• Why is Choosing a Licensed Moneylender Over an Automated Moneylender a Better Choice

    | Updated on July 7, 2023

    When the time of taking a loan comes, one tends to look out for the best deals like low rate of interest, minimum paperwork, and quick processing. This is why many people think it is better to opt for an automated money lender than a licensed one because they offer faster approvals and more flexible repayment plans. 

    While this might be true, the reality is licensed money lenders can offer much more benefits than their unlicensed counterparts – including ease of access and the fact that you don’t need to go through any lengthy processes or credit checks. 

    Automated Moneylenders

    Services of automated moneylenders are preferred by many owing to comparative ease in the loan process. However, a crucial issue with automated moneylenders is that they tend to have high-interest rates, sometimes as high as 48 percent. When you are returning the loan, this high amount tends to be compounded.

    You could end up owing quite a bit of money for something that might have initially only been several hundred dollars or so in total. Moreover, it is not just you who will be affected by using automated lenders. Your family members and loved ones will also suffer. 

    If you happen to default on repayment despite knowing fully well that you should pay it back, your credit score will decrease. Your family members’ scores may also be affected, which can cause problems when they try to buy homes in the future.

    Licensed Moneylenders

    A good thing about licensed moneylenders is that they help you out in the long term. If something comes up, you can contact them and ask for an extension on your repayment date.

    They will not see this as a problem to avoid any potential issues with your credit score.

    As long as you stick with a licensed moneylender, you should have no problems taking loans from them. It is always better for your finances and well-being if you don’t go down the road of automated lenders. Instead, stick with the safer and lower interest rates of licensed moneylenders.

    Benefits of Licensed Moneylenders over Automated Lenders

    Licensed moneylenders are more responsible. According to reports, private legal financiers do not charge a late fee of more than $60 in Singapore. Other benefits they offer over automated lenders are:

    1. A private, licensed money lender offers better customer service than an automated one.
    2. Legal financiers have a more extended repayment period after May 2015, where they can extend the loan repayment up to 6 months without penalty interest rate!
    3. Licensed moneylenders also offer an installment payment plan, so you don’t have to worry about a lump sum of cash up-front. Your balance will be Pay-As-You-Use basis. Hence, you can avoid a huge burden when you repay the loan (you can even sell it when in need).
    4. Licensed moneylenders offer bigger loans than most people require today, especially with Singapore’s rising cost of living. 
    5. Licensed lenders have to follow a set of guidelines that are relevant to your loan agreement. You can trust them more than any other type of lender who does not have a license to operate.
    6. You will get flexible payment options compared to most of the traditional banks around Singapore. Most people want an installment plan or a short repayment period. As long as you shop around and ask for their best rates, you’re on track with finding the right licensed moneylender!
    7. Licensed moneylenders do not charge early repayment penalties, unlike the 24-hour lenders. This gives better benefits for consumers because it means that they have more opportunities to repay their loans if they run into financial difficulty.
    8. They never levy admin fees/charges for payment/loan renewal, while some traditional banks might even charge late/missed installment fees.
    9. Licensed moneylenders offer a low interest rate of ~4.5 percent to 8 percent. At the same time, most traditional banks might even charge up to 16 percent interest per year.
    10. You’ll receive customized loans that suit different needs. Get loans for school fees, car installments, medical emergencies, and funeral charges quickly with less paperwork involved.
    11. Most licensed moneylenders do not require a guarantor. Suppose you have friends or family members who are willing to stand as a guarantor for your loans. In that case, they can process your application without any difficulties and lower down the interest rate considerably.

    Just make sure you clear all your outstanding loans with them before going for this option.

    Final Thoughts

    The pandemic has been a massive blow to the global economy. People are struggling to meet two ends. Hence, money lenders in Singapore are in huge demand.

    It is essential to research and find a legally working financier to get a loan in Singapore. They will work according to the rules defined by the Ministry of Law in Singapore.

    Also Read- Finding the Best Money Lender in Clementi

    Joseph Williams
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