Borrowing in Singapore

Borrowing In Singapore - Banks VS Licensed Moneylenders

If you are borrowing in Singapore by taking a personal loan from financial institutions, there are factors you should consider. There are some differences between borrowing from a bank and borrowing from a licensed moneylenders. Both kinds of financial institutions differ in their lending approaches.

As during your life stages, there are significant milestones in your life, such as getting married, buying a house and a personal transport, you tend to need some financial planning and management in order to fund these commitments. Borrowing money will help you tide over such financial challenges that can hinder your personal expenses. Banks are the most common options you can consider taking a personal loan from. The alternative option is the licensed moneylender.

One advantage of borrowing from a licensed moneylender is the ease and speed of approval of personal loan. It is especially useful if you are in urgent need of cash. Though the loans are smaller compared with banks, the process of obtaining a personal loan from a licensed moneylender is simpler. They do not require that much documents to get approval. So if you require urgent cash within a short period of time to pay for your wedding, the personal loan from a licensed moneylender is the better option for you.

Another factor that is different is the lower rate of rejection from a licensed moneylender. The banks can grant you personal loans but they look at your credit score in particular. They check on your credit score and history by researching your details from the Credit Bureau of Singapore (CBS). If you borrow from a licensed moneylender, you can get a personal loan with better flexibility even if you have a lower credit score. They refer to the report based on the findings from the Moneylenders Credit Bureau (https://www.mlcb.com.sg/).

However, licensed moneylenders usually disburse personal loans with higher rates and shorter payment terms. But it depends on your personal needs in this case. If you do not mind the longer payment term the bank offers, you must ensure a longer term job and income stability for yourself. On the other hand, borrowing from a licensed moneylender with a shorter payment term means you can clear off your debt faster. Paying off a debt earlier is an attractive option as no one wants to be heavily indebted for the rest of his life.

Banks can offer personal loans of at least $10,000, as compared to licensed moneylenders that disburse smaller loans, which usually can be as low as a few hundred dollars or up to $1,500.It all depends on your citizenship and annual income in order for you to qualify for a personal loan from a licensed moneylender. If you earn less than $20,000 annually, your personal loan can amount to about $3,000. If your annual income exceeds $20,000, you can borrow up to 6 times your monthly income. These rules only apply to you if you are a Singapore citizen or permanent resident. A different set of eligibility criteria applies if you are a foreigner.