Are you out of funds and been thinking of lending money from lenders available in Singapore? Because a lot of people today are experiencing financial challenges, financial institutes have been financially helping them, and two of the most popular lenders we can find in are the banks and licensed moneylenders.
Although banks are bigger than licensed moneylenders, not everyone can borrow money from the banks because they tend to have higher qualifications for an applicant to get a loan approval that is why most borrowers that can get a loan from banks are those who are financially stable and seems to really don’t need to apply for a loan.
Since banks are more difficult for borrowers to get a loan with, they would instead choose to apply for a loan from alternative ways and one of those is the licensed moneylenders who are not that strict when it comes to their qualifications compared to the banks. So, here is a thorough discussion on the differences between the two lenders:
If you are applying for a loan from banks, it is already guaranteed that there will be repayments in the future of the principal amount plus the interest rate of your loan. Banks offer two types of loans which are the specific and open-minded credit which is up to a certain ceiling amount.
● Larger loans
For loans that require a huge amount of money such as home renovation, buying a car or starting a business, it is advisable to get a loan from the banks.
● Credit assessment
When getting a loan from the banks, make sure that you have a good credit score where you have a low debt to credit ratio so you can easily qualify for their loan. Being vigilant with your credit score is also an excellent way to get a lower interest rate.
There are a lot of lenders you can find in the country today and what’s great with licensed moneylenders is that they are legal and regulated by Singapore’s Law hence you don’t have to be afraid of getting a loan from licensed moneylenders.
Unlike with a loan shark which is an illegal business that is why it is not surprising if they have a much higher interest rate compared to banks and licensed moneylenders. Aside from the interest rates, the fees that are being charged by moneylenders are also checked by the law hence rest assured that you will get a fair deal with them.
● Smaller loans
If you are applying for a small loan to fix your car or pay utility bills, it is good if you are going to have it through licensed moneylenders
● Credit assessment
Since licensed moneylenders offer a smaller amount of loans, they are not that strict when it comes to the credit score. So, if you got a bad credit score and you can’t get a loan from the banks, applying to a licensed moneylender is also a great option for you.
● Transaction speed
Do you need money immediately? Licensed moneylenders approve loans within the day thus perfect for those who are in a hurry.
● Higher interest rate
Because licensed moneylenders take risks in lending borrowers who have bad credit scores, they tend to have a higher interest rate compared to banks.