What to Consider Before Engaging in a Moneylender in Singapore

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A moneylender is an individual or group who lends money in exchange for interest being topped up on top of the principle when paid back. If you are in urgent need of a cash or capital injection, then a moneylender could certainly help you to finance your current venture. However, before you jump into a loan agreement, it is important that you first consider a few factors.

Purpose Behind the Loan

You first should be clear about the rationale for wanting to take a loan. Loans should not be taken on a whim or for no-vital uses. Instead, they can truly deliver help and value to you if they are taken only in times of need. As such you should ask yourself if this is a need or a want and if you need to get hold of the cash immediately. You should also have done your due diligence and determined the minimum sum needed.

While people have all sorts of reasons for borrowing money, here are some of the most common uses of loans from moneylenders.

Consolidating Debt

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A common use of loans is to consolidate debt from sources such as credit cards. If you do have multiple credit cards with amounts owed, it may be viable to consolidate the debt. The rationale for doing so would be if the credit cards’ interest rates are higher than the offered loan rates. In such a scenario, by taking a loan to pay off existing credit card debt, you have effectively transferred your debt to the moneylender. At lower interest rates, you would enjoy savings.

Leveraging for Financial Gains

Leveraging is a highly used financial technique in business and personal finance. In essence, it involves taking on debt in order to make an investment that pays out more than the interest owed. When done correctly, you would be earning money passively per time period, with your investment covering your debt. However, this should not be done without extensive research as a wrong investment may lead you to having to pay off your debt with your own active income.

Medical Bills

Emergencies are part and parcel of life, and none are as prominent as that of an urgent medical condition. If you or your family were to require expensive and urgent medical treatment, then a  fast personal loan Singapore offer may be needed. At times like these, the luxury of searching for other financial solutions may not be available. Instead, getting the minimum sum required to commence treatment should be prioritised.

Your Credit Score

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After confirming that your purpose for taking the loan is legitimate, you should next find out about your credit score. Your credit score is used as the basis for determining the interest rates that your moneylender will charge you. As a base line, your credit score informs moneylenders of your ability and willingness to repay the debt on time.

4 components primarily make up your credit score.

Payment History

The history of your repayment patterns is a key factor in your credit score. Common metrics used include that of repayment of credit card bills or previous loans. A previous failure to make timely payment would be a sign that you are less trustworthy and may not make good on the loan extended to you. Therefore, it is important that consistent & prompt payment is made for any debts owed.

Having said that, having no history of debt is actually counterproductive to your credit score. Without a record to refer to, moneylenders would have less information on your repayment history. As such, if you have no previous record of credit or debt, you should take a small loan sum first to prove your willingness to repay on time.

Amounts Owed

Your current level of debt is another critical factor in your credit score. Simply put, if you are holding on to a large amount of debt, your moneylender would have less confidence in your ability to repay additional new debt.

It is worth noting that not all amounts owed are equal. Moneylenders often analyse the difference between principal amounts and interest incurred. If the majority of your debt is in the form of ever-growing interest, then it is indicative that you are simply incapable of paying off the loan fully in the near future.

Length of Credit History

As alluded to before, the amount of records of debt incurred and repayment behaviour is important to moneylenders when evaluating you as a borrower. The longer your history of credit, the more evidence that moneylenders have that you are a trustworthy customer.

New Credit

The rate of borrowing also tells moneylenders about your current situation. If you have recently taken out several loans, then they might not feel secure extending you another. This also affects the overall amount of debt that you would currently be holding on to.

What to Look Out for in a Moneylender

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The third main topic to consider before engaging a moneylender is the traits or characteristics of the moneylender.

Licensed

For starters, any moneylender that you engage with should be licensed by the Singapore government. In order to be a licensed moneylender, the firm would have proven to eb compliant with state laws, rules and regulations. As such, their practices would protect you from having a raw deal. Be sure to only ever with licensed moneylenders so as to avoid being exposed to scams or fraudulent tactics.

Rate of Interest Charged

Based on your credit score and the individual moneylender’s evaluation of your profile, different interest rates will be offered to you by moneylenders. While you would obviously favour the best rates, you should be cautious to check the terms, conditions and practices employed by the moneylender. Always make sure to read the fine print and clarifying any points of doubt before signing on the dotted line.

Loan Limits

Finally, each moneylender would have official loan limits. While typically advertised on their website, you may have to enquire to confirm the highest amount that you are eligible to loan from them. Ideally, this sum would fit under your current financial needs.

Enquire for a Loan from JD Credit

Here at JD Credit Pte Ltd, we strive to achieve each and every one of our customers’ needs and wants. We are an organisation that provides loans with the best rates to any individual that is approved by the IPTO (Registry of Moneylenders). Our team of well trained and experienced staffs are obliged and dedicated to help our customers with their financial matters.

Our vision is to achieve excellence when serving customers provide the best information and finest service for our customers and lead in the money lending industry.

Get in touch with us to apply personal loan Singapore in no time as well as to get quality financial advise on how you can turn around your current situation.