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Everything you should know about money lending companies

Introduction

A loan is the amount of money that is a debt and is usually borrowed from financial institutions like banks, non-banking financial institutions, etc. But, it is to be noticed that there are several money lending companies that are also providing loans at an effective rate of interest. It is correctly stated that banks and financial institutions require so much documentation in order to clear a loan. Credit is the most important and viable need of each and every person. This article provides a general overview of the money lending company.

What is a money lending company?

A money lending company is an organisation that provides loans to the poor and marginalised sections of society at a certain rate of interest. The focus of these money lending companies is essentially on the lower-income households that cannot approach the bank owing to certain factors like illiteracy, lack of time, etc. So, these money lending companies help mobilise credit facilities in small sections of the society. For more information click best money lender in toa payoh.

Difference between money lending companies and banks

Money lending companies and banks are both established to fulfil the credit needs of society. They both provide loans at a certain rate of interest. However, there are some differences in the way they disburse loans to the people. Banks and other financial institutions provide loans to individuals at a low rate of interest, which is a plus factor, and banks are regulated and governed by the regulatory authority. Whereas money lending companies provide loans at a higher rate of interest than banks.

There is a whole bureaucratic process in order to approve loans, and it requires some time in giving a loan to the needy person, whereas money lenders can provide loans faster and quicker than banks because there is less documentation than with banks. Banks require certain collateral security in order to secure their loan, whereas money lenders generally disburse the loan without any collateral security. So, that’s why poor people prefer to avail credit facilities from money lenders at a higher rate of interest than from banks because money lenders approve the loan faster and don’t require any collateral security.

Conclusion

Money lending companies are institutions that provide loans to the poor sections of society by charging a certain rate of interest. There is a difference in the workings of banks and money lending companies, and a person should avail of credit facilities by keeping in mind