In this article, we are going to talk about things to consider when choosing the best money lender Singapore. Also, we will talk about what is legal lender, Difference between legal and illegal lender.
What is a legal moneylender?
Legal moneylenders are those people who have been approved by the law to give loans to people. This means that these are the financial institutions that give loans to the people who are in need. The moneylender can either be a single person or a group of private individuals. These people are an alternative to the bank loan and provide much faster service.
They also give you loans at a lower rate of interest than the bank. This is because the bank needs to pay many charges, so they take high-interest rates. The Ministry of Law (MinLaw) analyzes every lender in Singapore and tells which one is the best. Such kind of arrangement can be helpful for people who want to take a quick loan.
They also give out loans depending on the income of the person, not the credit report. This makes the chances of a person to get more and more secure and not exploited in the market. That is because there is also lender who are illegal and they are looking just same to the legal lenders. This is because they copy everything about them, like their number and also their license numbers etc.
The easy way to find an illegal lender is to check if they are ready to meet face to face or not. The MinLaw will check every month all the lenders in the market to see who is working best and not cheating. Those found cheating will be removed from the list and made illegal.
What are the differences between a loan shark and a legal moneylender?
Here is a list of some of the differences between both legal and illegal moneylenders.
- Loan amount
The minimum loan amount which every lender can give is fixed at $3000. The maximum amount will depend on the monthly income of the person. If salary is less than $20,000, the maximum is $3000 and more than that. It will be six times the income. While the illegal lender will give a high amount of loan with low rates of interest.
- Interest rate
According to the rules and regulations set by MinLaw, a moneylender can only take a 4% loan. This means that a legal moneylender will not take more than this amount of interest rate. While the illegal moneylender will promise low and then will take interest rate somewhere near 10%.
- Documentation
The licensed lender will always give you a contract to sign which has all the terms and conditions of the loan. He will then explain to you these things written and then ask you to sign if you are interested. The illegal lender will not have any kind of paperwork to do when they give you a loan. They will not also give you a contract and will try to make a deal on the phone call only.
- Type of fee charge
There is a certain restriction imposed on these lenders on taking fees from the borrower. The legal one can take $60 if the payment is late and not more than 10% as administrative fees. While the illegal lender will charge you more than the limit which has been set by the government.
- Physical office
According to MinLaw, a licensed lender is required to have a legal office with documentation. This means that you can easily make out by going to a lender whether they are legal or not. The illegal lender will not have an office. They will only deal with anyone through the phone, email, or call.
- Loan term
The maximum term for which you can take a loan is for five years, and the minimum is for one year. The legal lender will give you a loan between these boundaries, while the illegal might give you for a long time.
- License information
A legal lender must take all the necessary documentation to make themselves look legal. They need to have proper documentation to get on the list of licensed moneylenders. While the illegal lender will never try to give you their license information.
This is because if you check the license number, then you will know that they have copied it from some else.
What are the things to consider when choosing the best-licensed moneylender?
How do personal loans work in Singapore is a question that people ask when they take a loan from the moneylender. This is very simple as it takes only a little time to process, and the money is given to the borrower. Here are some things to consider when choosing the best moneylender in Singapore.
- The lenders’ reputation and creditability
The first thing to do is check whether the license is legal or not on the MinLaw website on the internet. Then you have to do a background search of the legal moneylender on Google and check their reviews. You can also look at the feedback form and even ask the people who took a loan from them. The best way to find about reputation is to talk in the market about the lender.
- Reasonable interest rate
You should check whether the lender is giving a good rate of interest or not. This is because they are only allowed to take up to 4% of the total loan amount. So they should give less interest rate than the maximum limit of the interest.
- Flexible repayment option
This means that you should check if they are providing you with a good long-term loan or not to meet all your requirements. Also, these lenders are instructed to give extra time to people who cannot pay back their loan amount.
- Hassle-free application process
This means that a legal lender will not have to do a lot of application work and get approval. They will take the request form and check the income of the borrower, then lend them the loan amount.