When you are faced with financial problems, there are many options available when you have to borrow money. However, making the choice is very important because you don’t want to get the wrong option for your needs.
For example, when you transact with the wrong moneylender, you are likely to suffer more problems with debt than you may be going through at this moment. It’s for this reason that you need to weigh your options carefully first before coming up with a final decision.
The right use of credit is very important to guarantee your financial health. When you are offered a loan, yet you aren’t disciplined when handling the money, you probably will end up with more problems. Also, lots of discipline is needed when repaying the loans. Be sure to work with a realistic budget and stick to it as best as you can. In doing this, you will greatly improve your credit rating.
Money Borrowing Options
When faced with serious money problems, you can turn to your family and friends to help you with some extra money. However, it’s not guaranteed that they will lend you the amount you require depending on the amount you need.
The other option for you is the money lending organizations and institutions that you can contact for financial assistance. These are banks, Pawnshops, and Licensed Moneylenders.
Below is a look at the differences between the 3.
Banks have been for years regarded as reliable sources of credit. There are different ranges of services and products offered, but of importance regarding this type of organization is that you need to be eligible to access their services. They also do accept collateral for a special loan option they offer.
Since they follow strictly government policies and industry standards, banks require borrowers to meet these standards before getting a loan. Additionally, banks have the revolving credit facility with credit cards they issue. This lets you access extra funds when you need it without having to request new loan applications every time.
They also offer bigger loans and their interest rate is often lower compared to other lending institutions. This generally applies to specific loans that include education and housing loans. It’s also convenient for you to repay your loan in the bank. Other options are by mail, online, or through ATMs.
It isn’t easy to access a personal loan from banks. Another downside of getting a bank loan is that it impacts your creditworthiness should you fail to repay the loan on time. Defaulting on a bank loan will automatically disqualify you from getting a loan from other banks. It is hard to qualify for a bank loan from private banks.
Pawnshop, require you to put in a “pledge” something valuable you possess in exchange for the loan. That’s why you have to bring a valuable item like jewelry to help you get a loan. The item is then left at the pawnshop and you get the money borrowed.
From the moment you are offered a loan, you will get 6 months period to repay the principal amount taken out plus the interest. But, failing to do this, the “pledge” is sold off by the pawnshop broker.
Regarding the interest rates offered it can grow to 1% in the first month. Then, reach 1.5% in the following month. This is a lot lower than the 2% interest you could get from a usual credit card. It’s important to make note of the repayment option which is not fixed.
Every time you repay your loan, the pawnshop dealer will extend your deadline for auctioning the pledged item by an extra 6 months.
It’s easy to get a loan from a pawnshop since you only have to present your Identity card and your valuable item (the pledge). They don’t look at your credit record, any existing loans, or salary. The debt does not compound when you do not pay the loaned amount.
One major concern you could have with pawnshops is their high interest. It’s at 1.5% a month and is lower than the rate that banks offer on their loans. You only qualify for the one-time loan, compared to the revolving credit facility on credit cards issued by the banks.
The amount you can be given by the pawnshop broker as the loan has a limit depending on the worth of your pledge item. Therefore, you need to have something expensive before you can get a loan.
The licensed money lenders in Singapore deal with small amounts of money like a loan of about $10,000 or less. If this is your case, you could consider contacting a licensed moneylender near your area to request a personal loan. The loan types they offer are either secured or unsecured.
Ahead of a certified moneylender giving you a loan, you must first present all the required documents. Your credit record checks and salary assessment are also done. The amount and interest rates are determined by the personal judgment of your moneylender. Because moneylenders face certain risks due to the less strict standards they adhere to when offering loans, their interests can be rather high. There is no interest higher than 25% for loans issued by licensed moneylenders.
For loan repayments, a licensed moneylender generally requires a fixed monthly scheme for you to repay the loaned amount. The terms applicable are negotiable, as well.
When the banks have turned you loan application down, you can access a loan from licensed moneylenders provided you meet their basic requirements. This will give you extra money for your urgent needs. Moreover, the entire loan process is stress-free and their friendly financial advisors are at all times there to assist you. They also do contact you in less than an hour. You can access a loan almost in under 3 days, which is much faster than other lenders especially when you need money for an emergency.
The one thing you need to consider when borrowing money from a moneylender is their high-interest rates.