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Understanding the Difference between Banks and Licensed Money Lenders in Singapore

Updated: Mar 5


Banks and Licensed Money Lenders in Singapore

Singapore is a bustling metropolis with a fast-paced lifestyle that demands quick financing solutions. In this city-state, when you need to borrow money, you have two options: banks and licensed money lenders. While both offer loans, there are significant differences between their practices, policies, and regulations.


If you are in the market for a personal loan in Singapore, it is essential to know the difference between banks and licensed money lenders, to make an informed decision.


In this blog post, we will explore the critical differences between these two lending institutions in Singapore.



Loan Requirements and Eligibility


Banks in Singapore generally offer higher loan amounts, lower interest rates, and flexible repayment terms. However, they have stringent loan requirements, including a high credit score, steady income, and collateral.


This means that if you do not meet their strict eligibility criteria, you may not qualify for a bank loan.


On the other hand, licensed money lenders have less stringent loan requirements and are more flexible in their policies.


They offer smaller loans, often without collateral and shorter repayment terms, making it easier for individuals who may not qualify for bank loans to borrow money. However, licensed money lenders charge higher interest rates than banks.


Loan Disbursement


Banks often take more time to approve loans because they have more paperwork to process, making the loan disbursement process lengthy. On the other hand, licensed money lenders usually have a faster loan approval and disbursement process. They can typically approve loans within 24 hours and disburse the funds to borrowers immediately in cash or through electronic transfer.


Interest Rates and Fees


Banks in Singapore generally offer lower interest rates on their loans than licensed money lenders. However, banks also charge various fees, such as administration fees, processing fees, and early repayment charges. These fees can add up and make a bank loan more expensive in the long run.


Licensed money lenders, on the other hand, generally charge higher interest rates than banks. However, they have a cap on the interest they can charge, depending on the loan amount and terms. Licensed money lenders also usually do not have hidden fees and provide borrowers with a straightforward repayment schedule.


Regulations and Legitimacy


In Singapore, banks are under the strict supervision of the Monetary Authority of Singapore (MAS), making them credible and trustworthy lending institutions. On the other hand, licensed money lenders are regulated by the Registry of Moneylenders and are required to comply with their rules.


This ensures that they operate their business within the legal framework, protect the borrowers' rights, and provide fair lending practices.



In conclusion, when you are searching for a personal loan in Singapore, it is essential to understand the differences between banks and licensed money lenders. While banks offer lower interest rates and better terms, they also have stringent eligibility criteria and more paperwork to process.


On the other hand, licensed money lenders offer more flexibility, faster loan processing, and less paperwork. However, they charge higher interest rates compared to banks. Whichever option you choose, ensure you do your research and compare the terms, interest rates, and fees before making your final decision.


Looking for a loan in Singapore? Contact Alles Autos Credit Pte Ltd, the top-rated money lender in Singapore located in the Chinatown area. With over a decade of experience in the money lending business, we offer a fast, secure, and confidential loan application process. Simply fill out our simple online form and receive a response within minutes. It's the perfect choice for those who prefer not to consult with a loan consultant at the early stage.


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