When you’re short of cash and possess a bad credit score, applying for loans may be a challenge. This is especially the case for bank loans; whilst they may offer you a loan, it may take quite some time to get your application approved. When you urgently need financial assistance, this may not be favourable. As such, other available alternatives may be tempting, in particular a shady personal loan moneylender, or otherwise known as a loan shark.
At first glance, this may seem like a good idea. After all, you’ll have access to the much-needed money in such short notice. This, however, can’t be further from the truth. We’ll explore why you should never engage with a loan shark, much less take a loan from them.
Difference Between Accredited Moneylenders And Loan Sharks
Unlike an accredited moneylender, predatory loan sharks are not subjected to the same laws and regulations that protect lenders. Accredited moneylenders are required to go through the contractual terms and explain it in layman terms so that you understand what you’re signing up for. Moreover, their interest charged is capped at 4% per month, and their imposed charges and expenses cannot exceed a certain amount.
Loan sharks, on the other hand, will not abide by such rules. Apart from imposing an extremely high interest or charge an exorbitant amount, they may also require you to surrender and keep personal ID documents and information that are not required for the loan. Such personal information includes passwords to your user accounts, NRIC card, driver’s license and the like.
What Happens When You Engage With A Loan Shark
Once you’ve signed the contract, you are unfortunately bound by law to stick to the terms. Otherwise, you may end up being penalised yourself. In most cases, however, they will harass you and your family members – an outcome you definitely wouldn’t want. The harassment will continue until you’re done paying for the loan, its high interest included.
The Better Alternative
When you’re financially tight and are pressured to find a financial solution, any option may seem like a good option. However, note that dealing with a loan shark will only aggravate the situation and give you further unnecessary stress. Instead of succumbing to such a fate, consider looking for other alternatives.
It doesn’t have to just be for personal loans either. If you have multiple high-interest debts, there are licensed debt consolidation companies in Singapore that can consolidate and settle your loans in a long-term, low-interest loan that would not put your financial health in jeopardy. This way, you’re not forced to get stuck in a perpetual cycle of being barely able to pay off your debt as the interest continues to rack up.
If you find yourself in a financial pinch, consider other methods outside of taking out a loan. You can look into getting another job or get financial assistance from your family members. If you still wish to take out a loan to pay off debts, make sure you’re working with a legitimate moneylender. This way, even though the approval takes a bit of time, the interest rates are favourable for all parties involved.
As a licensed moneylender in Hougang, we take pride in being a credible and honest moneylender that helps you settle all your financial worries. We’ll guide you through the entire process, making sure that you understand what you’re signing up for. Relief yourself of financial burdens with our excellent financial solutions!