When looking for a trusted money lender in Singapore, you can explore two quick options. You can borrow from money lenders or apply for a loan from the Grab mobile application. While moneylenders also allow short term loans, for relatively smaller amounts, you can opt for a Grab loan. However, the requirements are different, and you may not even be eligible in the first place. And even if you are, you might not find them to your liking.
To help you choose which loan to go with, here are the pros and cons of both Grab and local money lenders.
Grab Loan Pros
One of the popular loans available nowadays is Grab Loan. You can easily access this through Grab, a ride-hailing mobile application. Here are a few benefits of applying for this type of loan:
1. You do not need to leave the comfort of your home
Since you can use the mobile application, there is no need to physically visit a shop or office. You can easily check the requirements through Grab and upload documents instead of submitting files for evaluation of your application. It makes the process convenient and less stressful. If you are experiencing a personal crisis or a loved one is in the hospital, this set-up will be less stressful for the borrower.
2. Grab Loan currently does not have administrative fees
That’s one less thing to worry about if you opt to apply for a Grab Loan. You just need to watch out for interests and fees. However, this might easily change so it is best to double check the terms.
3. You do not need collateral to take out a loan
Like most personal loans, Grab loan is an unsecured personal loan. You would not need to worry about having a car or a parcel of land to use as collateral. There is no added burden of having a mortgage to think about on top of the loan.
Grab Loan Cons
Here are some disadvantages if you opt for a Grab Loan:
1. Restriction on who can avail of one
Based on the Grab website, their cash loan program is available only to Grab drivers and partners. Also, your eligibility depends on your earnings. It would be best to check with Grab’s customer service if these are the latest qualifications and if there are additional things you have to comply with.
2. Be ready to pay interest and other fees
As with other personal loan products,expect a Grab Loan to have significant interest rates. The ease with which one can apply for the loan does not always come free. Be on the look out for convenience fees and other fees.
3. It would take some time to qualify for one
Grab drivers need to have at least 12 weeks worth of earning statements before they can apply for one. This is on top of other requirements. So, if you are in dire need of money and you are a new Grab driver, you cannot rely on this option.
Local Money Lenders Loan Pros
If you do not qualify for a Grab loan, there is always another option. Look for a licensed money lender in Singapore like Soon Seng Credit. Here are advantages that might make you decide to go for one:
1. They are strictly supervised by the Singaporean government
As long as you make sure you transact with a licensed legal money lender, you can rest assured that their loan terms and operations comply with regulatory requirements. It would lessen the risk of unscrupulous behavior, exorbitant interest rates and unfair collection practices. This is why it is crucial to make sure the lender you are transacting with is listed on the Registry of Moneylenders, under the Ministry of Law.
2. They have a variety of products
From home renovation loan to business loan, payday loans and even wedding loans, local money lenders have a wide array of products. You do not need to be a Grab driver to avail of their loans.
3. They can offer flexible repayment schemes
Most licensed money lenders in Singapore give borrowers a variety of options in terms of repayment. It can be as short as one month or two months or as longa s 24 months. It would be up to you to negotiate what you think would work best for you.
Local Money Lenders Loan Cons
Now for things you might have to think through before applying for a loan from a local money lender, here is a short list:
1. They tend to favor those with a stable income
If you are applying for an unsecured loan expect that the loan amount will not be that much. Since there is a higher risk of default and non-payment, money lenders will only allow a certain amount and this is usually based on your annual income. For Singaporeans, permanent residents and foreigners, most money lenders only allow loan amounts that are up to 6 times of the borrower’s monthly income for those who earn at least $20,000.
2. They charge penalties, late fees and administrative fees
Licensed money lenders are allowed to charge for late payments. Make sure to ask them to itemize fees and penalties. Ask if there is a processing fee in case you request for a re-negotiation of terms.
3. They charge considerable interest
Be aware that money lenders are allowed to impose up to 4% interest rate. So before you apply for a loan, determine whether or not you can comply with the regular loan payments and the interest payment on top of that.
Conclusion: There is no magic bullet type of loan
The correct choice depends on what you need at the moment and where you are in your financial journey. Keep these short lists of pros and cons in mind to help you make an informed decision.