The money lending business keeps running simultaneously in the world having the financial bank institutions.
Even though there are bank and other strong financial institutions that can lend money on loan for people with the good and proper paperwork, there is a category of people in the world who prefer the private licensed money lenders for loan purposes.
The basic reasons for this particular preference are the urgency of the money and hassle-free paperwork. The legal money lenders need a proper license from the governing body of the region to operate. That is why they are called the Licensed Money Lenders.
Becoming a licenced moneylender
In order to get a license for lending money, the interested lender should go through a procedure of setting up protocols. There are lists of documents to be submitted to the governing body, which varies from region to region.
The person who is aspiring to become a licensed money lender cannot have a criminal record or be bankrupt. The governing bodies which give the license for money lending business always go through the background check for the applicants.
These background checks are done thoroughly before giving a license to the aspiring money lender. Hence it is always safe and recommended to borrow money or take loans from such licensed money lenders since they go through a long procedure of legalities before being eligible to lend money.
And yes, you can borrow money from licensed moneylender who is on our favourite bucket list of the top ten moneylenders in Singapore.
If a person wants to borrow money from a licensed moneylender, they can always check the validity of the license online on their government website.
If the registration isn’t found on the website of the local government, then you need to be cautious before proceeding with the money borrowing process. If the company’s name or lender’s name is not present in the registry, you might have to stay away from them even if they are readily willing to lend you the money.
ADVANTAGES OF BORROWING MONEY THROUGH LICENSED MONEY LENDERS
The first and foremost advantage of borrowing money from licensed money lenders is that they come in need of short-term emergencies. The licensed money lenders do not need a lot of paperwork which saves you a good time as compared to banks and financial institutions.
The licensed money lenders will not go for a thorough background check of your credit history for lending you the money.
The interest rate for the licensed money lenders has a fixed capping which makes it much better for the borrower to make money since the chances of exploitation decrease. The next advantage is that even if you fail to repay your loan amount on time, you can repay it later as per the availability of your financial situation, and still, it will not affect your personal credit history in a bad way.
The money lenders do not update your personal credit history in the financial market; hence you still have the same personal credit history that you had prior to taking a loan from the money lenders.
The chances of involving collateral deposit are very less in borrowing money from licensed money lenders, so it becomes almost risk-free for the borrower to take a loan in urgency and repay it in the given time. You can easily find the money lenders online as well these days by just searching online with “Moneylenders near me”, and you will get a huge list of money lenders if you are in any given city or regions like Singapore.
You can also verify the authenticity and validity of the license of the moneylender that you are borrowing money from by just going on to government websites for finances and check it over there.
The reason for you taking a loan from the money lenders is never asked, which is another advantage over the banking and financial institutions’ loans since the money borrowed from money lenders is always treated as short term personal loan and interest rates.
There is another advantage of taking a loan from licensed money lenders that even if you are a new citizen to the region, you can still make money from these licensed money lenders without any hassle since you can just deposit a small object or property that is valuable enough for the processing of the loan.
DISADVANTAGES OF BORROWING MONEY THROUGH LICENSED MONEY LENDERS
The basic disadvantage of borrowing money from licensed or unlicensed money lenders is that in most cases, you might have to deposit a collateral property of yours, which can be valued equal to or more than the loan amount.
This collateral property that is deposited with the moneylender can be seized by the moneylender if you fail to repay the loan amount in the given time.
The next disadvantage is that you do not have strong paperwork involved in the loan process of borrowing money from licensed or unlicensed money lenders. This means that even if you have made the repayment of the loan and closed your file in the given time, still this will not affect your credit history with financial institutions in a good way.
You will not get the benefits of good credit history if you take a loan from money lenders. The next disadvantage of borrowing money from licensed or unlicensed money lenders is that you might have to pay slightly more amount as the interest on the principal amount as compared to financial and banking institutions.
The interest rate with licensed money lenders can vary between 10% to 18% depending upon the amount you are borrowing and the tenure for which you are borrowing the money.
The interest rate that is being offered in some cases of money lenders can be charged on a monthly basis as compared to the annual interest charges that are fixed by banks and financial institutions.
This monthly interest charge can cost up to more than what you might expect, and hence it is always recommended to check the proper details of the loan you are taking before proceeding further.
If you are looking for a loan that you need for a longer time of repayment, then this type of borrowing money can be very costlier for you since it will cost you a fortune to repay.