A licensed money lender offers a wide range of financial products and services to suit the unique needs of borrowers. They also offer competitive interest rates and quick loan approvals. However, it is important to note that not all licensed money lenders are created equal. In fact, some are even considered loan sharks and can cause more harm than good to borrowers. Therefore, it is crucial to find one that is compliant with local and national rules and regulations.
One way to distinguish a licensed money lender from a loan shark is by looking at their office. Licensed money lenders will display their license certificate on their office premises for all to see. In addition, they will not advertise their loans via SMS, WhatsApp, or email like loan sharks. Furthermore, if you are approached by a licensed moneylender who claims to have a licence issued by Bank Negara, it is likely that they are not a licensed moneylender.
Borrowers should look for a licensed moneylender that clearly states the terms and conditions of their loan in their contracts. This includes the purpose of the loan, repayment period, and interest rates. Moreover, the contract must be signed face-to-face by the borrower and the licensed moneylender. This is to ensure that the borrower understands and agrees to all the terms and conditions of the loan.
It is also advisable to check whether the licensed moneylender charges any hidden fees before signing a loan agreement. For instance, a licensed moneylender is not allowed to charge late payment fees that exceed 4% of the total amount owed by the borrower. In addition, they are not allowed to charge up-front service fees that exceed 10% of the total loan amount owed by the borrower.
In addition, a licensed moneylender is not permitted to threaten or harass borrowers or their families in any way. In the event of non-payment, they must send a letter of demand to the borrower or their legal representative before taking any further action. They cannot call the borrower names, spray paint their name or “O$P$” on their door, or even confiscate their ID. Those who do so are loan sharks and will be punished under the law.
A licensed moneylender should not charge more than the interest rate capped by the Ministry of Law and their fees should be clearly stated in the loan contract. Moreover, they should not offer top-up loans or second mortgages as this will place the borrower in more debt and can affect their ability to repay the first loan. They should also not ask for a deposit or security to be taken as collateral against the loan and must obtain court orders for this. Lastly, they must not make any threats against the borrower’s family members or employer. If you do not agree with the terms of the loan, then you can always seek alternative help from a lawyer.