A money emergency may arise anytime without prior warning, and if you need urgent cash to meet your financial obligations, it would be best to seek the assistance of a licensed money lender. This type of finance company is a financial institution authorized to lend money to individuals and businesses based on their financial status and credit history. A licensed money lender can offer loan options that are more flexible than those offered by traditional banks, and can be much faster to process.
However, before you sign any loan contract with a money lender, it is crucial to check that they are indeed licensed and compliant with all local laws and regulations. This will ensure that they don’t charge exorbitant interest rates or other unfavourable terms to their borrowers. Look out for these red flags to avoid getting ripped off:
Unclear or Vague Loan Terms
Licensed money lenders are required to clearly explain all terms and conditions of their loans in their loan contracts. This includes the repayment schedule, interest rate charged, and any fees that may apply. They should also be able to answer all of your questions satisfactorily. If you feel that they are not doing so, it is best to find another licensed money lender.
Unlicensed money lenders typically advertise their loan offers via SMS, WhatsApp, and flyers. They may also charge higher interest rates and charges, which can easily spiral out of control. You can avoid these scams by verifying a money lender’s license with the MinLaw website. They should also display their registration number prominently on their business materials and contracts.
Besides checking for their license, it is also important to do some background research on the licensed money lender you are considering. A reputable licensed money lender will have an established reputation in the market and have good customer reviews. In addition, they will also have a physical office and will be able to verify loan documents face-to-face.
Licensed money lenders are also regulated by the Moneylenders Act and must follow a code of conduct in their business operations. This means that they must not use abusive language or behave in a threatening manner towards their borrowers. They should also not ask for your personal information such as passwords or PINs to your bank accounts, and should not request for any other details that they aren’t required to. You should also stay away from any money lender that is unable to provide you with a copy of the loan contract. If they do not have a registered address, this is likely a sign that they are operating illegally. Moreover, they should not lodge a caveat on your property until you have fully repaid your loan. This is because it can hinder your ability to sell your property in the future. If you want to get started with a licensed money lender, look for one that offers full-service management of license research, applications, renewals, and compliance.