For many Singaporeans who need cash and fast, it is common that they would not go to banks because of the lengthy paperwork that comes along with it. There is also the fact that banks take ages to approve an application and it is not a guarantee that they will get approved.
So, where do they go?
Moneylenders and Ah Longs
There are a lot of credit institutions in Singapore where Singaporeans can seek personal loans from and one of them are moneylenders. Moneylenders in Singapore are monitored by law under Ch. 11.2.3 Section 2 of the Law of Credit Security, Commercial Law of Singapore and they must submit several requirements to be recognized as an approved moneylender in the country.
Unfortunately, while there are moneylenders who abide by the law and assist Singaporeans who need to borrow money for emergency needs, there are moneylenders who do not abide by the rules and victimize those who need money. These moneylenders are the famous ‘loan sharks’ or Ah Long, moneylenders who offer personal loans with very high-interest rates and use force if they are not paid on time. Usually, the interest rate can go as high as 40% if one ends up making a deal with an Ah Long.
It is common that Ah Longs are found in Malaysia and Singapore and usually, their victims are people who are not granted funds from banks. Sometimes, they even target gamblers since they need funds immediately for their gaming.
Should a person be late with their payments, the Ah Long will paint or spray paint threats on the borrower’s house and even hang pig’s head to intimidate them into paying.
However, licensed moneylenders are not like these Ah Longs because they are businessmen with integrity and manners. Since they are licensed by the government, they act professionally in dealing with customers and would assist them throughout the loan process.
Reasons why Singaporeans prefer licensed moneylenders
Here are the reasons why Singaporeans often go to licensed moneylenders rather than going to a bank:
- Licensed moneylenders are not that restrictive when it comes to the amount you can borrow. If you only need to borrow an amount that is equivalent to your one-month salary or just a few bucks for your basic expenses and, moneylenders are all for it. Moneylenders often allow small loans because it presents lesser risk than offering larger loans. If the borrower somehow defaults, the loss is not too great. Unfortunately, they are not a good choice to borrow from if you are from a large corporation and business looking for extra funds because their interest rate is too high.
- When you apply for personal loans from banks, you will wait for quite some time before it is approved because banks will do a background check on your profile and the documents you presented. They will also consider your credit history in your application and one wrong detail or point in them; your application will be denied. With moneylenders, your application would run smoothly since they do not have to check your credit history too much. They are lending you just a small amount of money so the paperwork review won’t take very long. So long as everything is in order, loans can be approved as fast as 30 minutes and you can get the money on the same day.
- Furthermore, you can apply for a personal loan from moneylenders online. You simply fill up the details online, wait for the call and head on to their office to finalize the applications. In banks, you will need to bring your documentations to the bank and do the application in the branch.
- A borrower’s credit history is not that given that much focus if you apply with moneylenders. Moneylenders cater mostly to those who could not apply through banks because of their low or poor credit score. Of course, moneylenders still have exceptions and they will reject an application outright if:
- If the borrower currently has an outstanding loan from another creditor or moneylender.
- If the borrower has a large credit card debt.
- For former bankrupts, moneylenders will still permit them to apply for loans and grant them one if they are able to present a letter of discharge that showcases that you are no longer on the obligation to pay their debts.
- Moneylenders are also quite flexible in terms of the loan programs they offer. Clients can request a tailored loan program and repayment schedule based on their capabilities and the moneylender would be ok with it. Of course, clients have to do this before they sign their contracts to prevent legal action to occur should anything delay payments.
- Moneylenders are a great way to revive one’s credit rating. Since you are only borrowing a small amount of money, you can pay it easily and on time. Your early repayments will reflect on your credit history and improve your chances of getting a larger loan when you reapply for another loan.
- Finally, Singaporeans prefer licensed moneylenders because they are much easier to approach and they will not harass you with offers and inquiries, especially during the times you are late in paying your repayments. They will follow standard protocols on how to speak to clients and they will also guide clients accordingly to ensure they understand the loan they just applied for.
Considering the benefits of licensed moneylenders, it is no wonder that Singaporeans love to borrow money from them whenever they find themselves in a financial bind. However, if you will be considering them for your financial problems, you must do your research first because you may fall prey to Ah Longs who are waiting in the wings for victims who are borrowing unprepared. Be an informed borrower and do your research before sending your personal loan application to them and bringing your documents to their offices.
Money-related issues are very tricky to work with and if you find yourself in one, it is very hard to escape unscathed. Good luck!