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Should You Go To A Pawnshop Or A Legal Money Lender? - #1 Loan Directory in Singapore | Loan Singapore

Should You Go To A Pawnshop Or A Legal Money Lender?

Pawnshops are rather prevalent in Singapore. You may be in need of some quick cash to attend to an emergency; banks won’t loan you money, credit cards debt are fairly expensive in the current economy. The slow economic growth of Singapore has had adverse effects on most people making it difficult to access loans from money lending institutions and other financial institutions. This makes it possible for licensed money lenders and pawnshops to operate and experience a rapid growth. This is because both money lenders and pawnshops do not require you to have assets for collateral as required by banks.

Pawnshops and certified money lending entities make it easy to access to quick cash. This works best for those who require small and urgent loans. Pawnshops and money lenders normally offer higher interest rates and money is available without the review of your credit records. This makes is easy, fast and convenient in the current slow economy. The instalments make it possible for easy repayments. Since the cash is available upfront, there is fast approval period taken and you get to handle your money emergency issues immediately.

What Is Licensed Money Lender

Money lenders are institutions that are approved by authorization agencies like Singapore’s Registrar of Moneylenders. Before the money lenders entities are issued with a license, they are required to take and pass a test. Moneylenders normally function under a number of restrictions such as the loan limit they can loan out, the amount of fee and the interest rates they are to charge. To a licensed moneylender institution, its reputation is very important.

These normally offer smaller loans compared to banks. They also make the loan amount obtainable much quicker than banks. This is possible when you have in the past have presented all your documentation and undergone the necessary background checks. Such a record allows you to obtain a loan within an hour from a certified money-lender. Moneylenders also charge higher percentage rates than banks, have simpler requirements for an authorization of a loan and tend to be more lenient when you hold a low credit rating.

What Is Pawn Shop

Pawnshops are fairly easy to work with. They offer loans that are secured using something valuable that you give in exchange for the loan. The valuable item- can be jewellery or an expensive watch- is retained by the pawnbroker until you have fully reimbursed the loan plus interest accrued.

Pawnshops are under the regulation of government agencies and compared to the past, they more respectable. In the past, walking into a pawnshop, people would assume and believe you to be a gambler, a drunkard or as someone with poor management of their finances. This perception has, however, changed and pawnshops are now acceptable as another option for people to get loans.

When you are uncertain of whether you can meet monthly instalments and whether you will have the money available for repayments, pawnshops are an ideal choice for you.

Difference Between A Pawn Shop And A Licensed Moneylender


Default Penalties

Certified money lenders have high-interest rates on all their loans. In case you miss a few times to meet repayments to a money lender, the amount of interest gets compounded on the money you owe. This means when you default on payment, you will end up paying a lot more than you had initially borrowed. And soon debt collectors will be making visits to you to recover the money owed.

When you make use of a pawnshop loan, and miss a repayment and are not able to pay back, the collateral you presented in exchange for the loan amount becomes the pawnbroker’s property. The pawnbroker can at his discretion sell off the item to recover the money you owe. The downside is that you will lose your precious item.

Interest Rates

The pawnshops charge very low-interest rates on loan amount borrowed. This rate is even lower than credit card companies charge. While certified money lenders charge a much higher percentage rate on the loan amount borrowed.

Repayment Plan

Money lenders have a structured repayment plan and a fixed instalment to be repaid monthly while pawnshops have flexible repayments; you get to pay when you have the money to make payments with no compounding amounts.

Credit History

Before getting a loan from money lenders they do a thorough credit history review to ensure you have a clean credit history, while pawnshops do not require looking at your credit history or do credit review.

Collateral

Pawnshops require you to present them with collateral which is a precious item that you own, while money lenders only need collateral depending on whether the loan you are taking is unsecured or secured loan.

Trouble-free Access To Money

Pawnshops offer an attractive alternative to going to money lenders. You do n not require to present proof of identity or income to get a loan, while money lender require you to hand in proof of identification and employment letter as part of the documentations they need you to submit.

Conclusion

The slow economic growth of Singapore has had adverse effects on most people. This has made it difficult for most people to access loans from money lending institutions and other financial institutions. The pawnshops and money lenders make it easy for you to access quick cash. This works best for those who require small and urgent loans.

Since the cash is available upfront, there is no approval period taken and you get to handle your money emergency issues immediately. There are various differences between money lenders and pawn shops like the repayments plan; pawn shops offer the lowest rates and their repayment plan is more flexible, while money lenders have structured repayment plan with set monthly instalments.

Money lenders charge high interests and when you miss a repayment, the amount compounds increasing the amount you had initially applied for. Pawnshops on the other hand, do not charge any penalties on any defaulted payments and the amount you owe does not compound. Pawnshops require you to present a precious item to act as collateral while money lenders only require collateral depending on whether the loan you are taking is unsecured or secured.