The high cost of living in Singapore has pushed many to take on a loan for urgent financial needs. With loan contracts formed, situations where there are debts or disputes with a legalised money lender in Singapore may surface.
If this is happening to you, breathe easy, for information and assistance are readily available. You’ve landed at the right place if you’ve been wondering how to settle licensed money lender debts and disputes. This article here will equip you with actionable steps and valuable resources to navigate your situation with clarity and confidence.
Types of loans you can get from licensed lenders
Before delving into dispute resolution, let’s establish a common ground regarding loan types and what happens when you default on your loans. Whether you’re keen on short term lending or long term loans, this knowledge empowers you to make informed decisions.
Personal Loans: Ideal for everyday needs like medical expenses, home upgrades, credit card bills or debt consolidation. Their competitive interest rates compared to credit cards make them compelling, but responsible repayment is paramount.
Business Loans: Expand your venture, acquire new equipment, or bridge unexpected costs.
Payday Loans: A temporary lifeline for urgent cash gaps until your next paycheck. Understand the terms meticulously before borrowing, compare interest rates, and only borrow what you can comfortably repay within the short timeframe.
Renovation Loans: Finance essential upgrades like kitchen remodels, bathroom renovations, or other improvements. These loans bridge the gap when upfront cash is limited.
Study Loans: Designed for both full-time and part-time students. These loans offer flexible repayment options to suit your financial journey.
Wedding Loans: Cover expenses like wedding attire, rings, receptions, and honeymoons. Consider the desired repayment term and interest rate to find the perfect fit.
Bridging Loans: Bridge the gap between selling your existing property and purchasing a new one. Remember, these loans are repaid upon selling your current property and come with a 12-month repayment window. They can be expensive, so ensure you have a clear exit strategy.
Debt Consolidation Loans: Streamline your finances by merging multiple debts into one loan, often resulting in lower interest rates and faster payoff.
What constitutes licensed lender debts?
- Loan instalments
- Late fees and charges
- Late interest
- Compound interest
- Court-ordered legal costs when the lender is successful in claiming for loan recovery
Modes of payment accepted by money lenders
The most widely used method is cash and this would always be an acceptable method of repayment. Some money lenders also allow for cash deposits via ATMs and GIRO as well.
Now that we have understood the different types of loans in Singapore, here are some tips on how to settle licensed money lender debts on time.
4 Best tips to settle licensed money lender debts on time
Early and direct communication with your money lender is paramount if you’re wondering how to settle licensed money lender debts in the best way possible. Ensure that you keep your conversations with your money lender amicable and collaborate with them.
Licensed lenders have a vested interest in finding solutions with you and will often be willing to work with you. Here are some top takeaways to note on the topic of how to settle licensed money lender debts on time:
- Negotiate a payment due date that’s right after your payday
- Make debt repayment your priority
- Set aside your salary every month for loan repayment
- Schedule repayment reminders
What can happen if you are unable to settle your licensed money lender debts?
If you find yourself unable to meet your debt obligations, it is important to know what the possible consequences of delaying or refusing to make those repayments are:
- Your debt will begin to compound on itself for each missed payment along with any agreed past due fees and interest accrued (i.e. your debt will snowball rapidly)
- You risk being stuck in a debt cycle
The options available to licensed money lenders to collect what is owed include:
- A loan contract signed with the licensed money lender is legally binding. If necessary, they can file a civil suit in court to recover the outstanding debt, interest, and legal costs
- Seizing of your collateral if you’d taken a secured loan
Furthermore, you’ll find it harder to receive approval on loans in the future due to your history of skipping repayments that negatively affects your credit score.
What should you do if you are unable to settle your money lender debts?
Prepare an overview of your finances
Before taking any action, gain a clear understanding of your financial situation. Compile a detailed list of your assets, debts, income, and expenses. This empowers informed decision-making and facilitates seeking assistance.
Communication is key
If you find yourself struggling to come to terms with your money lender revising your repayment plan, an option you can explore is involving a neutral third party to mediate and provide a resolution that is agreeable for both parties.
Alternatively, speak to your licensed money lender and be honest about your financial situation. A good licensed money lender will be willing to listen to you and share the best financial advice with you to get through tough times. In some cases, borrowers can extend their loan periods or refinance their loans.
Consider your options to making repayments easier
It is worth noting that your method of making repayments is negotiable and it is important to understand what are the options available and choose a method that best suits your financial situation.
Consider seeking help from Credit Counselling Singapore (CCS)
If your situation requires additional support, CCS, a non-profit organisation and a registered charity, offers valuable resources. They provide services like loan restructuring, financial counselling, and even debt negotiation with your lender, all free of charge.
Attending a Debt Management Webinar or completing an Online Debt Management Course is mandatory before they can assist you.
Explore the Debt Repayment Scheme (DRS)
For managing multiple debts amounting to a maximum of S$150,000, the Debt Repayment Scheme (DRS), a pre-bankruptcy government programme, allows consolidation into a single repayment plan managed by an Official Assignee.
The eligibility criteria include proof of employment or stable income, no history of bankruptcy or DRS usage in the past five years, and not a sole proprietor or partner in any company. Under this scheme, you’ll have a maximum of five years to repay your debts.
Consider filing for bankruptcy
Filing for bankruptcy should only be considered as a last resort after exhausting all other options due to its irrevocable repercussions. To qualify, you require a minimum of S$15,000 debt with no foreseeable means of repayment.
The process involves court proceedings, bankruptcy forms, proof of debt, various fees and a deposit. If declared bankrupt, your assets may be liquidated to settle debts, and you may face restrictions like travel bans and employment limitations.
How to settle licensed money lender disputes, if any?
Foremost, speak to your licensed money lender and explain your circumstances. Avoid being abusive or defensive while you are at it. If need be, get a close friend or family member to help mediate.
If you are experiencing licensed money lender harassment, consider lodging a complaint against the money lender with the Registry of Moneylenders. Licensed lenders are not allowed to harass borrowers at any point in time!
Lastly, call the police if the dispute escalates.
Do not commit to loans on a whim
Borrowing is a commitment in itself. Research meticulously, compare rates, and choose wisely. Facing financial hardship and handling disputes can be overwhelming, but there are support structures in place to help you get through them.
We at Dio Credit are here to collaborate and help you on your financial journey. Feel free to get in touch with us to learn more about our services and commitment to our customers, or apply now if you need a loan to tide you over an emergency situation.
