Licensed moneylenders offer financial assistance in the form of loans to those who require it urgently. They do this by using their website, business directories, and physical offices to advertise their services to potential clients. Licensed moneylenders must also comply with the government’s regulations on loan interest rates and fees to avoid running into legal issues. They are also required to explain all of the loan terms to their borrowers before they sign any contract. This ensures that borrowers understand the full extent of their obligation and the charges that they may face.
Before choosing a licensed moneylender, it is essential to check their reputation. This can be done by reading reviews on their website or asking friends and family for recommendations. You should also check the Ministry of Law’s list of licensed moneylenders. All of the moneylenders on this list must have a physical office and be registered with the ministry. Lastly, you should never go to an unlicensed moneylender as they can be scammers in disguise.
A good licensed moneylender should be willing to explain all of the loan terms in a language that is easy for borrowers to understand. They should also allow borrowers to ask for clarification or have the loan officer repeat information. They should also tell borrowers about the 10-day ‘cooling-off’ period, where a borrower can withdraw from the contract without penalty. Finally, they should give borrowers a copy of the loan contract and the exact principal amount borrowed.
In addition to explaining the terms of a loan, a licensed moneylender must also provide a complete breakdown of all fees and charges that are associated with the loan. This includes the interest rate, late payment fees, and origination fee. This way, borrowers can determine whether or not the loan is affordable and compare rates from different companies.
Licensed moneylenders are allowed to charge a maximum of 4% monthly interest on the outstanding loan balance. In addition, they can impose a late repayment fee of up to $60. The interest and late payment fees can add up to a significant sum, so it is important to consider your options carefully before applying for a loan with a licensed moneylender.
Besides the fees and rates, you should also be aware of any other hidden costs that may come with a loan. For example, some moneylenders may charge extra fees for home collection. This is usually not the case, but if it is, you should be informed of it before signing the contract. You can also try to avoid this by paying your loan instalments on time and retaining all statements of accounts and receipts.
Many people turn to a licensed moneylender when they need urgent cash, but it is important to consider the risks before taking out a loan. If you cannot afford to pay back the loan on time, you could end up facing a lot of debt and stress. It is better to seek alternative credit solutions, such as debt counselling, which can help you develop a plan to get out of debt.