If you live in Singapore and find yourself in a financial pinch, you can take out fast loan products from a licensed lending agency. However, there are a variety of options that you can choose from in terms of a credit company to take out your personal loan in Singapore and other best loan services.
Deciding can be hard, and it is empirical that you be given the necessary information to go for the wisest option. Read ahead to know the difference between getting a legal loan from a licensed money lender in Singapore or a bank company in Singapore if you consider applying for one.
What is a Licensed Moneylender?
Here in Singapore, a licensed money lender is someone authorized by the government, under certain terms and conditions, to operate as a licensed money lender offering fast cash, debt consolidation, loan packages, business loan, and personal loans for the hassle-free lending process for needs.
They can be the establishment who directly loans the money or can be a third-party institution with a license like Bugis credit and other money lenders in Singapore. A money lender in Singapore must register themselves to become a legal money lender with the credibility to give financial assistance services, complete with a license no, under the Moneylenders Act. You can find the list of money lender Singapore at the Ministry of Law’s website, copyright 2020, all rights reserved.
An unlicensed moneylending business that suits your needs and financial difficulties still eligible to give quick cash is not registered under the Moneylenders Act but is rather authorized by other laws. Licensed money lenders are required to do their business with transparent Pte ltd and under legal terms, as the government has a couple of guidelines for how they are to operate.
This includes having certain regulated low-interest rates for cash loans from a licensed money lender. The Ministry of Law ensures that money lending by licensed moneylenders in Singapore remains affordable for those who need loans personal, but still rest assured to have competitive rates.
Licensed moneylenders in Singapore have unsecured loans with corresponding processing fees and can only advertise online or through flyers. They are prohibited from using abusive language when collecting repayments and are not allowed to hold on to important personal documents like SingPass, NRIC card, credit cards, ATM cards, etc. Text messages by a legal money lender are done professionally when you apply for a loan.
The Singaporean government has gone to extensive heights to protect the solidarity of money lending (e.g. Bugis Credit and another loan personal, loan plan, and loan options institutions) by various financial firms. Remember that licensed moneylenders are not allowed to make you sign bank documents that are incomplete or blank.
The principal loan amount should also be released immediately as a licensed moneylender should not under their licence withhold any amount from your personal loans without you knowing why.
Licensed Money Lender vs. Bank: What’s the Difference?
There are two main options in getting a legal business loan, fast cash or debt consolidation plans here in Singapore. These are applying for loans from the bank or a licensed money lender like Bugis Credit. You can decide which of the two is the better establishment for you to seek cash loan help from.
In making a choice, some key differences in empirical considerations include the loan amount, approval speed, eligibility and requirements, and, most importantly, the interest rates. The following details below indicate the differences between the two regarding these options to guide your application. Later on, your payment schedule or a payment plan will not increase loan amount interest for personal loans, fast cash, debt consolidation, etc.
1. Loanable Amount
First, the loanable personal loan total that the lending institution can give to you is the main difference between banks and institutions like the Bugis Credit. Most of the time, Banks offer higher loan amounts.
However, those with a license to lend like Bugis Credit have lesser requirements, offer unsecured loans, and a shorter processing period, albeit with higher interest total. The following table highlights these differences for easier viewing.
|Maximum Amount for Loans||2-6x monthly salary (~SGD200,000)||Less than SGD 2,000|
|Corresponding Business Rates for Loans||Low Interest, ~1% monthly||High interest, ~4% monthly|
|Speed||1-2 Days||30 minutes – a few hours|
Because of the risk of lending money to individuals without a good credit score, a business giving money loans to its customers limits the amount they give to their clients.
You can expect personal loans of only about a few thousand dollars in contrast to the huge loans that you can get when you file for a bank loan. The loans are regulated by the government agencies that control the fees and rates that a business can charge.
Therefore, if you need urgent money to pay utilities, you can go to the lenders, but when you need huge loans, the banks become your only option.
2. Approval Speed
As compensation for the limited loan amount you can get from lenders, they have the observable faster loan processing speed. This is because those in this business require only minimal documents and are not strict in their customers’ filtering.
Thus, you can expect to have your loans approved within the day of your application, as seen in the table above. This is also another reason why there needs to be a limited amount of money given in loans to a client to serve more customers at faster speeds while eliminating some of the risks of losing profits.
On the other hand, banks have a slower personal loan speed due primarily to the extensive scrutiny they perform on their clients. They require an applicant to have a good credit background, which means that during the personal loan processing, the staff needs to sort through more documents.
They have already optimized this to 1-2 days, however, as again seen in the table above. Besides, you can get higher value loans if you apply in the bank, so the wait is worth it in the end.
3. Eligibility & Requirements
As already stated above, banks require more documents than business lenders for their loans. They offer higher loans in exchange for this tedious application process, however.
