In this article, we will discuss how to tell the difference between legal and illegal lenders. Also, we are going to discuss why to take a loan from the lender and how to take the loan successfully.
Why take a loan from the moneylenders?
Moneylenders are the people who are there as an alternative to the bank. This is because the banks take a very high rate of interest, and usually, they exploit the people. So the lender is there in the market, and they work on giving the loan to the people at a low rate of interest.
People should prefer to take a loan from these lenders as they are affordable. That is because they do not take a huge amount of interest from their customers. This makes it good for the borrower as they will not have to pay a lot of money on a loan. This will help them to save money and utilize them someplace else.
They can use this money in the place for which they have to take a loan. You can either take a personal loan or a business loan, depending on your problem. If you want to get quick cash to pay for the little things, then you can take a personal loan. This will give you enough money to pay for all the remaining debt or any remaining payment.
Also, a personal loan generally come at a low-interest rate, so it is better to take a loan from a lender. The first thing you have to do before you take a policy from them is to research it. After gaining some knowledge about that policy, you can decide what to do very easily. These lenders target those people who have been rejected to give a loan by the bank.
What is a licensed moneylender?
These are the group of people or an individual who make an organization that gives the loan. They give out loans at a very low-interest rate than the other financial institutions. Licensed moneylenders are those who have followed the rules and are approved by the law to give loans. There are certain rules and regulations set by the Ministry of Law (MinLaw).
These are the rule which they have to follow every time to stay legal on the market. If any of the lenders breaks or does not follow these rules, then they are taken of the licensed moneylender list. Also, this is a list that MinLaw maintains every month by surveying every website.
Licensed moneylenders are there in the market since the early times and were called traders. First, they use to trade different items with the people for food or anything they want. Earlier on, this kind of payment for things was called the barter system. Where to take one item from someone you have to give them something that they want.
These lenders are only allowed to sell in the market and advertise using cards, boards, etc. They cannot use any direct communication with the borrower as it is illegal to do so. The lender does not have the authority to make the contract according to their own will as it is illegal to do so.
How to get a loan from a legal lender?
A private lender will have more likely to give out a personal loans Singapore than any other bank. This is because these lenders give a low rate of interest as compare to the bank. Also, to take an unsecured loan, you can go to these licensed moneylenders. This kind of setup should not be exploited so that people use it almost daily for their enjoyment.
The best way to get a loan approved from the legal lender is to have a good income history. This will help them to determine how much amount they can give you a loan. There may come a time that you need urgent cash, and you have a bad credit score and are rejected by the bank. So you can go to these lenders as they give loans based on the monthly income of the person.
Many times people forget to check whether a lender is legal or not, which is a bad thing. That is because the illegal lender, who is also called Ah Long in Singaporean, is also called a loan shark. There are these loan sharks in the market who are scammers and give high loan amounts. They will promise to give you a high amount of loan at a low-interest rate but, in the end, will change the policy. To take a loan from this, you will have to approach their office, and then you have to fill out the application. After that, you will have to make a contract with the lender and sign on it then you can get the money.
How to tell the difference between legal and illegal moneylenders?
Here are some steps which you can use to tell the difference between legal and illegal lenders.
- They will explain the terms to you
This means that before you take the loan, they will meet the borrower face to face. When they meet face to face, they will decide the contract of the loan and will then explain to you the terms.
- They will have you sign a contract
A licensed lender will always have you meet face to face to decide the terms and conditions. After which, they will need you to sign the contract, and they will take a copy of it and keep it for reference.
- The licensed moneylender will never charge you interest above the market price.
- They can charge three types of fee
The first one is that they can charge you $60 if you have a late repayment fee remaining per month. The second is that you have to pay 4% interest monthly to the lender. The last if you can pay up to 10% of the annual amount of the loan as the administrative fee.
- You can check their validity by entering the license number on the MinLaw website.