Getting a Loan
Although the first place people think of to go to when they need a loan is a bank, sometimes there are alternatives to a bank which would be better to get a loan from in certain circumstances, like an urgent need for the money. Banks are of course the traditional place to get loans from but their procedures are sometimes somewhat slow and mean that although you may qualify for a loan under their criteria and you apply today, it could still be several days before the loan is approved, processed and you receive the money. This drawn out process is often too long for what someone needs the money for, perhaps an emergency of some sort but thankfully, there are other places where we can go to get a loan and getting the loan from there will be a lot quicker process, allowing us to have the loan amount in our hands the very same day as we ask for it.
These alternate money lenders though come under two categories, the licensed money lender and the un-licensed money lender. Although both may qualify you for a loan more easily than a bank would and although both will process your request very quickly; there is where their similarities end. In Singapore there is an official website that lists all the licensed money lenders to ensure that someone looking for a loan does not accidently approach an un-licensed money lender. Why Singapore are so careful in ensuring that people preferably use a licensed money lender is because an un-licensed money lender, often referred to as a loan shark, may charge borrowers an exceptionally high interest rate on the loan, one which all too often leaves the borrower in bigger trouble than they were in to start with. A licensed money lender on the hand has strict rules and regulations which they must adhere to in order to keep their license and these regulations include the maximum rate of interest they can charge on a loan. Not only are licensed money lender’s interest rates regulated but also are many of the other terms of the loan such as repayment times.
This means that a loan from a licensed money lender, although the interest rate may be a little higher, is very similar to a loan from a bank. As there are no rules regulating an un-official or un-licensed money lender, they can apply whatever interest they want and whatever repayment plan they choose, often leaving the borrower with impossible repayment targets to meet, forcing them to take a further loan at similar rates. In the worst scenarios these types of loan can end up in an almost endless cycle of payment of extremely high interest charges. It is therefore perhaps best that if you do want a loan; if you can afford to wait a few days, then go to your bank but if you can’t; go to a money lender but ensure that the one you go to is licensed.