A licensed moneylender provides financial solutions when people find themselves in a tight situation. They offer a quick and convenient process in comparison to traditional loan methods. It is important to choose the right lender for your needs, though, as not all money lenders are created equal. It is possible to avoid scams and unsavory practices by taking the time to do some research before choosing a licensed moneylender.
Licensed moneylenders must assess the borrower’s ability to repay before approving a loan. If a moneylender ignores this and is willing to lend without considering your income or financial status, that is a red flag. Harassment: It is against the law for a moneylender to harass a borrower or their family members. If a lender uses threats, intimidation, or other scary tactics to pressure you into repaying your debt, it is likely they are not licensed. Licensed moneylenders must follow strict guidelines when following up on debts, which include sending a letter of demand to your address or workplace and visiting your home if necessary.
Upfront Fees: Licensed moneylenders must list all fees upfront in their contracts, and they cannot charge more than 4% interest on personal, payday, foreigner, and bridging loans. If a moneylender asks for upfront fees or hides these in the fine print, they may be a scammer.
Lastly, a reputable licensed moneylender will have a physical office and will advertise their business in multiple ways including online, in phone books, and in business directories. They should also have an easy-to-understand contract with all terms and conditions clearly written in plain language. If you have any doubts about a moneylender’s legitimacy, check the Registry of Moneylenders on the Ministry of Law website and read Google reviews from other borrowers.