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Difference between Money Lenders and Banks

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 Score

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.

Interest Rate

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.

Documentation

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.

Understand benefits of Money lending

Money lending is a business in which Moneylenders lend money at interest to another person. There are 2 parties in this transaction, one is Moneylender & the other one is Borrower. If you are looking for someone good at money lending in ang mo kio, you are at the right place.

There are many benefits of Money lending, some of them are given below:-

Benefits to Borrower

Easy to Borrow – If you borrow money from moneylenders then it is an easy process. Because there is no such complexity as banks & other financial institutions. You will get your loan in less time either, unlike others.

Less Documentation – There is less documentation required if you borrow money from moneylenders rather than banks & financial institutions. You need to collect a lot of documents if you choose other modes of borrowing.

Credit Rating – If you don’t have a high credit score right now, it may be impossible to get an approved loan from a financial institution. When applying for a loan from moneylenders, you will not have to negotiate with banks; Instead, you will borrow from an individual or group of lenders. You won’t have to give them a lot of information to get the loan approved, and they won’t be worried about your bad credit score or if you’re in deep debt.

Collateral – Moneylenders generally focus on the property value which you are developing. The property will be used as collateral against the loan, not your current financial situation. If you want to use any other property as collateral, talk to the lender about other options. They can accept other assets too, which you own provided these assets must be in your name. Moneylenders are known to be more flexible than banks, so meet the lenders & see what options are available.

Low Income – If you have a low income then it might be possible that you would get rejected for a loan in banks & financial institutions. But there is a higher probability of getting a loan from moneylenders than others.

Benefits to Lender

Passive income – In today’s world, everyone needs a passive income for better living& this is the best option to earn money without doing the extra effort. If you have the extra money in your bank account, cash, or any other mode & you want to earn income through it then you can earn income by lending money at interest to needy people.

High-interest income – If you start doing this business, then you can earn a higher-interest income than banks or FDs. Because you earn only 4 to 6 percent of the interest in the bank, but you can earn high-interest income in this business. It depends on which interest rate both the parties have agreed to.