When tough financial situations arise, it can get stressful to anyone who may be dealing with such ordeal. This is why they may find themselves stuck with the decision to borrow money since there is no way for them to handle such financial crises unless there is a source of extra funds available to them.
But then again, you should think carefully before you go ahead with the option to approach a lender for your emergency funds. Basically, you have two choices available – should you go with a bank or a moneylender in Singapore? If you have no idea which one to pick, we may be able to help you by giving you what to expect from sending out your loan application to these two options.
What to Know about Borrowing Money from a Bank
Banks usually offer secured loans alone. This means that you will need to present to them your assets or properties that qualify as a collateral before you may be granted a loan. But it is not always that easy. Not all assets may be considered as a collateral since the total value of your property must be more than the amount of money you are looking to borrow. In addition to that, the interest rates to be paid will be included to the calculation when the bank evaluates your assets.
So, what does this mean for the borrower? You run the risk of waiting for a long time and going through all sorts of steps and hoops before you can receive feedback from the bank. Meanwhile, the pressing need to pay an emergency expense is still waiting, and you may even be so stressed out not knowing how to settle this financial concern.
It is also worth noting that a bank requires you to repay the loan in full, which includes the interest rate. There may be a ceiling amount that the bank can lend you, or depending on your credit rating. If you are planning on taking out a massive loan to buy a car, a home, or to start a business, then a bank loan is usually ideal.
But of course, you have to be prepared to submit a number of documents, plus a lengthy waiting period is required by banks before you may receive the money you need. This is why for emergencies where you need to have fast cash, you may only be up for some frustrating experiences if you choose to even attempt to take out a bank loan. Hospital bills, credit card payments, and some minor repairs to your car are all urgent needs. If you cannot wait any longer for the money to come, then another option may be best to cover these expenses.
Aside from the slow and lengthy processing period, a bank loan may also mean being aware of your credit rating. You cannot simply show up at the bank, submit a loan application form, and expect to receive the money you need if your credit score is below average. A stringent credit assessment is performed by banks before they consider approving loan applications. If you have a decent credit score, specifically with debt to credit ratio that is quite low, then you have a chance of being approved of a loan. Otherwise, you may forget about your chances of receiving a “yes” from the bank.
Licensed Moneylenders in Singapore
Some financial problems just cannot wait any longer. For instance, you might have received your credit card billing statement, or you have discovered that there is an issue with your car that needs to be fixed immediately. These types of situations usually require an immediate solution, which means there is no time left for you to deal with a long waiting period involved with bank loans.
In this case, you may want to look into the possibility of borrowing money from a licensed moneylender in Singapore, since there is no time or energy left for you to lose by taking a trip to the bank and just receiving a rejection when you have been counting on an approval.
When it comes to licensed moneylenders in the country, the law regulates their guidelines and terms. They need to abide by the regulations involving interest rates and repayment schedules, along with the amount of money they can lend to potential clients. There are also standard requirements for the documents to be submitted by the borrower. Generally, although foreigners may also apply for a loan from a moneylender, there needs to be a valid passport, identification, and a work visa presented. The payslip will also be reviewed, as this will determine the loan amount that the client may qualify for.
If you have a low credit rating, your chances of being approved of a loan is higher from a moneylender, as compared with what you can expect from a bank. There are lenient standards in terms of the credit score of the applicant, so you do not have to lose hope right away.
At the same time, you are probably wondering – there has to be a catch, right? Well, the main thing that you may want to know about a licensed moneylender is the fact that the amount of cash you may be able to receive is smaller. The loans are just small and sufficient enough to cover your utility bills, repairs for your car or devices, or settling a cheap plane fare. Perhaps, you can expect just a thousand dollars or a little over that, which may be loaned to you. Of course, this still all depends on how much money you make in a month.
But if what you look for is convenience and less intensive processes involved with borrowing money, then it is practical to consider taking out a loan from a licensed moneylender. The overall process involved from the time you submit your loan application form, waiting for the feedback, signing the contract, and receiving your check can be quite fast. Thus, you can eliminate your anxieties about not being able to settle your emergency expenses at the time you should.
So,there are only smaller loans that you can expect to receive from a licensed moneylender such as personal loans, payday loans and etc. You can never use the money for starting a business or buying a house, which means the cash you receive may just suffice for your smaller expenses. This is why people only approach a moneylender when certain situations arise including the need to pay clinic bills and utility costs.
The credit assessment process is also not very strict. There is more leeway given when it comes to the credit score since only a smaller amount is offered to borrowers. People with poor credit ratings usually go to a moneylender instead of a bank due to the higher rejection rating from the latter.
Overall, the speed of processing your loan application is much faster if you go to a licensed moneylender. You may find an application form online, fill it out, submit it to the lender, then wait for feedback. There are instances when you will need to submit a few documents, but these are simple ones that give information about your job, income, and of course, your personal identification. Upon submitting these documents, there is no long waiting period to think about before you can receive another feedback as to whether your application is approved.
But no matter what you do, always conduct a background check on the moneylender in question. Go for licensed and trustworthy ones that have been in the business for years. Also, if you have any concern with the items presented in the contract, never hesitate to seek for clarification before signing it. This way, you know for sure what you are getting into, which can spare you from regrets along the way.