Singapore’s Monetary Authority (MAS) changed the regulations on unsecured loans. These changes specify the loan amount you can now borrow. The new unsecured loan limit established by Singapore Monetary Authority may not work for many individuals.
Life situations at times may require that you have some urgent funding. Therefore, you will need financial aid for some months. Your line of credit or credit card could be frozen. This is because of newly set limit on the unsecured loans.
What Happens When You Exceed The New Set Limit
If you exceed the new set loan limit, you may no longer get to carry out the transactions listed below:
- You may not get to apply for new credit card.
- You cannot access any new unsecured credit facility. This includes personal loans and credit line.
- You can apply for an additional amount. This is on your already existing unsecured credit facility.
- You cannot make charges on your on-hand credit card.
- You may not apply for increases in the limit for the existing credit card.
- You may also not get to use the on-hand credit card for settling recurring charges. These include things like the utility bill.
- You will not be able to make any cash withdrawals. Neither will you be able to issue cheque using the unsecured credit line.
Where To Get Money When The Credit Card Is Suspended
Singapore’s Monetary Authority placed limits will suspending several borrowers credit limits. Prior to finding yourself in this predicament. You will need to talk to your licensed moneylender.
A reliable and accredited moneylender will assist you. They can offer you a suitable loan type before your debts snowball out of control. The moneylender can provide you with an unsecured credit facility. This unsecured credit facility that attracts low-interests. It is offered by licensed moneylenders. Do not let yourself remain in debt. Not when there are ways. The means to help you avoid getting in deeper money issues.
The New Cap On Unsecured Debt
Since 1st June 2017, Singapore’s Monetary Authority has placed a new cap. The limit defines the amount of unpaid credit. This is what you may hold at the unsecured credit facility. This limit affects every one of Singapore’s financial organization (FIs). This new limit may be imposed on a borrower. That is when their interest-incurring unsecured loan. It goes above 18 times their monthly salary. That is when their unsecured loan stays so. Especially for 3 consecutive months.
Should this be the case, you risk losing any right to make use of credit facilities. Especially those facilities offered by financial institutions in Singapore. Several institutions will also prohibit you from getting new credit cards. That also includes the credit card uncollateralized facilities. As well as getting increments. That is on your present charge cards provided by them.
What An Interest-earning Unsecured Debt Is
Fixed charge unsecured credit is an amount of debt which incurs interest on the reducing balance. That amount is not secured by any type of collateral. An example is a property.
This unsecured interest-bearing loan is such as one charged on the line of credit. As well as on overdrafts, credit cards, and personal loans. These facilities are offered by the different financial institutions in Singapore.
This interest-earning debt leaves out credit. That is on any unsecured loans offered to you. This is on the basis of needs and purpose. Some of these unsecured loans are educational, medical, and business loans.
Financial Institutions – (FIs) Involved
The financial establishments involved are banks, credit card issuer found in Singapore.
How Total Interest-bearing Is Determined By Unsecured Debt
The credit bureaus in Singapore often collect and maintain all the credit information. This data detailing a borrower’s credit is frequently presented to its members. Some members of credit bureaus are banks, credit card issuers, and other money lending companies.
These bureaus then compute the total of all the remaining balance due. They derive this from the credit reports generated by their members. You report often indicates all debt you owe. That includes both the secured and unsecured credit facilities.
The unpaid uncollateralized credit then is further divided into 2 parts. The 2 parts are interest-bearing and non-interest-bearing debts. From these, the financial institutions will only look at the interest-bearing debt. This then helps them determine your borrowing limit. From there you are then able to access the credit report. You may get the report from Singapore’s Credit Bureau(CBS). Also from DP Credit Bureau.
An Example To Help You Understand
For instance, given that your monthly salary of S$3,000. Assuming that this what the financial organizations have on your wages data. Hence 18x your income every month sums up to $54,000. This is to say, monthly earning of S$3,000 times 18. Let’s say that you possess 3 credit cards with Citibank, HSBC, and DBS.
For those credit cards, your outstanding debt balance due is S$10,000 for each. Also, you have two unsecured credit lines. Each with OCBC as well as UOB. On the credit lines, the balance due worth S$15,000 on each card.
The fixed costs of unpaid loan for all 5 banks total S$60,000. The amount you already exceeds your set limit of 18 times your monthly wages. Let’s say that the S$60k debt is not paid for three consecutive months (i.e January- March). When the month April comes to a close, all five banks shall act. They will suspend both the line of credit and yours.
For a borrower, this means you may not be allowed to carry out different transactions. This remains so until a borrower is able to meet the below-mentioned conditions:
- You lower the interest-bearing loan which carries no collateral. This should get any amount below the sum of 18 times the monthly earnings.
- You submit your most recent salary documents. The financial institutions will review on your loan.
- The bank lifts the suspension on the credit cards and credit line. This is based on the findings they have gathered from your credit review.