In Singapore, every licensed money lender is regulated by the Moneylenders Act, which comprises a set of regulations established by the Ministry of Law.
This law stipulates that any changes to a loan contract must comply with the law and are only permissible under specific circumstances.
Conditions Under Which a Money Lender Can Change Loan Terms
Lending money in Singapore is a licensed and regulated business overseen by the Ministry of Law. Since such regulations protect borrowers from predatory lenders, money lenders are required to operate fairly and transparently. This means that when dealing with a licensed lender, borrowers expect safeguards to prevent sudden, unfair alterations of their loan terms.
However, circumstances change sometimes, and again, you will wonder whether, in Singapore, the money lender has the power to alter the loan agreement’s terms.
The money lender can vary the loan agreement terms under the following conditions;
- When a borrower requests for a change. The ordinary variations involve changes in cases when a borrower requests an extension of time to repay a debt or a change to the amount required in installment due to inability to pay. In such cases, a written acceptance must exist on the part of the money lender.
- Mutual agreement. The variation can also occur even on mutual agreements of both borrower and moneylender for revision in terms.
- Legal or regulatory changes. This is also done when the law or regulations change, and the terms have to be changed to meet the new requirements of the law. In such cases, the moneylender must clearly explain the changes to the borrower.
Procedure for Changing Loan Terms
A loan agreement can only be changed following the due procedure to ensure transparency. The money lender must notify the borrower in writing of the changes that might occur in advance and provide a written explanation of why the change exists. The new loan agreement must be executed, and both parties must sign the document.
Notably, the parties should be wary of the limitations to contract agreement changes. The changes should not exceed the maximum amounts provided by law under the Moneylenders Act, its rules and regulations, covering interest rates and charges.
If the change relates to repayment terms, the money lender must provide the borrower with a new statement of account detailing the adjusted amounts and due dates.
Restrictions on Changes on Loan Agreement
Specific changes in the contract are not allowed. Some of these restrictions include;
A money lender cannot unilaterally adjust interest rates or fees beyond the ceiling rate. The relevant ceiling rate currently applicable is 4 % p.m. for the interest rate and $60 p.m. for the late payment fee.
The Variations cannot be effected on repayment terms or made under threat or coercion without the borrower’s voluntary consent.
Borrower’s Rights When Terms Are Changed
This entails the right to changes in the loan terms. For instance, as a borrower, one can refuse to accept changes in loan proposals that are unacceptable.
A borrower can opt for an alternative or take legal action against the lender. Mainly, in the case of an unjust or unlawful deal, a complaint against a money lender can be launched to the Registry of Moneylenders.
Additionally, if there are disputable loan conditions, borrowers are entitled to mediation services provided by the Ministry of Law or other recognized bodies.
Conclusion
As discussed above, according to the Moneylenders Act of Singapore, a licensed money lender has the right to change the terms of a loan only under specific regulated and specified circumstances. Importantly changes must be documented in writing with the consent of both parties and must comply with legal requirements.
Notably, borrowers must remain vigilant and advocate for their rights whenever there are changes to their loan terms.
Lastly, at JeffLee Credit, we comply with the legal framework for loan contract changes, ensuring compliance and transparency in all our dealings. Therefore, you can contact us for a trustworthy money lending process.