Although many people don’t trust money lenders, they are here to help you get through the financial crisis. The licensed money lender has a legitimate business as they are legally authorised by the Ministry of Law. You may wish to check through the Registry of Moneylender. As any business, their purpose is to have a profit, but not at the expense of their customers. If anyone loses there will be no one else to borrow.
The reason you’re so afraid of taking a loan from a licensed money lender is that you probably heard several of these lies. We are here to show you the truth.
1. Are loans only for people in financial crisis?
The common misconception is that you should only think about getting a loan if you have some kind of financial difficulty, but this is not true.
You can easily take a loan if you want to buy something that’s out of your means. Yes, you could just save the money and buy it in a few months and years but you can also buy it now and this is what money lenders are for.
2. What are the emergency situations that will make me take a loan?
Unforeseen circumstances that require our economies happen from time to time. You might have saved money for a new car or house but are forced to spend that money on something completely different and urgent.
This doesn’t mean at all you should give up your dream and wait until you have saved all the money again. The licensed money lenders are here to help you.
3. I make enough money, why would I take a loan?
There are several reasons why you should consider taking a loan even if the money you earn is enough for your day to day life. One of these reasons is the possibility of investments. You can take a loan, invest the money and gain more. Or you can just buy the car, house or equipment you’ve been wanting for so long.
4. Why would I take a loan if I live with my parents and am renting my hose?
A loan will allow you to develop and buy the means to make even more money. If you are into renting you might consider buying another house and use the rent money to repay the loan. Depending on the location, the rent might even be bigger than what you have to pay the mortgage.
5. Why would I use a loan to buy land?
The money you get from your licensed money lender can be used for fruitful investments, one of which is buying land. In Singapore, land’s value increases by 2% every year. This means that if you buy today a piece of land that is worth SGD 100,000, in ten years it will have the value of SGD 122,000.
The land can also be used to generate additional income that can easily cover the costs of the loan making it a profitable endeavor.
6. How many types of loans are there?
In Singapore are two types of loans: secured and unsecured. A secured loan will require you to have a collateral – an asset you will pledge to the money lender. In case you won’t be able to pay the loan back this asset can be taken over by the money lender.
If the loan isn’t secured, the money lender has no right to take over the asset without a court order.
7. What exactly is a secured loan?
First of all, it is the only way you can obtain large amounts of money. A good example of a secured loan is the mortgage. In this case, the house itself is presented as collateral.
The maximum amount of the loan can’t exceed 80% of the total house value. If the market value of the house decreases below the amount that still has to be paid, the money lenders will most likely demand lump payment.
8. What are the advantages of a secured loan?
You might wonder why you would choose a secured loan considering the fact that, in case you won’t be able to pay it back, you can lose your asset. Here are two good reasons:
- Secured loans reduce the financial risks significantly and thus the money lender will offer you much lower interest rates；
- You will be able not only to borrow more money but also for longer periods. At the same time, the repayment schedules tend to be more permissive.
9. What are the disadvantages of a secured loan?
- If you can’t pay your loan back, the financial institution will be able to seize your asset.
- If you default on your loan you will lose the money you paid back until that moment.
- They take a longer time to process.
10. What exactly is an unsecured loan?
Unsecured loans don’t need to be secured with assets. The amounts are much lower and the reimbursement and processing times are shorter. In Singapore, citizens can get between two and four times their regular income if they make less than $30,000.
11. What are the advantages and disadvantages of unsecured loans?
- Your assets will be protected.
- The loan is approved quickly.
- Higher interest rate.
- You can borrow a lesser amount.
- They have strict repayment schedules.
12. Are there legit money lenders in Singapore?
The very short answer is yes. There are several licensed money lenders you can count on. In order to make sure you get the real deal, check if the money lender is licensed in the Registry of Moneylenders in Singapore. The registry has an official website you can check.
13. How can I differentiate a licensed money lender from an unlicensed one?
A licensed moneylender will verify your personal information, using either your NRIC card or other personal identification documents.
Many times the unlicensed money lender will give you lower, more attractive interest rates. In this case, if it sounds too good to be true, it probably is.
14. How can I make sure I have the best money lender in Singapore?
Here are some tips that will help:
· Check their reputation
· Find out as much information as possible from the internet
· Check the interest rates