Should You Borrow Money From The Bank Or Licensed Money Lenders?
Loaning money from the bank guarantees that there would be future repayment of the principal amount and its interest. A loan can either be specific or open-ended credit up to a certain ceiling amount. Characteristics: 1. Larger Loans – Banks are ideal for larger loans such as renovating your home, starting a business, or buying a car. 2. Credit Assessment – A good credit score with a low debt to credit ratio is a must to qualify for a loan. And, if you want to pay a low interest rate, you need to be vigilant about your credit score.
LICENSED MONEY LENDERS
Characteristics: 1. Smaller Loans – Licensed money lenders are the ideal option for smaller loans such as paying utility bills, getting your laptop fixed, or repairing your car (even amounting to S$1,500). 2. Credit Assessment – Unlike the banks, licensed money lenders give more leeway in the credit score. This is because they lend a significantly smaller amount. So, if you have a bad credit and you cannot get a personal loan, licensed money lenders are there for you. 3. Transaction Speed – Licensed money lenders approve the borrower’s application within the day itself! 4. Higher Interest Rate – Since they carry more risk for granting loan to people with poor credit rating, they usually charge a higher interest rate and late fees
Although the license money lenders give more freedom in the credit score, they will reject your application if you have a large sum credit card debt or if you have an outstanding loan from another money lender.