The secret to responsible borrowing from a money lender is knowing how much you can borrow based on the different parameters.
To get answers on how much one can borrow from a money lender, many contact a licensed money lender for help. They need to know how much they can borrow whenever they are faced with a financial crisis, a need for cash to purchase something big, or having short-term cash flow issues.
Who is a Money lender
Dealing with credit requires the highest level of credibility, trust, and transparency. Therefore, to ensure you are dealing with a credible lender, you have to establish who a legitimate money lender is.
Mainly, the accredited money lenders in Singapore are registered and operate within the strict stipulations of the Ministry of Law. The regulations aim to protect the borrowers, where there are specific limits to how much you can borrow, interest rates are capped and reasonable, and the loan terms are transparent.
Equally important, you should know the distinction between licensed money lenders and unlicensed ones, commonly called loan sharks. Mainly, unlicensed money lenders are not regulated. Since their dealings are not regulated, they may be willing to extend large sums to prospective borrowers. However, this is done with significant risks, hidden costs, and unethical practices.
Therefore, with this knowledge, always check a money lender’s credentials through the Ministry of Law’s official website in advance.
Factors That Affect Amounts One Can Borrow
1. Borrower’s Annual income
A borrower with an annual income of less than $20,000 will be allowed to borrow $3,000.
Notably, if your annual income is $20,000 or greater, you can borrow up to six times your monthly income.
2. Residency
If you are a citizen or a permanent resident in Singapore, your borrowing limit relates directly to your income.
Notably, the limits are slightly different for foreigners living in Singapore.
For instance, if one’s annual income is below $10,000, one can borrow a limited amount of $500. On the other hand, if one’s income is from $10,000 to $20,000 per year, a sum up to $3,000 is allowed. Those earning more than $20,000 annually can borrow six times their monthly income.
3. Legal framework
The legislation of loans in Singapore, as it is in many parts of the world, has such a framework that keeps loans within people’s reach yet manageable.
The legal framework offers maximum borrowing limits. These borrowing limits are meant to prevent over-indebtedness. The limits enable borrowers to manage their financial burdens without stress. What a money lender can give you may differ due to other factors.
4. Borrower’s creditworthiness
Any previous good repayment history or credit standing will increase the probability of approval for the amount considered, which is the legal maximum.
Notably, the lender investigates all your ongoing loan repayments and credit card loans as outstanding commitments to ensure that an added commitment for the new loan amount will not overcommit your loan repayment capability.
5. Employment stability
A regular income from a stable job gives the lender confidence in your repayment ability. This will make the lender willing to lend more than if you are self-employed and without a stable source of income.
In the case of a self-employed person or a freelancer, they may be asked to show more documents proving the continuity of their income.
6. The purpose of the loan
This may also affect a lender’s decision. For instance, loans taken for urgent needs, like medical emergencies, are looked upon more favorably than loans for discretionary spending.
Therefore, if you are taking a loan for an emergency, you will likely get the maximum amount. On the other hand, you are likely to get a lesser amount if you borrow for discretionary expenses.
Conclusion
Understanding how much a money lender in Singapore can lend is the first step to responsible financial decision-making.
Lastly, always be ready to furnish your moneylender with full details to help determine how much loan can be extended to you.