Introduction
People have money requirements, whether to renovate their homes, for weddings, or personal loans in times of emergency, and this is why personal loans have become the choice of solutions. These loans are availed to borrowers through two main sources: the banks and licensed moneylenders. Please click on good at licensed money lender singapore. Although they both purport the same cause of providing credit, they are governed by different structures, policies and philosophies of lending. This article provides a general overview of the difference between taking a loan from banks and money lenders.
Comparison between taking loans from banks and money lenders
Eligibility Criteria
- Strict rules of eligibility do exist in banks. They evaluate your credit ratings, stability of the income, and work history and provide a loan. Poor or no credit history borrowers find it hard to qualify.
- Licensed moneylenders are more accommodating. They emphasized your present repayment capacity and not your credit history. This is because of the ease of accessing moneylenders, which may be an appealing option to people who fail to satisfy the bank requirements.
Documentation Requirements
- The paperwork with banks is intensive. The applicants have to submit NRIC, income statements, employment letters, bank statements and might also have to undergo credit bureau checks.
- Moneylenders does not require more documents. As a rule, they request NRIC, evidence of earnings and evidence of residence. All the borrowers will also need to be physically present before being allowed to approve the loan to ensure transparency.
Amount and Duration of Repayment of a Loan
- Banks are usually ready to give a larger loan size, which is normally four or six times the monthly earnings of the borrower. They also offer more repayment terms that usually last as long as five years or more. This causes bank loans to be appropriate for high expenses like redecorations or education.
- Appropriate or regulatory authorities control licensed moneylenders who provide less amount of loans. Their loan terms are short, and therefore, they are good loans to take when there is a temporary financial requirement.
Loan Approval Speed
- It normally takes three to seven working days to determine a loan by the banks. The delay comes as a result of a lot of paperwork in terms of documentation, credit checks, and compliance procedures.
- Licensed moneylenders have much faster approvals, which may take a few hours. Some even offer the same-day disbursement after verifying the documents of the borrower.
Conclusion
Banks and money lenders both facilitate the flow of money in the economy by fulfilling various needs of the individual. Both banks and money lenders have their own system of providing loans to the people, but the borrower should choose according to their convenience, speed, documentation, etc.