Loan sharks lurks everywhere. They may pretend as a legitimate money lenders, but their main objective is to suck your money dry.
With a lot of options presented to you, how will you know if the money lender is a loan shark?
- Responsible lenders educate the borrower about the loan’s fees, charges, and consequences if the loan will not be settled. They also discuss other options a borrower can have. Loan sharks will insist that you get loan with hidden fees.
- Responsible lenders require the basic list of documents to verify if you are a responsible borrower. Most lenders are (of course) risk averse. As much as possible they want to know if you are creditworthy.
Loan sharks would just welcome any borrowers with almost no requirements to entice people to apply for a loan. Some of the illegal lenders just require a valid ID just to say that they have a requirement.
- Responsible lenders will only approve the amount of loan you can repay at ease. They provide loan calculators to help you see the amount of loan you can handle to repay. It is best to borrow only what you need and what you can pay.
Also, the lender will consider your income and existing financial responsibilities before approving the loan amount you can borrow. Loan sharks do not care if you have a lot of other financial responsibilities. They only care about you paying your loan to them with high-interest rates and other fees.
- Loans sharks are not registered. Licensed money lenders are regulated by the government. Responsible lenders pay taxes and make sure that the borrower’s rights and personal information are secured from any possible fraudulent activities. Before you apply for a loan, it is important to check the company’s registration.
Personal information is treated as private and confidential. They are not shared unless it is mandated by law. Also, registered money lenders have a cap of 4% for interest rates. Charging interest rate higher than 4% is illegal.
Benefits of Responsible Borrowing
As a borrower, you must also be responsible when handling a personal loan to maximize its benefits.
- Being a responsible borrower create a good relationship with the lenders. Since you have a good payment history, the lender will gain the confidence to let you borrow a higher amount in the future.
- Most registered money lenders utilize the credit bureau to see if the borrower pays diligently. They will also report your payment behavior to the credit bureau to be used as a reference by your future lenders. Every time you apply for a loan from banks or registered money lenders, they will access your credit report and give it a credit score. High credit scores usually get approved.
- If you pay your loans on time, you will avoid late payment fees and additional interest rates. Delinquent payers are also charged with legal fees to cover the expenses used by money lenders to pay the collection agencies and lawyers in securing unpaid loans.
A personal loan is useful to stabilize your finances, but this will be impossible if you borrow money from a loan shark. Loan sharks don’t care about your future. They are willing to lend money in exchange of insane interest rates.
Protect yourself from loan sharks. Get a loan only from trusted licensed money lenders in Singapore.