This article will shed some insight on money lenders and the different aspects of money lending.
What is a Money Lender?
A Legal Money Lender is an authorised loan provider, which, under governmental licensing, can grant small and medium sized loans.
Licensed Moneylender Singapore often offer their services to individuals rather than businesses, mostly because individuals require smaller and more manageable loans. Not to mention the fact that the lender can recover the loan or late payments more easily from an individual than from a business.
Loans tend to vary in size, which on its own is dependent on the financial capabilities of the person receiving the loan. Simply put, the more money you earn on a weekly or monthly basis, the more money you can borrow from a licensed money lender.
Loans come with interest rates, which are added to the monthly payments and are calculated based on a number of economic factors such as a the particular currency used and its market rate. Other factors also include inflation, the size of the loan, the period over which the payments stretch, various internal promotional factors, and so on. All countries have their own laws in regards to loan interest rates and how they are calculated at a base level, however in most cases, the contract that you sign with the legal money lender should stipulate the interest rate and how it is calculated.
As a general rule of thumb, the smaller the loan and the shorter the period, the larger the interest rate.
How does a loan work?
Loans are not exactly complicated, to begin with, but things tend to go out of control if you do not pay attention to the details and the monthly payments.
First of all, the person in need of a loan first figures out how much money he or she needs and in what currency. Once a figure is set, the person in question contacts a licensed money lender and begins discussing the loan.
The lender has the right to ask you to provide documentation in regards to your state of employment, proof of earnings and an economic report over a particular period of your past. These are security measures that lenders take to make sure that you will be able to pay the loan back.
After everything checks out, and the lender has the information that it needs, the maximum lending amount is then calculated. You will then be informed of the maximum amount that you can borrow and over what period.
Once a more realistic figure is discussed, and the period set, the interest rate is then calculated and presented to you. Once everything is agreed upon, a contract between you and the legal money lender is drafted and signed. The loan is then granted and the payment period begins.
As long as payments are made, and you do not fall behind on your payments, everything will be okay, and the loan will be under control. If payments are missed, penalty fees and added costs can be added and the lender can also seek legal action if needed, so make sure that you plan your finances accordingly over the length of the loan.