Even though that most Singaporeans enjoy a higher standard of living compared to other countries, it’s only a matter of time in which you or someone you know will be a bit short on cash. When such time comes, most Singaporeans would think of borrowing money from family or friends. This might be a good solution if your family or friends can cover that money you need. If not, then you might need the help from a licensed money lender or a loan shark. Before you go using the search engine and start searching for “Licensed Money Lender Singapore” or a loan shark lender, it’s in your best interest to know the difference between the two.
In this article, we are going to explore what’s the difference between a licensed money lender and a loan shark. Also, we are going to cover why it’s best to deal only with a licensed money lender. On the later parts of the article, we are going to enumerate tell-tale signs to ensure that you are working with a true licensed money lender. So, without further delay, let’s start with the very basics.
What Is A Loan Shark?
A loan shark is a slang that describes a Singaporean moneylender that does not do business under the official rules and regulation set by the government. Instead, loan sharks are mostly lenders that have a good supply of money, which may come from illegitimate sources. We do acknowledge that not all loan sharks are associated with a criminal organization. Nevertheless, given its nature, it’s nearly impossible to get any form of verification where their funds come from
What Is A License Money Lender?
A licensed money lender is different as it fully operates under the rules and regulation set by the Singapore government. Also, a licensed money lender must be registered and licensed under the Singaporean Moneylender’s Act. Under the Singaporean Moneylender’s Act, a licensed money lender may offer a variety of loans which may include personal loans or emergency loans.
It does not matter if you need money for an unexpected medical expense, a surprising increase in the utility bill or for car repairs, a licensed money lender in Singapore can work with you to help you get the kind of loan you need. Aside, from helping you with this specific area, licensed money lenders can also offer you other advantages.
Advantages of Licensed Money Lender
1. Set Rates And Agreements – Because licensed money lenders operate under the watchful eyes of the law, this means that what is agreed upon will be honored. This could mean the agreed terms and interest rates. Loan sharks operate outside the law and that means they are not obliged to honor any of the agreed terms and rates. In fact, loan sharks are known to the change the interest rates and terms whenever they like.
2. Guaranteed Lending – while it is true that not all Singaporeans may qualify to borrow from a certainly licensed money lender, but once you are qualified, you can be sure to get the full amount. With loan sharks, they are not obliged to do so, and that could mean that you’ll be receiving only a part of the agreed amount.
3. Legal Security – if you borrow money from a licensed money lender, then you can be sure that the money is legitimate. With loan sharks, you could be borrowing money from illegal sources. This means that it’s possible for you to end up with a criminal case in your lap as you may have unknowingly touched “drug money” or “blood money.”
Keep in mind that these are only a few of the many advantages of a licensed money lender. Now you know why it’s always better to choose a licensed money lender, it’s best that you know what to look for to ensure that you are truly working with a lender sanctioned by the Singaporean government. After all, anyone can easily fake documents and license numbers.
Signs That You Are Dealing With A Legitimate Licensed Money Lender
1. Clear And Understandable – if you are dealing with a lender that takes the time and effort to explain to you the terms in words that you can easily understand, then you can feel safer that you are dealing with a truly licensed lender. On the other hand, if you are dealing with a lender that hands you a contract and refuses to explain the terms, you might want to head for the door as soon as possible.
2. Unsecured Amount Limits – as mentioned before licensed money lender operate the under the law. When it comes to unsecured loads. Singapore lending law dictates there’s a limit on how much you can borrow. The limit is largely based on your income. Hence, if you try to borrow an unsecured loan and the lender seems to offer no sort of limit, then it’s likely that you are dealing with an illegitimate money lender.
3. Signature – licensed money lenders will always require you to sign a contract before you receive the money you want to borrow. The contract will also include the essentials such as repayment method, interest rates, loan amount, and late payment fees. If you receive the borrowed amount before signing anything, then it’s most likely you are dealing with an unlicensed money lender.
4. Within Market Rate Interest – one sure way of knowing if you are dealing with a loan shark is by simply looking at the interest rate. While the maximum interest rate changes, but the limit is dictated by the Singaporean government. In most cases, the interest rate rarely goes up by 5%. Hence, if you are being charged with more than 5% per month, then you are most likely dealing with a loan shark.
In most people’s lives, there’s a time in which money shortage becomes an issue. The problem may easily be solved by borrowing money. However, keep in mind that not all lenders are created equal. In Singapore, there are lenders that are sanctioned by the government, and thus they must adhere to the rules and regulation. These rules and regulation ensure that both parties are protected, and fairness is upheld. These kinds of lenders are known as licensed money lenders. Loan sharks are the opposites of licensed money lenders, and they have little interest in your welfare or fairness. Needless to say, only deal with licensed money lender when the time comes that you need to borrow money.