You know when banks are most keen on lending you money? When you own two houses, have a monthly salary of $20k, and don’t need a loan. The less you need money, the more the banks are prepared to lend you. This is some kind of sick joke, but that’s the way it has been with banks and that’s the way it probably always is. Because of this reason, many people turn to money lenders to sail over a financial emergency.
However, are licensed money lenders a viable option? Are they just same as loan sharks, the only difference being in their better manners? Or are they really not as demanding as banks, especially when it comes to running a credit check or processing a loan request? Read on to find out.
Money lenders who are licensed cannot be compared with loan sharks. The former are bound by law to follow certain rules and regulations, and in the case of a dispute, you can approach the relevant authority.
Here are some main differences between the two.
As per the rules, you can get a loan of up to 2 or 4 times your salary, depending on your annual salary, from money lenders who are licensed. However, in reality, most money lenders offer less than that. The reason is simple: the risk taking the capacity of money lenders is not huge and that’s why they are most comfortable in offering only small loans. Banks, however, can offer you big loans.
So if you need a payday loan or small emergency loan, approach a reputable money lender. However, if you need to renovate your house completely and plan to spend $12,000, you’ll have to wait until you become eligible for a bank loan.
You can get a loan within an hour of submitting relevant documents from a money lender. Banks, however, take a long time to process a loan request. The speed of loan approval is one of the main advantages offered by money lenders.
This goes without saying. Money lenders charge a much higher interest rate than banks or for that matter credit card companies. Try shopping around a little to get the best interest rate. However, remember that you will have to invest some time, because money lenders usually tell their rates only when you meet them, and not when you call them or contact them via the Internet. However, it is worth the effort, as you can save considerable amounts of money.
Contrary to popular perception, legal money lenders Singapore do have certain criteria for lending money, but their criteria are more lenient than of banks and credit card companies. While money lenders are less fussy about credit score, they may deny you a loan in case you’ve outstanding loans from several lenders. Just like banks, money lenders also do background checks.