Why do many Singaporeans turn to unlicensed money lenders to get some quick cash? Well, in Singapore, borrowing money from banks can be a very tedious process. For one, there is a ton of paperwork involved, and banks usually require you to be in decent financial standing to borrow from them. It also takes banks ages to approve a loan, and there is no guarantee that you will be approved. As such, some people approach money lenders when they need to take out a quick loan. However, it can be dangerous to borrow from an unlicensed money lender.
What is an Unlicensed Money Lender?
Unlicensed money lenders are better known as ah longs or loan sharks. These money lenders charge very high interest rates, possibly up to 40% of your loan. Additionally, they can resort to using force and threats if you do not pay them back on time. One famous example is the “O$P$” spray paint on one’s house or property. Loan sharks may even hang pig’s heads outside one’s door if they are late for payment.
Unfortunately, it is usually easier to make a deal with an unlicensed money lender than with a bank, as ah longs do not care much about your financial standing or paperwork, only that they will be able to get their money back with a high interest rate. As a result, Singaporeans that are unable to make enough money to repay both their loans and high interest usually end up constantly being harassed by these loan sharks.
You probably do not wish to fall into the predicament of being unable to repay a loan shark, but what if you are also unable to borrow money from banks? Who can you turn to then?
Licensed Money Lenders
Thinking of money lenders may bring to mind ah longs or loan sharks, but actually, not all money lenders are bad. There are licensed money lenders out there who are required to abide strictly by Singapore’s law, under Ch. 11.2.3 Section 2 of the Law of Credit Security, Commercial Law of Singapore. Most of these licensed money lenders are credit institutions that have been approved by Singapore’s law.
Why Licensed Money Lenders?
Licensed money lenders usually do not restrict the amount of money you can borrow. Unlike banks, they are more likely to offer small loans as it is also less of a loss to them if the deal becomes a bad debt. However, if you are looking for a larger sum of money, they are probably not a good option due to their higher interest rate.
You can also get your loan approved much faster with licensed money lenders than you would with a bank. Since the loan amounts are smaller, they do not check as much paperwork and you can even get the loan approved within half an hour!
Additionally, licensed money lenders are more lenient with your financial standing. Since they tend to cater to individuals that are unable to borrow from banks, they do not pay as much attention to poor credit ratings. However, you should still make sure that you do not have any outstanding loans or a large credit card debt.