Legal moneylenders: Not sharks, but their bites hurt

[youallhumsup]

Legal moneylenders: Not sharks, but their bites hurt
Unscrupulous tactics of some put extreme stress on borrowers

Published on Sep 23, 2011​

Not sharks, but their bites hurt -- ST ILLUSTRATION: MIKE DIZON

By Janice Tai & Stacey Chia

Factory driver Andrew Pang thought his debt problems were solved when he turned to licensed moneylenders for loans.

But when he missed a payment deadline by a day, he felt the full brunt of their efforts to collect payment.

'They would come to my office every day and shout for me. My colleagues and bosses were all shocked and I was too embarrassed to face them,' he said.

BACKGROUND STORY

Legal lenders
Who can set up a moneylending business?

Applicants to the Registrar of Moneylenders for a moneylender's licence must fulfil conditions, such as:

• be above 21

• passed a test conducted by the Registry of Moneylenders with regard to the Moneylenders Act and its rules

• have placed a security deposit of $20,000 with the Accountant-General for every approved place of business

What is the interest rate they can charge?

Under the Moneylenders Rules 2009, the maximum rate is 12 per cent per annum for secured loans up to $3,000 and 18 per cent per annum for unsecured loans up to $3,000.
These rates apply if the individual borrower's annual income on the date of the grant of loan is less than $20,000.

For those whose annual income is $20,000 or more who wish to obtain a secured or unsecured loan (regardless of amount, subject to quantum caps), the interest rate is to be agreed upon between moneylender and borrower.

For borrowers whose income is above $20,000 per annum, the interest rate usually ranges from 2 per cent to 20 per cent per month, depending on the risk profile of the borrowers.

Prohibited practices include:

Demanding SingPass usernames and passwords or keeping a borrower's NRIC or any other personal identification cards or documents
Granting loans without exercising due diligence - for example, approving a loan over the phone
Asking the borrower to sign on a blank Note of Contract
People who come across such practices should report it to the registry.
For more information, visitwww.ipto.gov.sg

Mr Pang, 45, owes $15,000 to legal moneylenders and loan sharks - 10 in all - but mostly feels the heat from the former.

Read the full story in Friday's edition of The Straits Times.