When you are about to take a loan

It is a big responsibility to take up a loan, any loan. Whether it is a payday loan, a business loan, a foreigner loan, a personal loan or any form of financial commitment for any reason, you need to be well aware of your responsibilities and the risks involved. So, you might want to consider all your options and exhaust them before deciding to approach a moneylender in Singapore.

What are your options?

Approaching a moneylender means you will be entering into a short to middle term financial commitment. Before you do that, look at other ways that you might be able to avoid this because you could well have a more comfortable alternative. This includes finding options like:

  1. Government assisted funding
  2. Grants and subsidies (for businesses)
  3. Investment from friend and families
  4. Interest free loans from direct family members

When all that has been exhausted, and you see no other ways, then perhaps engaging a moneylender would be your next option

Legal obligations

In Singapore, once you enter into a contract with a moneylender, you are legally bound to fulfill your part of the agreement. Therefore, you must be extremely sure and confident that you can do this for the term involved before agreeing to anything. This is simply because it means you will be going into a commitment that will have some strain in your financial health for sure. Failure to service the loan means that you have breached the contract and that will have consequences. If you make your payments late, then it might cause more frustration not only for you but your family members as well.

Conditions and Guidelines for borrowing money

In Singapore, moneylenders have to explain in detail and in the language that you understand of the terms and conditions before the agreement can be reached. A copy of the loan contract must be given to you as well. Like any other form of contract, once you signed it, it comes into effect. Therefore, it is extremely crucial that you know what you are signing. In fact, you should read and understand the terms of the contract fully. You must take note of the following:

  1. The interest rate
  2. The repayment period
  3. Any additional fees and charges involved
  4. Late repayment procedures
  5. Early settlement fees

Another important issue that you must consider is the ability of the moneylender to lodge a caveat which will have implications on your real estate property in the event that you fail to service the loan. When this occurs, it means that you will not be allowed to sell any of your property before settling your loan with the moneylender completely.
Meanwhile, you should always shop around for the best and most suitable moneylender before you make any decisions. NEVER rush into any agreement and do not be ‘forced’ to sign anything until the terms and conditions fully satisfy your queries.

The Loan Amount

This is an issue which a lot of borrowers always overlook. They think that taking a higher amount could ease their financial burden but do not think about what happens in the longer term. You must always borrow within your means. The monthly repayment installments should be the most important issue here because it would determine if you are able to live comfortably and for how long. As a rule of thumb, the monthly repayment installment should not be more than a quarter of your disposable income each month.

Before you sign the contract

This is something which you must do with no room for compromise. You must not take it for granted that everything is taken care of. Read the terms and conditions of the contract over and over again. Check with a lawyer if you have to so that you know for sure what contract you are entering into. Check the fees and whatever charges that are involved and sign only if you are 100% sure and confident that you can pay.

After given the loan

You must ensure the following when the loan is approved:

  1. Ensure that the full amount is disbursed to you as agreed. Never accept anything if it is a cent less than stipulated in the contract
  2. After the money has been accorded to you, you must ensure that you pay the loan installment on time and per scheduled. There are late penalty charges if you fail to do so.
  3. Every time you make a payment, ensure that get a dated receipt with a registered company name and address. This will ensure that there will be no dispute in the future