Borrowing money should be treated with the seriousness it deserves. Don’t borrow money from anyone. There are consequences that you do not want to act oblivious of. Hurt pockets are guaranteed if you do not make the right lender selection decision adequately.
There are good consequences for choosing to borrow from a licensed money lender. Sometimes, it may come with its shortcomings. Regardless, you ought to understand that no borrowing has advantages only. Irrespective of the lender, every borrowing has its flaws you have to consider.
These are essential things you need to know about borrowing from licensed money lenders
You are legally tied to fulfilling your loan contracts with any licensed lender(s). Going against this obligation has its consequences. Legal action will be taken against them, and the products may not be pleasing.
For instance, a caveat may be placed against your property. That means that the proceeds of the sale of that wealth may all be claimed by the lender.
Or they could take part in it. Another consequence is that you may not be able to sell the property until you settle all your debt. That could put you in a big financial mess as you could lose most or all of your wealth depending on the amount of loan you took.
Licensed lenders have the power to use legal means to get to you. That is why you cannot risk misbehaving with their loan.
If you do not believe you can repay the loan, you should avoid this category of lenders. You do not want to put yourself in trouble while staring at it.
Banks will mainly categorize loans into two. Unsecured and secured loans. The fast loans are attached to some property of yours or guarantors. The others are not secured by any asset. For that reason, unsecured loans are high risk. Well, that may explain why unsecured loans may be issued but with lower loan limits.
Secured loans will probably come at a higher limit because it is pegged to your asset. In addition, it is yours to lose if you default on repaying the loan. This, too, is an important consideration when seeking to borrow from a licensed lender.
Both options have implications, and it’s wise to scrutinize your situation and compare with the facts regarding limits.
How much can you borrow from a licensed lender?
When all is said and done, there’s only a certain amount that you can earn depending on your status.
Singapore bona fide residents and those with a higher annual income have an advantage when it comes to this.
For instance, under being a Singapore resident, one is entitled to $3000 if they earn $20,000 or less in a year. However, foreigners making the same are allowed to a lesser amount.
For those earning above $20,000, you can get as much as six times your income in loan amount irrespective of your citizenship.
These are rates by licensed lenders. As you can read, some standardization makes it easier to plan when dealing with this kind of lender.
For licensed lenders, this rate is capped at 4% in Singapore. This doesn’t matter whether you have a higher income or not. The amount is standard, which explains the fairness in Singaporean lenders when it comes to licensed lenders.
Well, the unlicensed lenders will tend to vary their rates based on incomes to mitigate risks. So, to conclude, should you borrow from licensed money lenders? My answer would be yes!