A bank lends you money, when you have your own house, property, earn good money, assets like car, bike, or when you do not require borrowing money. The less amount you need to lend money, the more banks wants to loan to you. If you have need of borrow money in Singapore, maybe you are wondering where to go for lent it. You can borrow money from two main services, banks and money lenders. Money lenders are licensed by the “Registrar of Money Lenders” in the country, which means restrictions on the fees, interest rate and the amount they can lend.
Usually, banks and money lenders provide similar services, but there are also some key differences between them.
In Singapore, most of the money lenders are quick, and are able to approve your loan within half an hour. It is possible because lots of money lenders are small, and want to attract more and more customers so provide quick services. But, when you go to a bank for a loan, it can take some days or even weeks to get approved the loan. It is because lots of paper works involved in the process. If you require the money within few hours for any reason like money for medical reasons, then banks are not able to lend you money.
Approval of Loan
You have to follow various guidelines of banks for sanction your loan application, but moneylenders work out the loan approval process according to their own specific lending rules. People who apply for a personal loan from a moneylender are more stress-free and relaxed than those people who followed by traditional banks. Hence, it is very easy to get approved for a loan by a money lender than a bank.
One of the biggest and the major differences between money lenders and banks is Interest rates, particularly when your application is about a personal loan. In most of the cases, banks provide lower interest rates in comparison to moneylenders. Generally, money lenders do not tell their interest rate on the phone or email in Singapore due to law. Most of the money lenders offered interest rates of 20% to 30%
You must have a good credit score with a low debt to credit ratio to meet the criteria for a loan, when applying at a bank. Remember, late credit card payments can drop your credit rating to a B. If you got a warning letter, then the rating can be slipped a C. Bank are obsessive about credit rating, and it’s very hard to improve. If your credit rating is too low, then your loan application can be rejected. On the other side, money lenders are less obsessive about your credit rating as the amount of loan they provide is comparatively small. But, if you have significant credit card debt or outstanding loans from other lenders, then they can deny your loan as well.
Another big difference between banks and money lenders is the application process. Usually, you have to submit various documents and fill out a great amount of paperwork when applying for a personal loan from a bank. On the other hand, an application of personal loan from a moneylender eliminates lots of paperwork and made the application process much easier in comparison to a bank loan. It is because many lenders are not restricted to a few of the regulations and procedures as banks.
These are few major differences between bank and moneylenders in Singapore. If you have decided to get a personal loan, then must take into consideration these points.