We all needed a little money in emergencies, and we’ve been told never to borrow money. There are licensed moneylenders, but what are they and how are they different from banks. There are actually companies out there that make money by legally lending cash to other people from your own earnings, at an interest. If you live in Singapore, you can choose a money lender Singapore to help you with the money.
Licensed moneylenders are regulated by the moneylender’s act 1951. They include a cap on how much they are allowed to lend out, fixed interest rates, and guidelines on how they run their business. Basically, the law is pretty strict about how these guys operate so that you don’t harass people like other unlicensed lenders. But how do you know they are a real deal.
Check the legibility
Legal moneylenders need a license to operate. That’s why they are called licensed moneylenders. And cannot have a criminal record or be bankrupt. You can even lookup a company’s registration number on a Ministry of Urban Wellbeing. Housing and local government website. If the company’s name isn’t there, you might want to stay away from them.
How exactly the loans work?
All loans work the same way, whether from money lenders or a bank. And when you pay them back, they earn profit through interest rates. Licensed moneylenders are only allowed to charge interest between twelve to eighteen percent annually. Depending on whether security, giving up something available you have as a deposit, for a loan is given or not.
They do accept hand phones or even bigger items like the car or a house. Banks, however, have different interest rates ranging from three percent to eighteen percent and a deposit or a down payment, depending on what the money is used for? How much you borrow? And how you want to pay it back?
Sometimes banks can choose to lower interest rates or extend tenures to help the public. Due to the current Covid-19 situation, a lot of people and businesses postpone loan payments by six months. This was especially helpful for people who weren’t able to earn money by working from home.
So in what cases should you use a licensed moneylender over banks?
Moneylenders don’t usually give out loans above ten thousand bucks. But they can get approval much faster than banks. That is because their pool of money isn’t as large as the big guys, as interest rates are usually there, the only source of income.
They also don’t do a detailed dive into, how you finish your payments in the past or your credit history. Since their main business is to give out loans, it’s in their best interest that you get one. Of course, you would still have to give them some paperwork to prove that you’re worth lending money to. Because of this, they would be more helpful for small emergencies like car maintenance or medical needs.
How Fast Do You Need Funding?
Moneylenders will help you to get your money as soon as possible. Hard money lending is faster than conventional bank loans. Each money lender works in different timeframes. Most of them took seven to fourteen days. However, there are also some of them who can process loans in 5 days.