After a loan application is approved, the licensed money lender will deliver the principal amount after deducting an upfront loan approval fee, which can’t exceed 10% of the principal. It’s important to understand your contract and make monthly repayments on time. Also, always keep receipts for documentation.
Unlike loan sharks, licensed moneylenders will not loiter around your house or workplace and won’t use threats and violence to collect debt.
They are registered with a regulatory agency
As part of the licensing process, legal moneylenders are required to give borrowers a cautionary statement which warns them of the abusive conduct carried out by some moneylenders. They also inform borrowers where to lodge a formal complaint in case of any problems.
Licensed moneylenders cannot charge a fee for loan approval or impose upfront interest and administrative fees. Additionally, they can only deduct a maximum of 10% of the principal amount. Moreover, they are not allowed to threaten or harass borrowers over late payments.
If a moneylender has violated any of these rules, you can file a complaint with the Registry of Moneylenders. This agency will investigate the complaint and take strict action against the erring money lender. They can even have their license revoked or suspended. In addition, they cannot loiter around your house or workplace. They also can’t place posters, placards, bills or slogans on your property. They can’t also use scare tactics such as threatening to break your car window or damaging your property.
They do not pressure you to take out a loan
Licensed moneylenders do not pressure you to take out a loan, and they are not allowed to make threats or employ aggressive tactics. In contrast, loan sharks are not only illegal but also tend to be extremely difficult to deal with. They often use threatening phone calls, incessant letters and even visit your home or office to demand payment. These tactics can be very stressful for you and your family.
You can find a legal moneylender by looking for advertisements in consumer or business directories, on their registered website, or at their official business premises. They can also be found through advertisements placed in the local newspaper. Flyers, SMSes, and emails are not permitted under the law.
Before you borrow from a licensed moneylender, consider your ability to meet the contractual terms of the contract. Be sure that you will be able to repay the loan by the specified date, or you may face late payment fees and interest charges.
They do not charge a fee for approving a loan
Licensed money lenders are legally obliged to fulfil the loan contract on stipulated terms. However, borrowers should consider whether they are able to abide by the contractual terms before borrowing. If they are unable to do so, they can file a complaint with the Registry of Moneylenders.
Generally, a moneylender is only permitted to deduct an upfront loan approval fee of up to 10% of the principal amount. Moreover, they cannot impose late payment fees or charges in excess of the value of the borrowed amount. In addition, they should send borrowers a statement of account and receipts for every repayment made. Borrowers should retain all statements of accounts and receipts for safekeeping and documentation purposes.
Unlike legal moneylenders, illegal money lenders often resort to extortion to collect their debt. They might even threaten violence if you fail to pay your debt. They also tend to use a number of tactics, including splashing “O$P$” painted in red across the front door of debtors and incessantly calling their debtors.
They do not charge a fee for delivering the loan amount
Moneylenders are licensed to give out loans and their services are regulated by the Ministry of Law. They are also required to adhere to certain rules and regulations that protect the borrower’s rights. They must not charge any fee for delivering the loan amount, nor ask a borrower to pay before approving the loan application. In addition, they must not use illegal methods to recover unpaid debts.
However, some legal moneylenders can be abusive when collecting debts. They may contact your employer, family members, or even report it to the credit bureau. These actions can have serious consequences on your credit scores. You should always check the Registry of Moneylenders for any complaints against a particular moneylender before borrowing from them.
Moreover, no moneylender or debt collector is allowed to send you hate mail, spray your house with graffiti, or take any of your personal belongings without a Writ Of Seizure And Sale. Any such behaviour is a breach of the law and should be reported to the police immediately.