applying for a loanmoneylender
What Happens When You’re Unable to Pay a Moneylender on Time?
- Late interest and fees accumulate. When you’re unable to make a timely repayment, a licensed lender is allowed to charge a maximum of 4% interest per month on the overdue loan amount. Additionally, licensed moneylender late payment fees, capped at $60 for each month of late repayment, can kick in. While these interest rates and fees do not sound exorbitant, the truth is that they can add up quickly, leading your debt to magnify, hence making it tougher to pay off your loan completely.
- Your credit profile will be affected. Apart from snowballing debt, failing to make a timely repayment to a licensed lender will result in late payment records in your Loan Information Report. This may negatively impact your creditworthiness and ability to qualify for future loans.
- You will receive payment reminders. When you’re unable to pay a moneylender in Singapore, you can expect to receive payment reminders via text messages or phone calls at reasonable times of the day. A Letter of Demand (LOD) may also be delivered to you at your residential address or workplace.
- Legal action may be taken against you. If the issue persists and you’re still unable to pay your moneylender after multiple payment reminders, the moneylender has the right to initiate legal proceedings for debt recovery. Note that you may be liable for the legal fees if the licensed moneylender decides to file a case against you in court.
- Using abusive language, threatening violence, or engaging in any form of harassment, including locking your gates, splashing paint, or sending threatening messages to you
- Seizing your property without obtaining a formal court order
- Charging hidden and excessive fees that were not agreed upon at the point of contract signing
Can a Moneylender File a Case in Court?
- The borrower responds to the Letter of Demand: Negotiations between the lender and borrower will commence, and if a favourable settlement can be reached between both parties, it will not be necessary for the moneylender to file a case in court.
- The borrower does not respond to the Letter of Demand, or both parties are unable to reach a settlement: As a next step, the moneylender may file a case in court. Depending on the amount owed, the claims may be filed with the Small Claims Tribunal (SCT) or the civil court.
Options to Consider if You Are Unable to Pay a Moneylender
- Speak to your lender to renegotiate the terms. As daunting as it may seem, approaching your lender as soon as you anticipate financial issues or immediately after missing a payment may be the most effective solution. Be candid about your situation and come prepared with a realistic proposal for what you can reasonably afford. For example, you might suggest extending the loan tenure or request a temporary suspension of payments.
- Seek professional help. Financial hardship can be just as stressful as any other life challenge, and getting professional help from social service agencies can help you better navigate this rough patch. From facilitating discussions with your moneylender to developing a Debt Management Plan (DMP), credit counsellors offer invaluable guidance and support to help you regain control of your finances.
- File for bankruptcy as a last resort. If all other options for managing debt have been exhausted, you might want to consider filing for bankruptcy. It’s essential to note that bankruptcy can have severe and long-lasting consequences on your credit history and overall financial freedom. Hence, it is advisable to seek professional legal and credit counselling advice to fully understand its implications before considering bankruptcy as an option.
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