The money lending business has always been in there a part of the world since the very beginning of the money market.
The money lending business basically means that there is a person in need of money with some urgency situation, and then there is another individual or institution who can lend the money to the first person in return for some charges that are called the interest charged on the principal amount that is given.
This is basically how the money lending business works. Over the years, there have been a lot of changes that came up in the money lending business since the market has grown drastically.
There are two major parties in this business, one being the lender and the other is the borrower. The borrower is the person who has the need for money with some urgency and cannot take a loan from a banking institution since it might take time.
Time is also a major factor in the money lending business. The process usually completes in a very short time as compared to the normal financial / banking institution.
Types of moneylending
If you need a personal loan fast, then there are two types of money lenders available in the market, one being the Licensed Money Lender, and the other is the Unlicensed Money Lender.
The unlicensed money lenders do not trade in paperwork and can be very harsh with regards to the collection of money borrowed. While on the other hand, licensed moneylenders have particular protocols set up by the governing bodies to run their business.
If you have an urgency to borrow the money, you should always prefer the licensed money lenders in Singapore for the loan. These licensed money lenders will give you a loan in a very short span of interval.
Additionally, the interest rates charged on your loan will also be lesser as compared to unlicensed money lenders. The paperwork is part and parcel of the licensed money lending business as well, just like financial banking institutions.
But the only difference in the case of money lenders is that the paperwork is different from the financial banking institutions and that it is hassle-free.
On the other side, if you plan to borrow money from an unlicensed moneylender, then you may have to submit some collateral documentation. The collateral documentation can consist of anything that is valuable, equal or more valued than the loan amount.
The unlicensed money lenders profit only by practising such trades. Here the moneylender will give you a loan of a certain amount and keep an object or property belonging to you that values equal or more valued than your loan amount.
If you are unable to pay back the loan amount in the said time, then the moneylender has full rights to keep the property that you presented as collateral. This is the reason it is always much recommended to go to a licensed money lender over the rest of the unlicensed money lenders.
The interest rate of a licensed moneylender
The interest rates depend on the amount you are borrowing and for the tenure that you have applied.
The licensed money lender Singapore interest rate can vary anywhere from 14% to 16%. The interest rates charged by the licensed money lenders have a capping value which is fixed by the governing body.
Hence the licensed money lenders have a fixed maximum interest rate capping which they cannot cross without prior approval from the governing bodies. If any licensed money lender crosses the amount for interest rates, then the borrower can register a complaint against the lender.
However, the borrower has a choice not to go for any legal consequences and just accept the given interest rates charged by the moneylender.
Other aspects related to an interest rate of legal moneylender
These interest charges are basically levied on a monthly basis and not on an annual basis, unlike the financial banking institutions. Hence always prefer to borrow money from licensed money lenders only if you have a need of borrowing money for a short span of tenure.
This way, it will be easy to borrow money quickly and can be returned in a short time with hassle-free paperwork. The interest rates charged by the licensed money lenders are collected back in certain ways.
While some money lenders deduct the interest rates from the loan amount directly while lending the money, on the other side, some money lenders collect the interest rates from the borrower in the form of repayment options of instalments.
The repayment of interest rates can be prior to or post the collection of principal amounts. The amount you pay in the form of interest rate charges is totally dependent upon the tenure of the loan repayment.
Suppose the tenure for repayment is more than it directly affects the interest amount. In certain conditions, the moneylender might be very strict for the repayment terms, but in certain situations, there are some money lenders found in the market that are not strict about policies, and instead, they help the borrower in the repayment of loans.
More details of the interest rate charged by the moneylender
The interest rates in the market completely vary from region to region and are often changing with respect to time of the year depending upon the financial market situation.
Even if the interest rates for the licensed money lenders are set by the governing bodies of the nation, but the implication of laws is a thing to be considered.
It is not necessary that all the money lenders will always follow the laws that are registered by the governing body with respect to the interest rates. It is always recommended for a borrower to look carefully into the loan documents before going further with the procedures for a loan.
Always read the terms and conditions thoroughly provided by the money lender so that you do not miss on to anything important from the clauses that might cost you a fortune later.
Try to negotiate with the moneylender over the adjustment of the interest rate since that will definitely help you save some money while repaying the loan amount.