It is empirical for banks to demand such requirements as the staff need to ensure that their clients can follow their repayment plans. On the other hand, lenders require significantly lesser documents for faster processing speed, but the loans are highly limited.
You must be between 21 to 65 years old to be able to apply for a bank loan and have the necessary documents (NRIC, credit history proofs, residency or employment documents) that vary from bank to bank.
Also, you should be earning SGD 30,000 if you are a salaried employee or SGD 40, 000 if you work via commissions or are self-employed. This income eligibility requirement is for Singaporeans and permanent residents.
For a foreigner loan in Singapore, on the other hand, you need SGD 400,000 income and have a valid employment pass of at least 6 months to be eligible.
On the other hand, lenders require those who want to apply for a loan to complete an online loan application form that needs to be filled with their details. They will then be asked to sign a surety if it applies, and supporting documents are to be submitted for the loan’s approval. These business documents include proof of their income, utility bills, payslips, and/or income tax statements.
For a foreigner loan, they’ll just be asked to give additional requirements like an original valid employment pass, passport, a copy of the tenancy agreement, appointment letters from their employers, and bank statements (details for the loan foreigner can be asked in their customer service office).
|Minimum Salary||18 years old and above earning at least SGD 2,000||18 years old and above earning at least SGD 3,000|
|Documents needed||• Identity cards/NRIC |
• Proof of residence
• Proof of employment
• A work permit / S-Pass / Employment
• Passproof of residence proof of employment proof of income
4. Credit Score
As repeatedly stated above, banks require their loan applicants to have a good credit background. Although the documents needed vary from place to place, a significantly higher number of documents are required for legal bank loans and debt consolidation. This requirement gives the bank assurance that you can repay the amount that you have borrowed.
Licensed lenders on the other hand, take the risk of allowing individuals with low credit scores to still have their loan requests approved. This allows moneylenders to access more clients that are not eligible for a bank loan.
Because of their not being strict with their loan applicants’ credit score, getting a loan approved in licensed moneylending businesses is faster. They charge the higher rates, however, as compensation for their faster and less tedious process.
If you are in a pinch, it is still necessary to take the time to make a wise decision when choosing between a licensed lender or a bank. Both of these institutions have their perks, and choosing one over the other depends on a variety of factors.
Having a bad credit history is not the endgame of loan application; it means that you do not have any other choice but the lenders. This is not necessarily bad, especially when you only need the loan for urgent financial issues.
5. Interest Rates
Perhaps the most important factor in choosing a place where you can get a licensed loan is the interest rate that the financial firm offers. The interest rate can make or break you when the time comes that you have to repay the amount you owe.
It would help if you chose the establishment that not only offers your needed money but one that you can see yourself repaying without any hitches. Refer to the following table to compare interest rates between licensed lenders’ interest rates in Singapore versus that of the banks”.
|Financial Establishment||Interest Rate|
Licensed moneylenders charge higher interest rates compared to what is offered in the bank. With this 4% interest rate regulated by the Singaporean government. This might not seem a lot at first, but when you consider the loan tenure, this can add up to 30 to 50% of the original loan amount you borrowed.
Also, if you slip in paying a few months of the loan on time, your debt could easily spiral out of control due to the high-interest rate. It is thus necessary for you to be very careful when opting to apply for a moneylender loan.
If you no longer have any other option (meaning you have been turned down by the bank or need the money urgently), getting a loan from this type of credit institution may not be all that bad.
At the end of the day, you will have to consider your repaying capacity within the loan tenures (usually 36 months) no matter where you apply for one. If you take the necessary steps to ensure that you can repay the loan without getting penalized, you can even improve your credit score with these legal loans.
Taking out a legal loan here in Singapore is easy because the government itself is heavily involved in regulating the policies. You can have various options to choose where you source your loan from, which includes getting a credit card or applying for loans from licensed credit institutions like banks, pawnshops, and the moneylender.
Your choice will depend on a variety of factors, such as those discussed above, and ultimately, it rests on what budget you are capable of working with. It would help if you decided which option to go for with extensive knowledge of whatever is available in the market to make your installment calculator work efficiently.
If you decide to get a loan from a moneylender, it is wise to contact us at Bugis Credit. They have been given a five out of five ratings by both clients and experts for their top-notch services. They excel in customer service, and past clients have stated how their staff can extensively explain the terms of the loan that they are getting. They are also quoted to have reasonable processing fees and interest rates.
Bugis Credit is listed in the Ministry of Law in Singapore as a moneylender. They have even been awarded the title of being one of the top ten licensed moneylenders in Singapore. Located at 470, North Bridge Road, Bugis Cube, they are easily accessible, but they also offer online applications when it is out of your way. Just visit the site or give them a call through their contact number, and you can start your loan application with one of the most trusted credit institutions in the country.