A legal money lender is registered with a regulatory agency and must be licensed to give out loans and services. What this means is that they are bound to follow the already set rules and regulations by the government, among other factors.
A look into what is the difference between licensed moneylenders and banks. Typically, a bank is, maybe, making a term loan against fixed assets of a company in a revolving line of credit for operations and other types of credit facilities to acquire companies.
Moneylenders serve that population that gets beyond the risk profile of a bank. Banking actively deals with the acceptance of deposits as lending money, whereas moneylenders may not include acceptance of deposits.
There are other types of loans that are more complicated and certainly riskier for a client that wants to grow more quickly than the risk profile of the bank warrants. Legal moneylenders like SUCredit Company highly come in here as they offer an array of different products regarding loans where they run a much more disciplined quick process to help the client find a new source of capital.
Products That Legal Money Lenders Offer
1. Asset Based Lending
Asset-based lending (ABL) is given to businesses that then provide an asset as collateral for the loan. In most cases, the cash is used to boost the business. They can decide to use it for some business operational costs or expansion.
It has become a popular choice for companies and individuals that don’t have credit ratings, track records or patience.
2. Rescue Finance
Typically, it is a provision of a loan to a company, business, or individual in difficulty. Moreover, it provides solutions to fundamentally sound businesses with unstable balance sheets due to cyclical pressures.
There are quite a few advantages of rescue financing. Sales and profits are mostly increased once the loan has been granted and minimizes potential bad debt. Since it is a loan to boost up your business, capital return is improved unlike before.
3. Bridge Finance
This is a short-term loan used to provide quick financing to a company or individual until permanent financing is arranged.
Bridge finance is a stop-gap solution that is most convenient for individuals looking to buy a second home before selling their first.
The rate of interest on bridge finance is relatively higher than that of term loans. However, the approval time is way shorter than other loans.
How Exactly Do Loans Work?
All loans work the same way whether from moneylenders or a bank and when you pay them back, they earn a profit through interest rates. Licensed moneylenders are only allowed to charge interest annually depending on whether security, i.e. giving up something valuable you have as a “deposit” for the loan, is given or not.
Banks, however, have different interest rates and a deposit or a down payment, depending on what the money is used for, how much you borrow and how you want to pay it back. Usually through a tenure (paying a fixed amount every month for a set period).
Things To Consider When Choosing Legitimate Money Lenders
1. Lender’s Reputation And Credibility
The answer to this question is the most important. Does the lender do what they say they will do? Get referrals from other borrowers, if need be, to check the lender’s trustworthiness. It is very important to know the credibility of the moneylender and take your time and read other borrowers’ reviews and testimonials until you have the right image.
However, never rely on a single source of information, as the internet is full of scammers, and it may end up being a trap. All this is to help you ascertain a credible moneylender.
2. Loan Specialty/Volume
Why do you need the money? Is it for a small business or an emergency? These are some questions to ask yourself. Answering these will assist you in knowing the right moneylender to approach.
You might wonder why it is important, as all lenders have the same goal and objective. The main contrast is in the payment process and interest rates. A lender designed to offer personal loans is different from the one that lends for business-related assistance.
3. Interest Rates
All moneylenders have got their preferred method or system of payment, and so are their interest rates. Most of these factors can easily be accessed from their website, advertisements, or through contacting them on various platforms.
Based on this, finding the one with low-interest rates is easier compared to the traditional ways of finding information on moneylenders. Moreover, most lenders often offer loans with sensible interest rates.
Making a comparison of different lenders helps or rather guides you to counter-check all factors of the moneylender, mostly when it is your first time applying.
4. Terms Of Engagement
Generally, what this means is that you should consider reading the lender’s policies, terms and conditions as they may contain information that is not stated on the website or so. These may include features like repayment schedules, repercussions of payment failure, or interest rates as earlier stated.
What would be the case if you default or miss a loan repayment within a few days? The answers should be in the terms and conditions of the moneylender. Your credit score should always be key when it comes to loans and keeping them positive.
When you approach a legal moneylender, you will feel safe. This is because all their terms are transparent, and you won’t have any fear that they can con you in the process. Thereby, always try to check how legitimate the moneylenders are. You can get a loan, then they start pressurizing you immediately. Always be careful and choose a legitimate moneylender like SU Credit.