Differences Between Licensed moneylenders and Banks
Do you know when banks will lend you money? The answer is when you have two houses, earn $15k a month, and have absolutely no need to borrow money. The less you need to borrow money, the more they want to lend it to you. It’s like some sick financial joke, right? And it’s also the reason why some Singaporeans are now turning to licensed money lending company. But are they a viable alternative, or just loan sharks with better manners? And are they really more relaxed than banks?
A money lending company in Singapore http://imoneylender.sg/ is licensed by the Registrar of Money Lenders. The license has restrictions on the amount they can lend, the fees they can charge, and the acceptable interest rate. It also means that they have passed a money lender’s test. So what are the differences between licensed moneylenders and banks?
Firstly, money lending companies in Singapore focus on smaller loans.
I contacted six different licensed moneylenders; all of them were emphatic on small loans only. One of the agencies offered me a maximum loan of $1,500, even though my income exceeding $30,000 a year. I felt like a 12 years old child begging for an advance on my allowance. The legal restriction is two to four times your monthly income, depending on how much you earn. However, most money lenders will not lend you the full sum. For most of them, their customers are people who need payday loans, small amounts to tide them over. They cannot bear the risk of someone’s $10,000 renovation. That makes money lenders ideal for small, urgent fees. Stuff like getting your car fixed, paying a clinic, or paying for a budget plane ticket. Remember, a money lending company in Singapore is not an alternative for large business or renovation loans.
Secondly, money lending companies in Singapore are fast.
Most of the moneylenders offer to approve the loan within 30 minutes. Because most moneylenders are small and flexible companies. There are fewer bureaucratic layers than a bank, and the loan amounts are not big. This is one way they can help clients that banks can’t. If you need the money right now, in order to avoid legal complications, or you need the money for medical reasons, the bank might be too slow. If you don’t qualify for a credit card, a money lending company in Singapore is your only alternative for fast cash.
Finally, money lending companies have higher interests.
Most money lenders won’t tell you their interest rate over the phone or e-mail. One of the companies contacted required to discuss this only face-to-face. And it’s a happy coincidence for money lenders. Because there’s no way to instantly compare all their interest rates, borrowers can’t just zero in on the cheapest ones. Their target market is people who need urgent loans. Exactly, these people don’t have time to shop around for the lowest rates. Fortunately, Singapore has a finance blogger who prefers checking these things to having a social life. Most of the money lenders I approached offered me interest rates of 25% to 30%. There seems to be why you’d get 30% instead of 25%, and it all seems more arbitrary than the line-up of an S-League team. But one thing’s for sure: Credit cards are cheaper than licensed money lenders. So try your best to get plastic before going to a money lender.