I need urgent money.
That is possibly one of the most distressing things that you can say to yourself. Most people who borrow money in Singapore only do it when they have no other options left. However, there is one important choice that they will still have to make – ask friends and family for help or turn to a professional money lender.
In this article, we explore the reasons why people make one choice or the other, the pros and cons of each option, and how you should approach the situation.
‘Large’ loan vs. ’small’ loan
Most of us have casually asked our friends and family for small amounts of money, for example, if we forget our wallets. Depending on your own and the lender’s socioeconomic status, a loan of a few hundred and up to a few thousand dollars can be based on a casual agreement.
However, even a hundred-dollar loan can be considered ‘large’ if the lender is struggling with their own financial obligations. In such a case, the sensible choice is to approach a licensed money lender to borrow money in Singapore.
The important thing to remember is that an amount that is ‘small’ or ‘large’ for you may not be seen as the same by the other person.
If there is a possibility of any confusion on the issue, the better option is to turn to a licensed money lender. Money borrowers won’t have to worry about imposing on a loved one, and a licensed lender is always happy to get a new client. Everybody wins.
Fixed terms vs. returning favors
“Remember that time when I lent you all that money?”
Money borrowers may hear those words from family members or friends when they least expect them. The guilt may oblige them to agree to do things that they otherwise would have refused.
With a licensed moneylender, there are no favors to return, only the money that was loaned and the interest you agreed to pay. You free yourself from the specter of being asked unexpected favors and not being able to say ‘no’.
There is also the peace of mind knowing that once you have paid back a loan to a moneylender, they cannot guilt you into other favors later.
On the other hand, most loans between family and friends don’t involve interest. You simply pay back the loaned amount.
You will have to decide for your particular circumstances if the money you save in interest is worth the burden of asking someone for financial assistance. It could leave you in perpetual moral debt to them.
Repayment is key
Whether you have signed a contract, come to an informal verbal agreement, or simply did not discuss repaying the money, repay it.
In the case of a formal lending agreement with terms of interest and a schedule of repayment, do not miss payments. On-time settlement of debts helps maintain your credit score and protects you from late fees, administrative charges, and additional interest. If not, your loan could end up costing you more than it is worth.
In an informal agreement with friends or family, repaying your debts improves your social standing and keeps unpleasantness from ruining relationships. If possible, return the money even if they ask you not to. They will remember the gesture.
Making the decision
You probably visualized yourself as a borrower and/or lender as you read this article. Perhaps it even made you recall actual conversations that you have had when borrowing or lending money in the past.
The odds are that if you borrowed money from friends or family members, it ultimately led to awkward conversations and uncomfortable meetings. Debts can poison a good relationship even when both the money borrowers and the lenders have the best of intentions.
When you borrow money from a licensed moneylender in Singapore, it takes all emotion out of the equation. It is reduced simply to a business transaction between two parties who agree on the amount to be loaned and the terms of repayment. You pay interest, yes, but it is regulated and you can negotiate the terms.
The next time you find yourself thinking, “I need urgent money,” read this article again. It will help you make the right decision if you have to borrow money in Singapore.