When you’re in need of money, it’s important to know the difference between legal moneylenders and loan sharks. While both offer loans, there are significant differences between the two. In this article, we’ll explore the differences between legal moneylenders and loan sharks and why it’s important to know the difference.
What Are Loan Sharks And Legal Moneylenders?
Loan sharks are illegal moneylenders who operate outside the law. They often charge high-interest rates and have strict loan terms. On the other hand, licensed moneylenders are legal and regulated by the government. They offer more flexible loan terms and lower interest rates. t’s important to know the difference between loan sharks and licensed moneylenders because borrowing from a loan shark can be dangerous. Loan sharks often use aggressive tactics to collect payments and may charge exorbitant interest rates. Borrowing from a licensed moneylender is a safer option as they are regulated by the government and must follow strict guidelines.
The Characteristics of Loan Sharks
Loan sharks operate outside the law and are not regulated by the government. This means that they can charge exorbitant interest rates and have no obligation to follow any guidelines. Loan sharks often charge high-interest rates that can be difficult to pay back. This can lead to a cycle of debt that is difficult to escape. They often have strict loan terms that can be difficult to meet. They may require collateral or other forms of security that can be difficult to provide.
The Characteristics of Legal Moneylenders
Licensed moneylenders are approved by the government and must follow strict guidelines. This means that they are a safe and legal option for people who need money.
Regulated by the government
Licensed moneylenders are regulated by the government and must follow strict guidelines. This means that they cannot charge exorbitant interest rates or use aggressive tactics to collect payments.
Lower interest rates
Licensed moneylenders often offer lower interest rates than loan sharks. This makes it easier for people to pay back their loans and avoid falling into a cycle of debt.
More flexible loan terms
Licensed moneylenders often offer more flexible loan terms than loan sharks. This means that people can choose a loan that works best for their needs and budget.
Comparison between Loan Sharks and Licensed Moneylenders
Interest rates and loan terms
Loan sharks often charge high interest rates and have strict loan terms. Licensed moneylenders, on the other hand, often offer lower interest rates and more flexible loan terms.
Legality and regulation
Loan sharks operate outside the law and are not regulated by the government. This means that they can charge exorbitant interest rates and have no obligation to follow any guidelines. Licensed moneylenders, on the other hand, are legal and regulated by the government. This means that they must follow strict guidelines and cannot charge exorbitant interest rates.
How Do I Know If A Moneylender Is Licensed?
You can check if a moneylender is licensed by visiting the website of the Moneylenders Bureau and searching for the moneylender’s name. If the moneylender is licensed, their name will appear on the list. You can also head to the Ministry of Law website and search for the name of the company. If they’re registered, their details will come up on the screen.
What Are The Risks Of Borrowing From A Loan Shark?
There are many risks associated with borrowing from loan sharks. Firstly, loan sharks charge much higher interest rates than a high street lender would charge you. This means that you may end up paying much more than you borrowed. Secondly, loan sharks may harass or threaten you if you fall behind on payments. This can be very stressful and can make it difficult for you to repay your loan. Thirdly, loan sharks may pressure you into borrowing even more money to repay your original loan. This can make you more vulnerable to intimidation and violence.
In conclusion, it is important to know the difference between loan sharks and legal moneylenders in Singapore. Loan sharks are illegal operations that charge high-interest rates and have stricter loan terms. Licensed moneylenders are legal operations that are regulated by the government and offer lower interest rates and more flexible loan terms. By understanding the differences between these two types of lenders, you can make an informed decision about where to borrow money from.
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