5 Key Questions To Ask Your Lender Before Taking A Loan

5 Key Questions To Ask Your Lender Before Taking A Loan

Life does not always go the way we plan, and hardships could come up without warning at any time. A notable and recent example would be the COVID-19 pandemic, which affected economies worldwide and many people altogether. But thanks to the availability of easy loans in Singapore, such as personal loans, financial help is always within reach, making licensed money lenders more relevant. Thus, if you ever need to take out a personal loan for an emergency or any other situation, it would be best to ask your licensed money lender these five critical questions before signing the deal.

1. What are the interest rates?

Interest rates for personal loans can vary depending on the lender and other factors, such as limited-time promotions or if the loan requires collateral. But even if that is the case, the Ministry of Law in Singapore has imposed a maximum cap of 4% interest rate per month for all licensed money lenders under their registry. This applies regardless of whether a loan is secured or unsecured and the borrower’s income.

While the interest rate is undoubtedly essential, looking at other loan terms, such as monthly loan payments, is also recommended. Oftentimes, lenders will lower their interest rate but, in exchange, impose several fees and penalties to increase their profits.

2. Is the loan secured or unsecured?

Loans are typically classified into either secure or unsecured loans. Secured loans require borrowers to offer a collateral asset. In the event that a borrower defaults on their loan, the lender has the right to seize this collateral to make up for their losses. Putting up collateral increases the borrower’s risk but lowers that of the lender. However, this risk comes with a silver lining: lower interest rates.

In contrast, unsecured loans do not require collateral. But since the chances of the lender recouping their losses for these types of loans in case of default, they typically incur higher interest rates.

3. What are the penalties and service fees involved?

Besides asking outright, reading the fine print of your loan contract will let you know if a loan comes with any hidden terms. A couple of notable details to look out for are:

  • Admin fees

An admin fee is essentially an up front processing fee paid before a loan gets approved. Licensed money lenders can only charge a maximum of 10% of the loan principal for their admin fees, according to the rules set by the Ministry of Law.

  • Minimum repayment sum

Virtually all licensed money lenders will impose minimum monthly payments. Borrowers who fail to pay this baseline amount will generally be charged late payment fees, increasing one’s debt.

4. How flexible are the repayment options?

Some degree of flexibility is vital in any loan since borrowers may need to adjust their repayment terms in times of unexpected financial difficulties. Thus, one should ideally ask their lender if they can easily arrange for concessions. For example, they could temporarily lower the required minimum payment sum for a few months and recoup the lost amount in another way.

5. What are the terms regarding missed or late payments?

Borrowers can be penalised with extra fees if they are late with their monthly payments. Expensive late payment fees can be quite challenging to make up for, and incurring even more than several can cause one’s debt to snowball. Thus, if the late payment fee and minimum monthly repayment sum are too high for you, consider negotiating them with your licensed money lender. Also, it would be good to keep in mind that $60 is the maximum limit for each month of late repayment per the rules imposed by the Ministry of Law.


No matter how small the loaned amount may be, applying for a personal loan is an important decision to make. Therefore, it is imperative that you know all the terms and details involved in your loan contract before signing it off. Besides reading the lender’s conditions and stipulations, asking questions is another way to get the information you need.

Look no further than Orange Credit if you require fast loan approval in Singapore from a registered Geylang money lender! We offer a range of loans to assist you in overcoming your financial difficulties and reclaiming your peace of mind. To find out more, contact us today.