When in debt with other options such as loaning a sum of money from friends and family exhausted, a thought that will cross most debtors’ minds is to borrow from moneylenders.
Although there are still other alternatives such as visiting a debt consultancy to get advice and exploring different ways to repay debts, some may still choose this route as a quick and fuss-free solution.
However, it is important to take note that borrowing from licensed moneylenders versus illegal sources makes a whole lot of difference.
Here is everything you need to know, including how to settle your loans from a licensed moneylender – read on to find out more.
Why do people turn to illegal sources for loans?
Despite being notorious for their unethical behaviors and exorbitant interest rates, there are still people who will turn to illegal sources for loans, possibly due to its easy-to-approve process that does not require face-to-face meetings and credit checks.
Why is it not worth it to borrow from illegal sources?
Alas, the convenience and simple process can do more harm than good in the long run. For instance, these illegal sources often do not operate in a physical office, making it difficult to track them down in the event of an altercation. Additionally, they are known for their harsh money-collecting methods including harassment when you are unable to meet your monthly repayments.
Why borrow from licensed moneylenders instead?
While borrowing from a licensed moneylender may not be the best option out there to repay your debts, it still has more benefits than turning to illegal sources.
There has been an increase in scammers masquerading as licensed moneylenders via text messages in recent years and unfortunately, many have already fallen prey to them.
Hence, borrowing from a licensed moneylender helps you to avoid scams because they are not allowed to solicit loans via text messages, phone calls or social media platforms. You can also check the Ministry of Law’s website for the list of licensed moneylenders in Singapore for greater assurance.
Nevertheless, it is still advisable to practice caution as even some licensed moneylenders can be aggressive in their dealings.
Greater security and peace of mind
Unlike borrowing from illegal sources, you can always lodge a complaint against a licensed moneylender should they engage in any unfair practices toward you.
An investigation will then be launched and the Court has the authority to set aside loan transactions that are substantially unfair.
Thus, borrowing from a licensed moneylender gives you greater security and peace of mind as you know there is a legitimate government body you can fall back on.
Although borrowing from a licensed moneylender is advisable instead of turning to illegal sources, you should still consider other alternatives such as a Debt Repayment Scheme, Debt Consolidation Plan and debt settlement appeal before jumping the gun.
These schemes are aimed at helping debtors clear their debt quicker and in a more manageable way instead of adding on to what they already owe.
If you are still feeling unsure about the route to take, contact our team here at Debt Aid.
We are a debt consultancy in Singapore with a team of professional consultants who will advise you to the best of their ability on the next steps to take based on your current situation and needs. Start taking charge of your life today!