Like any other developed country, there are multiple options to borrow money in Singapore. You can ask your close friends or family members to lend you some money for a short period of time. You can also go to a private bank or approach an instant loan approval in singapore to help you out when faced with a financial crisis.
Whether you select your private bank or a licensed money lender to lend you the much-needed financial help, both of them operate on the same basic principles:
- Both of them charge some interest on the amount of money loaned
- Both of them charge penalties for late payments and defaults
These are the only two similarities between the two popular methods of getting a loan in Singapore. However, when we talk about the differences between the two, there is a long list. To find out which is better for you, you need to first familiarize yourself with the differences between a licensed money lender and a bank. Let us have a look at some of these differences:
The Amount of Money You Can Borrow
One of the major differences between a licensed money lender and a commercial bank is the amount of money you can borrow. Since commercial banks offer other financial products such as savings accounts, fixed deposit accounts and many other monetary services, they hold a big cash portfolio. On the other hand, not all private licensed money lenders in Singapore offer such services and therefore may not have a big capital portfolio. The lending capacity of commercial banks in Singapore is therefore often more than that of private licensed money lenders. Therefore, when in need of a big loan, you should consider visiting a commercial bank or a licensed money lender that is well established.
The Loan Approval Process
Another major difference between a commercial bank and licensed money lender in regard to loans is the time taken take to process your loan application and release the required money to you. Commercial banks take a lot of time in processing your loan application since they need to fulfil a lot of formalities. On the other hand, the loan application process is very simple and quick when you apply for a loan with a licensed money lender. Therefore, if you are in dire need of money and cannot wait for days or weeks, you can approach a licensed money lender Singapore.
The Credit History Checking Process
Banks check your credit history differently from licensed money lenders. Your credit history will be checked thoroughly when you apply for a loan with a commercial bank. The loan officer may check your employment record, your past payslips, your credit card payments, your utility bill payment history and a lot of other important financial transactions before approving your loan application. This is not the case with private money lenders in Singapore. Private licensed money lenders in Singapore do not dig that deep to approve your loan application. Hence, there is a higher chance of loan approval for you. The trade-off is that you may be charged a higher interest rate for your loan.