In Singapore, you can find no shortage of services which can be prepared to lend you money. Banks have made personal loans extremely easy to obtain, with approval processes that sometimes lastly just a few hours and up to and including day or two. Even charge card debt is also offered at albeit high interest rates. And then you can find the so called “licensed money lenders” that are willing to give money to almost anyone. Who’re these individuals and is it worth borrowing money from their store?
In accordance with Ministry of Law of Singapore, you can find about 160 licensed money lenders in Singapore, with 5 more that are suspended. These companies target borrowers who’ve difficulties in acquiring loans from more conventional sources like banks. Because banks typically require a minimum annual income and some amount of good credit history, they have a tendency to reject loan applications from individuals who earn low income and desperately need a loan to cover an emergency. Therefore, licensed money lenders provide loans to these individuals at high interest rates than normal.
Interest Rates at Licensed Money Lenders
Many of these places will provide loans like payday loans, whose interest rates are incredibly high. Even after the us government instituted 4% cap on monthly interest rtes, this level is still could be up to 2x greater than what you would see on a charge card or 4-5x greater than rates on your own loan from banks. Therefore, we absolutely do not recommend going to these services unless you can find zero other alternative. Below, we summarize and compare main characteristics of licensed money lenders against a bank. When you borrow S$500, paying S$20 in interest 1 month may not seem like it’s exorbitant. However, if you do not pay of this type of loan immediately, it might run you a huge selection of dollars in fees and interests, potentially as much as the first S$500 you borrowed.
Licensed Money Lenders vs Banks
Because licensed money lenders are targeting customers that were forgone by banks, they’ve distinct characteristics that serve needs of a different pair of customers cashmax88.com. The greatest difference is the risk profile of the borrowers. Because banks concentrate on people who have credible credit history copied with stable income, they are inaccessible to individuals who make less than $20,000 and lack a credible credit history. On the other hand, licensed money lenders specialize in lending to the latter group of people. You can find certain consequences of this key difference.
For instance, licensed money lenders have a tendency to only make small sized loans as high as S$1,500. Particularly for payday loans for people who make less than $20,000 per year, they’ll likely lend 24% less than your monthly paycheck, capping the total amount you can borrow at about S$1,200. Because money lenders are much smaller organizations than banks, they can’t bare the risk of making a massive loan to someone with very risky credit profile. On the other hand, banks can lend you around 2-6x your monthly salary up to $200,000, though they simply lend to borrowers with stable income.
Not only this, small size of licensed money lenders enables them to make loans extremely quickly. Sometimes within the hour, if not sooner. While personal loans in Singapore from banks are already quite competitive and extremely efficient because they are made available to borrowers within 24 hours of application, such speed still pales in face of the nimbleness with which licensed money lenders can operate.