Life is all about hustling on a day-to-day basis to make ends meet. Sometimes, even when you push hard, financialconstraints emerge. For an example during the time when COVID-19 Crisis came in, travel restrictions were put in place, and this kind of restricted movements hindered economies from booming. This saw a great revolution of borrowers lining outside financial organizations seeking funds to support their urgent needs.
Licensed moneylenders and Pawn shops were not left out, and the more we need to learn about them and understand which is better or whether they are similar.
What is a Licensed Moneylender in Singapore?
A licensed Money lender is an entity formed by individuals or a company to provide small financial assistance to people needing cash with a return of interest during any repayment period.
These organizations are regulated by the Ministry of law in Singapore to ensure that borrowers are not victimized into paying exobitant interest rates. The defined borrowing rates vary from one moneylender to another; therefore, before lending, it is essential to research and work with the one that offers favorable interest rates.
To make things easier, the ministry has listed all the licensed money lenders in Singapore to ensure that borrowers do not fall into the traps of loan sharks who charge high-interest rates and are not in any way regulated by the government.
To know if you are dealing with a licensed moneylender in Singapore, there are several pointers you need to look out for;
- The form of Advertising– They use their website, business directories, and physical offices to advertise their services. One such institution is OTC Credit.
- They do not ask for upfront fees– Licensed moneylenders will consolidate all the information required in any loan application and disburse without asking for a penny. You must start paying during your first initial loan repayment period.
- Terms and Conditions– Before entering into any contract with any licensed money lender, the first request is that the borrower goes through the terms and conditions and accepts them for seamless partnership.
Licensed money lenders are not strict when checking your credit scores, and this is an assurance that even with a low credit score, you stand to get a loan and receive it within 24 hours. However, this is only applicable to small loans.
If you need a loan and have an allowed rating, consider visiting OTC Credit, take a loan and boost your rating for a bigger loan in the future.
This is only an unsecured loan when taking a personal loan, and one will not be required to provide any collateral.
What is A Pawn Shop in Singapore?
On the other hand, a Pawn shop is still a financial organization with many similar features to those of a licensed money lender. Some features include offering small loans and being regulated by the ministry of law in Singapore to provide small loans to businesses or people in need.
However, there are significant differences that exist between the two. To be eligible to access services from a pawn shop, you will be required to submit collateral in exchange for the cash, which in many cases is disbursed immediately.
Some well-known pawn shops include Cash Mart, Moneymax, ValueMax, and the Maxi- Cash.
In as much as both pawn shops and licensed money, lenders offered fast cash solutions, which is not the case for banks. We will detail several differences here to help you make a sound decision when needing urgent cash.
- Ability- If you need cash using a licensed money lender, you must provide a source of funds document, such as a recent three months pay slip and a bank account statement. This is not so for a pawn shop. You will only need to bring collateral such as gold, watches, phones, and other valuable items to support your ability. The good thing with a pawn shop is that even beginners can take loans to help them start a small business.
- Collateral– Personal loans provided by licensed money lenders do not require collateral. In the case of a pawn shop, collateral must be provided to cater to the loan amount given. For instance, the loan can only be given at a value of 80% of the totalcollateral provided..
- Loan Repayments– Licensed money lenders have a defined way of repaying their loans. For example, you can schedule to be paying on a monthly or a quarterly basis.
Pawn shops, however, do not have such restrictions. As long as the loan is being repaid, then the balance will be spread until such a time that it is completed. This, however, requires discipline to pay it off in good time and avoid high-interest rates.
- Loan Limit- The loan limit for a licensed money lender depends on your monthly income’s ability. However, a pawn shop will give based on the value of the pledged items. And the reason one should pay it in good time is to avoid chances of losing your items through auctioneering.
What Conditions are suitable for taking a loan with a Pawn Shop?
Sometimes, one may not be certain how they will make timely loan repayments. A pawn shop is flexible enough to allow you to organize yourself so long as you do not exceed six months without making a single repayment.
Are you looking forward to getting a loan from a licensed money lender or a pawn shop in Singapore?
Always go through the benefits of each and find where you suit best. This will enable you to make a decision you will not regret.
Money lenders in Singapore have done well for employed individuals with reasonable accessibility. If your pay slip is eligible for getting a loan with money lenders, it can be a good option when consolidating high-interest rates.
But then, if you need an emergency loan and do not want to go through a long process, visiting a pawn shop is an alternative to getting financial support.