Choosing Between Banks and Licensed Money Lenders in Singapore

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Choosing Between Banks and Licensed Money Lenders in Singapore

It is a paradox. Banks lend money to people who do not need it, while genuine borrowers often do not get an approval for bank loans. For the average customer, borrowing money from banks is a difficult task. Thankfully, there is an alternative way to arrange loans. People can borrow from licensed money lenders in Singapore. If you are in need of money, but not sure where to get it from, read on the comparison between banks and licensed money lending services.

How fast can you borrow?

If you have all the required documents, the approval time generally is half an hour. The entire process gets over in under an hour. This is because unlike banks, money lender services ask for lesser credit background. That’s where licensed money lending scores big over banks. The idea of borrowing money depends a lot upon how fast you can get your money, and if it is taking too long in a bank, you would be better off seeking the services of a money lender.

What about the loan amount?

Licensed money lending is all about small loans. For instance, if you’re buying a house, it is going to be a long process anyway. For that reason, you should contact your bank. Moneylenders offer small amounts, so if you’re fixing your bathroom, or are paying your rent, they are a better option. Generally, the loan amounts they offer are a third of your income, and they’re legally restricted to offer only as much as four times your monthly income. You can also get a payday loan that you can repay when you receive your salary.

What is the difference in interest rates?

The only drawback money lenders have vis-a-vis banks is that they disclose interest rates in person. This is necessary because detailed explanation has to be made in a meeting. You would have to visit the institution and you usually can’t compare instantly. Interest rates, therefore, are on the higher side when you borrow from a licensed money lender. The reason behind this is that money is often being offered to people with a poor credit rating.

How does credit score matter?

Banks’ concern with credit rating can be frustrating. If your credit score is plummeting and you are missing payments, managing it in a short period of time is tough. A bank will outright reject a customer with low credit rating.

However, money lenders do not focus on credit that much, since they are not giving away a huge amount of money in the first place. Background checks are conducted, and if you have outstanding payments, you could be rejected. However, if an individual can provide proofs of a fairly decent income, they can definitely get some quick cash from a licensed money lender.

The biggest upside of borrowing money from lenders is that it is far more convenient to apply. You can visit various lenders’ websites and quickly compare the services offered by them, along with the terms and conditions. To add, moneylenders are under an obligation to explain to you the terms and conditions of the loan in a language you understand.