Most people need to borrow money every now and then for a variety of reasons. With so many lenders available today, he or she will have to choose between borrowing from banks, credit unions, friends and family, moneylenders and the like. By far, the most popular choice of lender in Singapore is the moneylender. There are many advantages in borrowing from a licensed moneylender, but should one fall into the hands of an unlicensed moneylender, the results can be quite tragic.
What Are the Benefits of Borrowing from A Private Licensed Money Lender?
There are several benefits of borrowing the cash that one needs from GS Credit licensed moneylender:
1. No collateral. One of the main advantages of borrowing money from a licensed moneylender is that they do not require any security to give out loans. Basically, they loan money on the strength of the borrower’s credit history and credit score, as well as current income.
2. Easy eligibility requirements. Licensed moneylenders only have basic eligibility requirements for their borrowers to meet. They include being a Singaporean Citizen or permanent resident, having attained the age of 21, proof of identity, and proof of income.
3. Less stringent credit score requirements. Whereas it may be difficult for someone with a credit score that is below average to borrow money from traditional lending institutions, licensed moneylenders in Singapore are willing to lend to them, and even to those who have bad credit. When it comes to loan approval and even loan repayment, licensed moneylenders will tend to be more flexible.
4. Quick transaction. A licensed moneylender is the best solution for someone looking to get instant cash, or within 24 hours. This of course, is if he or she provides all the supporting documents with the application.
5. No harassment. Unlicensed moneylenders or loan sharks are known for harassing their debtors. Licensed moneylenders must work within the parameters of the Ministry of Law and cannot carry out threats and other harassment tactics used by loan sharks.
6. No income restrictions. Even though they must consider income when lending money, licensed money lenders like GS Credit do not restrict themselves to high income earners as is common with traditional lending institutions like banks. Low income earners are also welcome to borrow money with us.
7. Requires only basic documentation. The supporting documents needed when putting in a loan application are basic, only your NRIC or passport and proof of income (Singaporeans can just provide their CPF/bank statement on the spot to process).
9 Things You Can Use a Personal Loan from a Licensed Private Money Lender for
A personal loan has no restrictions when it comes to usage. How one uses the money is left to their own discretion. Here are 10 of the most popular reasons why people take out personal loans:
1. Debt consolidation. This happens when someone has many small outstanding debts that may be accruing a high amount of interest. Often, it is credit card debt that if left as is, could lead to trouble. Consolidating debt leaves him or her with a single payment in management monthly repayments, and with a rate of interest that is manageable as well.
2. Home renovation and remodeling. Even though banks in Singapore offer home renovation loans, the amount usually has a cap on it. If one needs additional money to complete the renovation, a personal loan comes in handy.
3. Wedding expenses. Weddings are expensive, and everyone wants to have a memorable day. A personal loan comes in handy in order to cater to all the expenses such as the wedding dress, photography and videography, cake, flowers, catering and decorations.
4. Relocation expenses. This is especially true if one is moving to a distant location. Moving expenses are generally high, but when you factor in a distance move, they can be off the charts. A personal loan can help ease the financial burden of the move.
5. Funeral expenses. A personal loan comes in handy when a person passes on and their estate cannot cover the expenses of a funeral. Many times, it is close family members that are left to foot the bills and they can be quite high.
6. Medical bills. Even though most people have medical insurance, there are certain procedures that the insurer may not cover for one reason or another. Some of these include fertility treatments, cosmetic surgery, some dental services and orthodontics, bariatric surgery and care among others. Sometimes, it is the cost related to treatment that requires the additional money, such things as cost of travel, medication, live in caregiver, or aftercare among others.
7. Large purchases. One may be able to take out a secured loan to purchase a boat, car, or RV, but there are other secondary expenses that may need additional funds. People who may not have good enough credit to qualify for such loans may also need to take a personal loan to cover their large purchases.
8. Unexpected Expenses. Sometimes unexpected needs come up that totally throw off one’s budget. It can be a sudden spike in the bills, or a need to travel suddenly, or even that the car develops mechanical problems and needs fixing. If he or she does not have enough money saved to cater to these expenses, a personal loan can resolve the financial shortfall.
9. School fees and related expenses. Most people can secure educational loans to pay for their school fees, but these loans may not cover the full amount, or may only cover tuition and no other related expenses such as the cost of books and the like. A personal loan can close the gap by paying off the additional fee amount, or being used to purchase books, bags, writing materials and covering any other school related expenses that may arise.
Important Notice: Learn how to differentiate between a licensed and an unlicensed moneylender / loan scam
Here is how to differentiate:
1. Listed by the Ministry of Law. The Ministry of Law displays on their website a list of every moneylender that they have licensed to carry out business in Singapore. Once a borrower identifies a moneylender that they would like to do business with, the next stop should be this website to make sure that they are indeed licensed. If not, then he or she can be sure that they are dealing with a loan shark or an unlicensed lender.
2. Clear Explanation of the Loan Terms. Licensed moneylenders are required by law to ensure that every borrower has the terms of the loan explained to them clearly in a language that they can understand. This means that all questions by the borrower should be answered satisfactorily, all the terms reviewed clearly. Any lender who uses too much jargon or is unwilling to fully explain the terms of the contract may not be legitimate.
3. Sets the amount one can borrow based on income. Whereas unlicensed moneylenders are happy to saddle one down with high amounts of debt, licensed moneylenders considers one's yearly income. The amount they can offer is set by the Ministry of Law and all licensed money lenders abide by it.
4. Contract signing. The law requires licensed money lenders to offer contracts to all borrowers. The contract should clearly spell out the loan amount, interest rate, loan tenure, any fees and charges applicable and the like. The borrower is required to read it and sign the contract if in agreement. Anyone willing to lend money without a contract, or with a contract that is incomplete or blank, may be a loan shark or an unlicensed moneylender.
5. Interest rates. The Ministry of Law has set a maximum interest rate and all licensed moneylenders must abide by this. Any lender who charges interest rates that are above-market should be avoided at all costs. Loan sharks or unlicensed moneylenders are charging a much higher interest rates.
6. Different types of fees. It is important to know that the law allows only for 3 different types of fees to be charged to borrowers. These fees are in addition to the interest rate that has been charged. They include the following:
- Administration fee
- Legal fees
- A late fee
Any lender who charges additional fees, or higher amounts than what is set by the government is most likely an unlicensed lender and should be avoided or reported to the Police.
7. A physical office. The law requires that every licensed moneylender has an office that they operate from. The physical address of the moneylender must match the information provided by the Ministry of Law on their website. Most unlicensed lenders do not have a physical office. This means that one must be wary of lenders who only communicates with you via online means.