Licensed Money lenders Vs Banks
What is a licensed money lender?
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Licensed Money Lenders In Singapore Are Governed By The Money Lenders Act
Licensed money lenders are registered with the registry of moneylenders where they are required to be compliant with the Moneylenders Act. You should also be able to find a licensed money lender listed on the Singapore Ministry of Law website. As a rule of thumb to avoid loan shark, always check on the website for list of licensed moneylenders in Singapore before engaging any money lenders.
The law requires licensed money lenders to go through the contract of loan which consist of quantum, interest rate, late payment fees, admin fee and etc. with borrower in a language they understand. Borrower’s identity and personal information will also be kept confidential.
Legal money lenders recover debts in a similar fashion as banks do. Borrowers would not have to worry of unconscionable methods of debt recovery.
You might come across times when you are unable to pay your credit card bills timely hence leading to a drop in your credit rating, drop in credit rating are typically hard to reverse. Thus, if you are looking to take up loan at banks the chances of approval are slim as banks judge on individual credibility largely based on credit ratings.
Licensed money lenders are more lenient with credit rating assessment. However this does not mean that all loan applications will be approved, if the credit rating indicates red flags, further documents may be requested to facilitate loan approval.
The required documents to process a loan application at a licensed money lender is much lesser compared to banks requiring a comprehensive list of documents taking up to weeks before your loan can be processed. Often, banks would only approve loans to those who still have that extra cash to service the monthly instalments. For many individuals, taking up loan only comes into place when they are in urgent dire needs for it. In such cases, a licensed money lender with less stringent requirements is a better option for quick loan approvals. And with the right documents you can get your loan approval in as fast as 30 minutes.
Shorter Payment Terms
Compared to licensed money lenders in Singapore, Banks generally offer lower interest rates. However the loan tenure is also a significant factor to consider. Bank loan comes along with a longer tenure to serve which means being a debt and paying off interest for longer period of time.
Licensed money lender in Singapore offers loans with shorter loan tenure which offers you the freedom of being debt free as soon as you are able to clear off your loan.