Here in Singapore, when you have a financial emergency, you have two main options to which you can turn to for a loan, and they are banks and private moneylenders. There are several banks in Singapore from which you can obtain a loan which include DBS, Standard Chartered, Citibank to mention just but a few. At the same time, there are many licensed moneylenders throughout the country.
Licensed moneylenders and banks work in completely different ways. Licenced money lender singapore are businessmen like any other entrepreneurs. However, in Singapore, for one to run a money business, they need to be licensed by the registrar of moneylenders. This license that they are given has restriction within which any licensed moneylender should operate within such as the amount of money that they can lend to you, a competitive interest rate and the service fees they can charge you among other restrictions.
Before you run to any of these businesses to take that loan, it is important for you to know the differences between a bank and a licensed moneylender.
Amount Of Money They Lend
In Singapore, the registrar of moneylenders regulates all moneylenders, which is a state department that determines the amount of money that the licensed moneylenders are allowed by the law to lend to local borrowers. It does not end there the regulation also limits the kind of service fees and the interest rates which a money lender can charge you when you go to him for a loan. The good thing about these regulations is that when you go to a licensed moneylender anywhere, you are protected by strict regulations.
In addition to the above restrictions, you can be sure that the amount of money that a licensed moneylender can loan you is smaller as compared to a bank. Hence if at the middle of the month you run out of cash to meet your daily needs, as you await your end month salary, you can approach a licensed moneylender for a loan to tide you over. However, if you are in need of a huge amount of money, then it goes without saying that the bank is your only option.
Transaction Speed They Approve
Depending on how soon you need money, a licensed moneylender might be the better option. This is because, at a licensed moneylender’s office, you can be able to get that fast loan within an hour or less of you visiting them. The required documents that a moneylender need are much lesser than a bank’s requirement but do prepare the required items before you approach a moneylender so as to speed the process of loan approval.
But on the other hand, if you go to the bank to get a loan, you will have to wait for a number of days or even weeks before your loan can be processed. The reason as to why banks take that lengthy period of time is the amount of paperwork that is involved in issuing a loan and the required checks to ensure your documents are in accordance with their strict requirements. This is a clear indication that the bank is not the best place to turn to if you have a pressing need of money to meet your emergency.
Credit Checks They Do
In Singapore, both banks and licensed moneylenders have the ability to handle credit checks from their clients. However, banks are always known to be stricter about the outcome. In a bank, you need to have a credible credit score combined with a low debt to credit ratio for you to qualify to be issued with a loan, especially if you need money for example to renovate your home. In addition to that, if you want to have the lowest interest rate on your loan, you must ensure that your credit score is above average when you are approaching a bank to take a loan.
If you are sure that your credit score is below average and you need a loan, you have the option of visiting a licensed moneylender near you. The good thing about moneylenders in Singapore is that they are lenient when it comes to debts and credit scores. It goes without saying that if the credit checks show that you have already taken a lot of loans from other moneylenders, your chances of being approved for a loan are minimal. This is due to the fact that moneylenders want to be sure that you are capable of paying back the loan within the agreed time.
Higher Interest Rates They Charge
In case you are not aware, licensed moneylenders can only reveal their interest rates to you when you visit them hence sometimes their rates are higher as compared to banks. In fact, in some of the moneylenders, their rates are so high that it would only be wise for you to use your credit card as compared to visiting a moneylender. If the middle of the month you need a few hundred dollars to push you to the end of the month, then it would be wiser to approach your bank to get approval to use your credit card than to turn to a moneylender.
In conclusion, therefore, as you might have realized till now, there are few differences between banks and licensed moneylenders. If you are not so sure whether the kind of loan that you need can be catered for by a moneylender, feel free to visit one near you and inquire or you can search online. Alternatively, a search with the government moneylender register will bring up a list of legalized moneylenders and their contacts.
So, between a moneylender and a bank, whom should you turn to for a loan today? This is dependent on the type of loan that you want. If you want a huge amount of money, the bank is the better option for you and if you are looking for a payday loan, then visit a legal moneylender.