We occasionally need quick financial help to manage unexpected expenses. In such cases, we would typically apply for a quick loan from a reputable bank or licensed moneylender.
Banks are usually the preferred option, but moneylenders, focused on short-term, private lending, also offer various types of private loans to individuals and businesses, just like banks. This makes them a great alternative choice for people that are in dire need of extra funds. This is significant especially for those looking for fast loan approvals.
There are some differences between loans from a licensed moneylender and a bank, but key similarities are:
- both charge interest on your loan
- both charge penalties for late payments or defaulting on the loan.
Loans from a licensed moneylender vs a bank
Understanding the differences between the two key financial organisations from which you can secure a loan is an important step in applying for one. This table covers all the main points to consider before you decide which option suits you best.
| Moneylender | Bank | |
| Loan amount |
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| Loan approval |
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| Loan tenure or term |
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| Loan eligibility and creditworthiness |
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| Annual income below $20,000 |
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| Criteria and documentation for Singaporeans and PRs |
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| Criteria and documentation for foreigners |
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| Interest rates |
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So, which is better?
After comparing loans from banks and licensed moneylenders, you may still feel stuck and not know which to choose. The answer depends on how much money you need and how urgently you need it.
Reviewing a complete list of moneylenders in Singapore and available loans from banks can also help you choose what’s best. With different attributes and limitations, banks and moneylenders have their different advantages.
Therefore, before moving ahead with either of these options, it is essential to determine your requirements.
Here’s a general guide to help make the decision easier:
Go with a bank when:
- You need a large loan for big purchases such as a car or a house.
- You need a longer tenure to repay since the maximum tenure banks offer is up to 5-7 years.
- You don’t need money urgently, since banks have a slower process.
Go with a moneylender when:
- You require a relatively small amount to fulfil an emergency.
- You need cash fast since moneylenders can approve loan applications within an hour.
- You have a low credit score or you’ve been rejected by banks multiple times when applying for a loan.
If you would like to learn more about loans that you can apply for and get approved quickly, contact us at Cash Direct and we will have a loan expert take you through all the available options.
