Find The Best Personal Loan Providers In Singapore: Licensed Money Lenders Or Banks?

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The elevated standard of living and the current inflation rate in Singapore has necessitated people to rely on personal loans to meet critical financial requirements. Keeping pace with increasing demand for cash flow, growing numbers of financial institutions offer personalized loans to their customers at distinct terms and rates. To avail of the best possible deal for getting emergency funds in Singapore, you can choose two alternatives. The first one is a typical personal loan, availed from Bank & the other one is financial help from licensed moneylenders, which is quite popular in Singapore.

So, if you are a Singapore citizen and confused about taking loans, this article helps you on personal loan comparison in Singapore to choose the best option! Here we will let you know the basic difference between these two types of lenders. So, read on for a more detailed inspection!

Moneylenders vs. Banks: Difference

The difference between Authorized Money Lenders and Banks is present everywhere around the World; But in Singapore, it is visible.

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Banks are secured large-sized financial institutions, which accept deposits and make commitments to offering loans. On the contrary, Money Lenders are smaller-sized entrepreneurs who are registered. For meeting additional personal expenses, borrowers could take loans either from licensed Money Lenders or Banks.

The Amount, Available For Loan

Money Lenders and Bankers’ main difference in Singapore is the Loanable amount they offer to the borrowers. Speaking, banks have much more resources to offer higher amounts of loans when compared to private moneylenders. On the other side, Moneylenders, likely to offer you loan out their available capital, which is smaller than Banks.

Banks in Singapore provide almost 10 times one’s monthly salary and require customers to have an income above $20,000 yearly. Licensed Moneylenders provide only 6 times a customer’s monthly salary and focus on customers who have yearly earnings less than $20,000. This is the biggest advantage of choosing them by the individuals, who need a smaller amount.

Fund Disbursal Speed & Easement

Commercial Banks in Singapore take a longer time reviewing documentation, evaluating the security deposit, and approving your payout. That’s why, who need urgent financing should avoid banks, as it takes a few business days for final disbursement.

On the contrary, money lenders of Singapore have proven to approve your application as fast as possible. They generally release your money on the same date if you show them all the necessary documents. Moreover, they don’t ask for any collateral from the borrowers.

Basic Eligibility Criteria

For approving loans, Banks in Singapore usually have more rigid requirements for customers. As they offer higher amounts of money, so the risk is also higher! They will ask you to show documents on personal information, the purpose of taking a loan, payslip of last 3 months, banking statements, full-time employment certificate, past credit statements, and many more.

In this area, authorized money lender Singapore is quite forbearing. A borrower can get his loan within the same date or an hour if he provides recent utility bills, professional identification, income proof, or payslips.

Credit Scores

Credit rating in Singapore plays an important role in determining whether you are financially capable and responsible for taking a personal loan or not. As banks generally offer higher loan amounts, so for minimizing the risks, they ensure that their customers can repay their loan amount. Therefore they scrutinize their borrower’s credit rating before granting a loan.

On the other hand, Registered Moneylenders in Singapore are more flexible in approving loans for those with poor credit scores. Borrowers can be assured of getting their loan approved by the Licensed Money Lender than Commercial Bank. Indeed, they will check the individual’s employment validity, but they are not as strict as the Banks.

Annual Rate of interest

Both financial institutions in Singapore are strictly regulated when it comes to the rate of interest. Honestly, they both have their interest rates charged on loans according to a list of guidelines and prerequisites. In most Singapore banks, interest rates are calculated on an annual basis and ranging around 4-10%. Your income, credit rating, and collateral play an important role in getting a reduced rate of interest.

Moneylenders in Singapore generally charge borrowers a higher interest rate. As they offer more flexibility in credit checks and eligibility criteria, So it can be adjustable. According to Singaporean guidelines, the licensed money lenders usually charge monthly 1- 4% interest from the borrowers. However, the rate of interest differs from time to time. So, it’s advisable to compare and find the best deal before applying.

Transparency Level

Most people believe that it’s convenient to know all the required details regarding a personal loan from a bank instead of a loan offered by moneylenders. Doing online research by yourself can help you find the best option for taking loans in your emergency. Be it a loan from a bank or a moneylender, always ensure full transparency to make a fair comparison of personalized loan offers. And then choose the one that best suits your requirements.

Strict Rules For Moneylenders

Registered Moneylenders in Singapore are working under the Money Lenders Act. They have to maintain some basic responsibilities strictly, and follow specific guidelines, like

  • Restraint from harassing the customers for payment.
  • Keeping the privacy of the borrowers
  • Sending legal notice in case of late payment by the borrower
  • Unable to charge more than 4% monthly interest rate
  • Can charge late fees up to $60 monthly
  • Not allowed to enforce clients for taking loans
  • Only able to advertise on their websites and outside of their premises.

Which One Would You Choose?

Now, you have a thorough idea of the banks’ basic features and licensed moneylenders in Singapore offering personalized loans. Frankly speaking, banks and licensed Money Lenders have different customer bases. Don’t forget that every loan plan is distinct. The answer of which one you should choose between the two types of lenders is dependent on you! Opt for one which fits better based on your own need and budget.

For a smaller amount and emergency purpose, it’s best to borrow from licensed moneylenders. In contrast, for a larger loan amount and lower cost of debt, choose a banking company. Be a borrower, and we have to be responsible to take into certain considerations, like personal status and constraints, before selecting a financial establishment.

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