Banking is a business in which the business is not just giving loans to the customers. Money Lenders often use their money for lending Whereas banks operate by accepting deposits from their customers. Deposits of customers in banks lend to customers in lieu of security. In addition, depositors receive interest from the bank and can withdraw their deposits.
Lenders do not receive any money from their clients and even if the loan is repaid, they pay no interest on deposits and are not deductible. Also, when the lending rules are strict, banks can borrow money from other banks, the choice of lender is not available.
If you live in Singapore & looking for a moneylender for a loan then you must contact Sumo Credit Pte Ltd. Because they are good at money lending in Singapore.
Differences between Moneylenders & Banks
Loans from Banks and Moneylenders
Moneylenders usually offer smaller loans depending on the income of the borrower. Lenders are available to help people cope with short-term financial needs. Whereas banks can offer you a higher amount of loan in comparison to moneylenders. So if you want to purchase a home then it may be wise to take out a mortgage from banks.
Credit analysis is a key difference between authorized banks and licensed moneylenders. Compared to banking companies, moneylenders are less stringent when looking at a credit score of a borrower. Lenders often use small loans to collect high-interest rates associated with a high risk of default. Lenders do not guarantee credit levels. Whereas banks considered credit scores on a serious note. Some banks may reject applications immediately according to their policy. This happens when the borrower has a low credit score.
Moneylenders’ interest rate is generally high in comparison to banks. These interest rates can be very high depending on the loan value. Whereas bank interest rates are not as high as moneylenders.
If you are taking a loan from moneylenders then you will be free with minimal documentation. Whereas if you are taking a loan from a bank then you might get distraught because of documentation. Because they ask for you many documents, you may have to run a lot to get it.
Time in Loan Process
The moneylender ensures that the loan is ready as soon as possible. Good lenders can get a loan quickly but this process is usually quick and easy regardless of the client’s situation. Whereas banks take a lot of time to approve loans because managers thoroughly review the approval process. Another part of the process is lending, but this process affects different types of loans.