The following can only be a brief introduction of the legal subject concerned. Before you take any action which may have legal consequence, you should first seek advice from your own lawyer or make an appointment at any District Office to see a volunteer lawyer of the Free Legal Advice Scheme.




(504) BORROWING MONEY (2) - BANKS AND MONEY LENDERS

Voice

There are many ways of borrowing cash or getting credit for the things you want to buy and there are 4 recordings to deal with this topic.

(This recording deals with banks and money lenders)

Banks usually offer the most reasonable terms on the open market. Still, terms may vary from bank to bank. Bank loans are often available only to customers of the lending bank which may make it difficult to shop around. Personal cash loans are usually limited to about ten times the borrower's gross monthly income. Business loans may be larger but security will usually be requested. You may have to produce proof of your financial position, like your income, regular expenses, and other assets and liabilities.

Money lenders are another source of cash but they are usually more expensive than banks. They must be registered and there are limits placed on the amount of interest they can charge.

Do not confuse the registered money lender with the 'loan shark'. Loan sharks are unregistered money lenders and are unlawful. Loans made by a loan shark cannot legally be enforced, but beware that loan sharks also have illegal means of enforcement.

Money lenders cannot demand more than 48% interest per year. What's more, where any loan is unfair because interest of more than 36% per year is charged, the borrower can apply to a court to charge the terms to make it fair. Money lenders must provide their borrowers with a copy of the loan agreement within 7 days. It must be containing information of the amount borrowed, the yearly interest rate, the form of any security given by the borrower and any other terms.

Date of amendment: 11th October 2023