In this article, we are going to talk about the five things to consider when you borrow money from a moneylender. Also, we are going to talk about which option is better, either to take money from a moneylender or a bank.
What is a private money lender?
Private moneylenders are either single people or a group of people. They can either be random individuals or a corporation together. These moneylenders are there in the market as a kind of loan givers. They are there in the market, and they give loans to those people who request them from them.
Moneylenders are known to give out loans at a very cheap rate of interest and not a high amount. You can opt to go to a moneylender if you want to get instant cash for yourself if there is an emergency. The process, which involves the registration and also the giving out of money, is very short. That means that if you complete the process early, it will give you money within 2 minutes of filing the form.
Private money lenders have a different association to look after them and also highlight those lenders who are fraud. This is done so that these societies can protect people from getting scammed by these people. Most people say that the financial market is a very tricky place and a home to scammers. That is because most of these people stay in these places ready to scam the people.
So the moneylenders and their association are trying their best to stop these people. Due to these scammers and fraudsters, the name of these people is getting blacklisted in the world. That is why these organizations work 24/7 to find these scammers and arrest them once and for all.
What is a bank lender?
These are the commercial banks from which the people usually go and take a loan from. They do this because they think that it is the safest way to get the amount of loan that they want. They are partially right as they will get the amount they need, but it will take some time.
Also, the banks have a high rate of interest than private moneylenders. Banks take the deposits to form the public and then give it out to those people who approach them. Banks are a very old concept, just like the moneylenders, but they both are different/ The banks can give loans to people and also to businesses.
While the moneylenders can only give loans to people and only small businesses, the bank has a long process of booking the application and then transfer the money. The whole process of taking in the application, processing, and transferring takes up to 24 hours. Banks have been in the market for a long time, and people think that they are safe to use. So the people are attracted towards them like a honey bee towards nectar.
What they don’t know is that these banks are taking high interest from the people. This is how the bank makes its profit from more than a thousand people daily taking loans. These banks will also not disclose the whole reason for such a huge amount of interest on these loans.
Who to take a loan from?
Personal loan Singapore is the main option due to the rates in that country. That is because the country is very expensive, so you will need financial help to survive. This means that people need to take loans no matter what to meet their day-to-day expenses. That is why there are a huge amount of banks and moneylenders in Singapore.
Singapore is also called as world’s business hub due to the availability of banks and also many companies. Banks are a good thing to have in one’s country, but they take unnecessary charges from the people. So a question that is asked by many people is from whom I should take a loan.
The answer will be given after analyzing both of the options in the market. Banks offer you the amount you want but at a high rate of interest and for a long period. While Moneylenders take some charge, but they specify the reason also for taking charge. If a moneylender is financed by a bank, then the rate of interest will be high.
If they are financed by investors or a company, then the rate of interest is low. This is because the bank also takes a huge amount of money from these lenders. Also, the period which is offered by the moneylenders is somewhere between 1 – 5 years.
This means that you can go to a moneylender if you have short-term and emergency requirements for money. They will also give you money on the spot while the bank will take at least one day to transfer the money.
Five things to consider when you borrow money from a moneylender
Below mentioned is a list of the five things which you need to keep in mind while taking a loan from a lender.
- Alternate borrowing option
This means that you can also go to a bank of an NBFC to take a loan from. You can take either credit loans or also even you can take long-term payment loans. The loans are taken for anything, but you have to specify the reason to the lender.
- Licensed money lender
You must look in the market for licensed moneylenders to make a safe transaction. Because many lenders are legal and many who are illegal, also called scammers or fraudsters.
- Effective interest rate
This means that a legal lender will always take a lower rate of interest from its borrowers.
- Other charges
This means that the lender will tell you about any other charges you have to pay for the loan. They will not take it in silence like the banks.
- Loan recovery process
Some lenders will hire loan sharks to recover the money or even bondsmen to search and arrest the borrower if they have defaulted.