After getting a loan from a money lender in Singapore, you most likely feel the whole financial burden has been lifted off your shoulders.
But imagine that your money lender suddenly wanted to change some terms of the loan after having approved it. Is it even legal?
In this post, we’ll explain it in simple terms so that you understand how things stand.
What is a Loan Agreement?
A loan agreement is a contract binding between you and the moneylender. The agreement comprises all the conditions of the loan, including the interest rates and the manner and periods when repayments must be effected. Also, it stipulates whether some fine is required in case of a breach of contract.
Notably, while the licensed money lenders in Singapore are usually very trustworthy, you shouldn’t be ignorant about the loan agreement, the terms and conditions contained in it as well as your rights as a borrower. It’s crucial to thoroughly understand and agree with the terms of your loan before you sign on any paper. Also, ensure that you have a copy of the agreement in your possession for reference.
Importantly, before signing, if you find yourself in a situation where something is not explained properly, don’t hesitate to seek clarification. Mainly, make sure you fully understand the loan agreement and your rights as a borrower.
Can a Licensed Money Lender in Singapore Change the Loan Terms After Approval?
Well, it depends. Licensed money lenders are bound by very strict government guidelines where, once the loan agreement is approved and signed, the contract terms are legally binding and cannot be negotiated or amended except if mutually decided upon.
Mainly, according to the Moneylenders Act, a lender cannot unilaterally change any of the conditions of your loan after approval and signing. This means, your lender can’t raise your interest rate or add new fees without your consent. Your rights are protected by law, ensuring your financial security.
However, with a few exceptions, the terms can change. These exceptions include;
- Mutual agreement: Changes can only occur if both lender and borrower accept amended terms. For instance, if you have trouble keeping up with the repayment schedule, the lender may offer to increase the tenure of your loan in lieu of slightly higher interest. In this case, the agreement must be changed and signed.
- Breach of Contract: If one party fails to comply with the loan terms, such as not paying the loan as agreed, the consequences can be a fine or alteration of terms as stated within the agreement. Therefore, read the fine print carefully to understand what constitutes a breach.
- Regulatory Changes: Sometimes, a change in the government’s regulations may affect your loan terms. For example, if the maximum rate of interest that can legally be charged is reduced, the lender may be compelled to lower your rate.
What To Do If The Terms Change?
Mainly, every licensed money lender in Singapore is bound by law, and you, too, have all the rights to protect yourself from any adverse situation.
Therefore, if your licensed lender tries to unilaterally alter the terms without seeking your permission, you shouldn’t panic since you are protected. Instead, you can do the following:
- Check Your Agreement: Go back and check your agreement to see if there is a clause that allows modification of the loan terms. If they did otherwise, they most likely breached it.
- Communicate with the Lender: Go to your creditor and ask why. Sometimes, this might be in error or an administrative mistake.
- Complain to authorities: If the lender intends to change the conditions in their favor without informing you, you can always complain about them to the Registry of Moneylenders. You can do this by filing a complaint. Alternatively, you can seek legal advice to understand your rights and options in such a situation.
Conclusion
Remember, a loan is a two-way street. You and the money lender both have responsibilities, and they should be laid out clearly and equitably from the very beginning. Lastly, stay informed to be in a much better position to handle any surprise or particular element of surprise coming your way, empowering you in your financial decisions.