In Singapore, money lenders and banks can offer you lines of credit when in need of extra cash, but the way they do so are often completely different. One of the key similarities between the two is the amount of money you want to borrow - generally, the less money you want to borrow, the happier both banks and money lenders will be. Reliance on money lender has gone up in recent years in Singapore, due to rising costs of healthcare, groceries, rent and other expenses. So, what are some of the differences between money lenders and banks in Singapore?

Singaporean money lenders need to be licensed by the Registrar of Money Lenders, and if you find one that isn’t, you should probably stay away. The license means that the money lending business has restrictions on their lending, a cap on fees for late payments and a good interest rate. Additionally, they would also have passed the money lender’s test, meaning they are trustworthy. Money lenders are not as strict as banks are when lending money - this is because money lenders often take the form of payday loans for people who cannot get money from the bank on time. Once a contract and money amount if agreed, money lenders are much faster than banks on releasing money.

Banks however are financial institutions that have a lot more stringent rules on releasing lines of credit. When comparing a money lender and a bank, they only share similarities when it comes to debt collection. In regards to the process of getting money from a bank, banks will ask for more than proof of identity. Often, people requesting larger loans from a bank will need to own at least one property in Singapore, be in good credit rating and be earning above $15K.

The bank works slowly than a money lender because the bank’s priority isn’t speed, but protecting yours and it’s money reserves. Therefore, do not expect a speedy loan from a bank. Once you have completed the various proofs and tests of eligibility from the bank you can agree on repayment timeframe and dates.