warning consumers.
Until 2012, regulations were very lax as far as interest rates, amount of money allowed to be lent, and fees are concerned. As of 2012 the Moneylenders Act mandates that interest rates be no higher than 13 percent for secured loans and 20 percent for unsecured loans, and the maximum loan amount has also been lowered. Also, moneylenders are limited to seek specific fees and are more tightly regulated as far as unfair business practices are concerned. However, these regulations are still quite liberal compared to most norms in America and elsewhere in the West. This the reason why money lending in Singapore remains a very lucrative option for financial sector as the lending companies do make a lot of money out of their lending practice. However, the Moneylenders Association in the country has been lobbying to have these rules relaxed, which would further add to their convenience and profit margins.
In other areas, however, this lending practice is tightly regulated in Singapore. For example, a moneylender in Singapore must be licensed with the Registry of Moneylenders. Unlicensed lenders cannot enforce a loan contract if the borrower defaults. The Ministry of Law (of which the Registry of Moneylenders is a smaller part) is also pushing for a new law to ban advertisements for money lending in authorized spaces. Such stringent laws show that the tide may be changing in favor of tough regulation of moneylenders.
Lending scams, as in other countries, are widely perpetrated in Singapore. These range from emails to potential borrowers promising low rates, to websites advertising fictional companies that really have terrible business practices. Singapore is also a hotbed for companies that like to engage in these practices overseas. However, recipient nations are becoming more adept at recognizing these types of businesses and warning consumers.
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