tougher rules to rein in moneylenders

the government has introduced more rules for licensed moneylenders which will come into effect from november 01, 2011.

some of these rules include:

1. moneylenders cannot place ads in newspapers
2. moneylenders have to subscribe to a telephone land line approved by
the registry of moneylenders and use it as the business contact
number
3. the manager of each moneylending outlet must be approved by the
registry
4. they must display the registry's notes to borrowers when obtaining
loans from moneylenders - a checklist for borrowers reminding them
to ask for information such as interest rates and what will happen
if they cannot pay - in a prominent location in the office
5. they cannot collect any fees before the loan is granted
6. they cannot obtain a borrower's singpass, or other confidential
passwords
7. they cannot make upfront deduction of interest payments from full
loan amount
8. they have to seek the registry's approval before employing any staff
including debt collectors
9. they have to computerise their business operations and submit
electronic quarterly reports to the registry for audits

my comments:

the moneylending business has seen a mushrooming of licensed moneylenders numbering approximately 260 now from just slightly more than 100 in 2009.

with new rules in place, customers should be better 'protected' than before.

however, the interest rates moneylenders charged has not changed. for example, the maximum rate is 12% a year for secured loans of up to $3,000 and 18% for unsecured loans of up to $3,000 and these will apply for borrowers' whose annual income on the date the loan is granted is below $20,000.

borrowers who earn $20,000 or more a year who want to get either a secured or unsecured loan will have to work out the interest rate with the moneylender.

mr kuo how nam, president of credit counselling singapore said:

"there should be a cap. from the cases we have seen, some moneylenders are charging effective interest rates of between 180% and 300% per annum."

my comments:

there are good loans and there will always be bad loans.

if a person needs what i term as emergency cash, surely the worst one is to look up your very friendly loan shark.

then who to call?

your more than friendly life insurer.

the way to instant access to fast money is through the accumulated cash values of a participating policy where up to 90% (or more) of the current cash value can be encashed in the form of a policy loan.

dependent on the insurer and the loan amount, policy loans are always available on the spot and there are absolutely no questions that need to be answered on why the loan is needed.

the interest rate payable on policy loans differ amongst insurers and the lowest currently is 5.5% per annum* from ntuc-income and will be disbursed in the form of a cheque within an hour.

*subject to change at the sole discretion of the insurer

but one caveat on policy loan (even though the interest charged is so much lower) is that the interest is compounded over the unpaid period of the policy loan.

therefore, take the policy loan if u must but like all loans, the 'hole' gets bigger with time and never ever take any loan* unless the need is akin to something that is representative of a 'life or death' situation.

*with the exception of good loan/s.

but at the very least, u know u do not have to run around like a mad hound to lay your hands on almost instant fast cash.