Aug
25

5 things to remember while dealing with money lenders

In times of financial emergencies, people go to money lenders. The people in financial need borrow the required money from money lenders at some interest rate. With time, there have been lots of changes in the money lending system. There are many institutes or money lenders good at money lending in Toa Payoh.

There are two types of money lenders – Formal and Informal money lenders. Both differ from each other based on the rules and regulations. Informal money lending gives you more freedom and fewer rules than formal money lending. Also, it is spreading widely throughout India and adding to the economy. When borrowing money from a money lender, it is important to consider some points.

Know about more available options

Make sure you have explored all available money lenders as there are money other options such as NBFCs, websites, financial institutions, mobile apps, etc. If researched properly, you will find several institutes and money lenders that provide loans at quick rates and with convenience.

Verified money lenders

To make the money lending process convenient for all, the government has also taken steps through the money lender’s act in every state. Under this, you can easily find registered money lenders with valid licenses. When looking for genuine money lenders, always look for those with a proper license.

Check on the Interest rate

Never forget to check the interest rates whether they are effective or not. An effective interest rate is the total percentage rate debited in interest over a loan. So the lesser instalments you have lesser will be the effective cost.

Additional charges

Sometimes the money lenders add on some other charges such as the penalties for late fees, pre-closure fees, etc. Ask the lender to provide all these in written form for your final approval.

Know about loan recovery

Many money lenders use radical measures when the loan amount has not been repaid within time. So if you are going to a money lender for borrowing money, do ask about the actions taken in the loan recovery process taken by the money lender. To avoid any risky situations, you should contact only licensed money lenders.

Conclusions

First of all, you should consider your eligibility for getting a loan. There are formal and informal types of loans with different aspects. The informal types of loans are considered risky. To avoid risks and other obstacles you can follow the mentioned criteria in this article. Ensure that you conduct proper research prior to the decision.