Banks VS Money Lenders: The Triad of Distinctiveness Unfolds

Was there ever a time that you thought about comparing badminton to football? Both sports have unrivalled popularity and are well-loved in Singapore, but they play by entirely different rules. Now, consider specifically comparing two financial heavyweights: banks vs money lenders.

Yes, both are Singapore’s best financial institutions. Both provide financial products to Singaporean and non-Singaporean borrowers. But their economic game and how they play it is as distinctive as a badminton court from a football pitch.

So, buckle up and prepare yourself because you’ll dribble through the top three differences between Singapore’s traditional banks and money lenders. But is it only three?

It’s now your chance to unfold the ways of safely gliding through your financial maze. Find out where your real monetary goals lie.

Difference #1: Banks VS Money Lenders and Their Regulatory Framework

In Singapore, every person who considers themselves a law-abiding citizen is often associated with the regulations that the government imposes. It’s a good way for a person to boost their credit score and acquire the best services.

It’s the same when searching for personal loans and other financial products between banks vs money lenders. Both operate strictly by particular guidelines but are not under the same jurisdiction. 

Thus, this makes the initial distinction between banks vs money lenders in Singapore, which is their regulatory framework. Here are the particulars that will interest you further.

Banks: Sturdy Nets with Stringent Rules

Have you ever watched the Lions, Singapore’s national football team, in action? There’s a governing body setting the rules of the game. It’s the Monetary Authority of Singapore (MAS).

Banks, like footballers, follow a set of guidelines. They are under stringent monitoring, ensuring that they abide by the established MAS protocols, thus, delivering a sturdy and reliable security net.

MAS’ Regulations: Banks require a capital adequacy ratio (CAR) set by the MAS. It guarantees the bank’s financial stability and protects its valued depositors’ interests.

Loan Specifications: Banks as per the strict loan-to-value limits that MAS’ has set when providing loans. It’s particularly essential for limiting housing loans.

Money Lenders: Nimble Moves with Flexible Strategies

Do you want to switch your financial gears?

You can do so with Singapore’s licensed money lenders and consider a badminton singles player. The game is about flexibility and quick response, similar to how money lenders function under the Ministry of Law’s Moneylenders Act.

Yes, licensed money lenders are more relaxed than MAS’ traditional banks. Nonetheless, they provide essential protection for Singapore’s borrowers.

Flexibility: Money lenders can adjust to the terms of the loans more freely, offering a variety of loan options to borrowers. But, as flexible as it is, it’s still under the stipulations of the Act. 

Rapid Response: They have the legal capacity to approve loans faster, often within a day. Of course, you must submit all the requirements and be eligible to get the funds from the loan you applied for.

The first shuttlecock has been deftly volleyed!

Difference #2: The Loan Approval Process

For Singaporean and non-Singaporean borrowers who genuinely need money, the loan process is a crucial matter to clarify. It’s because when the financial requirement is highly urgent, waiting weeks for the funds’ disbursement to your bank account can be a little unsettling. 

Thus, which can grant you the fastest loan approval process between banks and money lenders?

Banks: Team Play with Long Passes

The loan approval process from a Singaporean bank is like a football match. Every team member plays a part, from the credit score to the debt-to-income ratio. They focus primarily on long-term stability, passing the ball around until they find the perfect opening.

Crucial Credit Score: Banks mostly require a credit bureau score of 1900 or higher for unsecured loans.

Income Verification: These financial institutions require proof of income and often have a minimum income requirement of more than S$20,000.

Money Lenders: Swift Strikes and Fast Returns 

Would you like to try and switch courts?

It’s a possible choice for you, primarily when you have licensed money lenders to lean on. You can contact legal lenders in Singapore through the Ministry of Law’s Registry of Moneylenders.

Money lenders like these focus on rapid responses to their customers. In addition to such superb customer service, they deliver a swift loan approval process.

Flexible Credit Requirements: Singapore’s licensed money lenders are more lenient with credit scores, focusing instead on the borrower’s ability to repay the loan.

Rapid Approval: These money lenders can typically approve a loan within the same day if you can fulfil the eligibility criteria and requirements like proof of identity, minimum income, proof of income, and employment permit.

However, licensed moneylenders are not unlicensed moneylenders or loan sharks. These loan sharks, or “Ah Long”, usually promise the easiest and fastest loan transaction you can get in Singapore. However, they operate outside the Act and should be reported to the Registry and Police once they contact you via text messages, chat, or cold calls. 

Another swift rally, and the shuttlecock is in play again!

Difference #3: Banks VS Money Lenders and Interest Rates

When you’re about to apply for a loan from a bank vs a money lender, you must analyse and assess the interest rates. The interest rates include the total loan amount you will pay. Thus, it’s imperative to know whether you’ll pay monthly or annually, how much to evaluate your overall debt and when you can repay it soon.

Banks: A Tactical Play

Comparable to the football team planning every move meticulously, banks have a tactical approach to setting interest rates.

Lower Interest Rates: Singapore’s banks typically offer lower interest rates, primarily based on the Singapore Overnight Rate Average (SORA) or the Singapore Interbank Offered Rate (SIBOR). 

Both have a historical tandem with the US Federal Reserve regarding setting interest rates. Banks impose interest rates mostly per annum than monthly. 

Fixed or Variable Rates: Banks offer both interest rates, allowing borrowers like you to select which you prefer more and which suits your financial situation best.

Money Lenders: Quick and Agile Returns

On the other hand, licensed money lenders are all about fast returns. You can compare them to a badminton player swiftly smashing the shuttlecock back.

Higher Interest Rates: Licensed money lenders mainly charge higher yet legally allowed interest rates. It must be within the Act’s cap of 4% maximum per month. Moreover, borrowers can have flexible repayment terms that are befitting their capacities. 

Simple Structure: Legal money lenders have a more straightforward interest structure, typically by imposing a flat rate. It makes it easier for you as a borrower to understand the loan structure, and you can easily commit to it.

A tactical strike, and you’ve scored another point!

The Final Whistle: Making Your Choice Between Banks VS Money Lenders

But you have to be honest, how do you choose the right financial player between banks vs money lenders?

Should you side with the banks, the financial equivalent of the football team with careful planning and structured play, or do you prefer the skill of money lenders, the financial singles badminton champions with swift responses and flexibility?

Consider the banks if you have a solid financial track record and are not in a hurry to get the funds. With your patience and a solid game plan, you acquire payoffs of lower interest rates and the security of stringent regulations.

Regarding licensed money lenders, when you need quick and easy loan approvals like Accredit. They’re the go-to options for fast funds, especially when you have a less-than-stellar credit score. Remember, though, that agility comes with higher interest rates.

What’s the key takeaway? You have to understand that each player has their strengths and weaknesses. And you can choose which fits your financial needs the most. 

Accredit Pte Limited has 4 locations island-wide, to bring our transparent services closer to you.


Tampines Branch
(+65 6226 2662)
Yishun Branch
(+65 6219 2662)
Hougang Branch
(+65 6245 2662)
Clementi Branch
(+65 6261 2662)

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