At one point or another, borrowing from a licensed money lender must have crossed your mind.
However, before that, you may want to know whether it is safe.
Usually, when you face a financial crisis and desperately need to have access to immediate cash, borrowing is one of the ways you can solve your financial problem.
Who is a Licensed Money Lender
A licensed money lender is a person or business entity authorized by law to lend cash under certain conditions provided by the government or monetary regulator.
Unlike loan sharks or lenders without licenses, licensed money lenders work by rules and particular guidelines that allow a fair and honest opportunity to borrow.
How do you determine if a Money Lender is Licensed?
As a borrower, it is in your interest to ensure the moneylender you deal with is licensed. The following is how you could verify one and provide you comfortably avoid scammers and unlicensed lenders.
Check the name from the official government registry
The Ministry of Law lists licensed money lenders on their websites. Searching from this registry will confirm whether the lender in question is on the good books.
Request for documentation
A licensed money lender could provide a crystal-clear, lawful contract. If the paperwork looks shady and lacks details, that’s a warning.
Visit their office
A genuine lender will have a physical office and won’t call or WhatsApp from anonymous numbers.
Request the license number
A licensed money lender will not be evasive or secretive about their license number.
Key Safety Borrowing Tips
Borrow only what you need, and can afford: First, work out how to pay back the funds before accessing any credit facility, and do not borrow more money than your affordability.
Understand what the terms imply: Find out precisely what you are signing up for. Check the interest rate, repayment schedule, and fees imposed for late repayments-. This understanding can empower you, making you feel in control and confident about your financial decisions.
Shop lenders: Shop and compare licensed money lenders to get the best terms and rates you may qualify for. This involves comparing interest rates, loan terms, and customer reviews to find a lender that best suits your needs.
Don’t hurry: Take your time. Rushing into a loan agreement can lead to regrettable decisions. If the lender insists you need to do something right now, that’s a red flag. Avoid unlicensed money lenders: However sweet it may sound, borrowing a loan deal from an unlicensed lender can translate into harassment, surging fees, and distress in the form of finance.
Pros of Borrowing from a Licensed Money Lender
Borrowing from a licensed money lender is sure to ensure it’s for you before the actual borrowing, during the loan repayment time, and even after you have cleared your loan.
The following are more pros of borrowing from a licensed money lender;
Faster Approval Process. A licensed money lender would process the loan in hours or, at most, a day. This fast approval process can be a savior in urgent situations, such as paying medical bills or attending to urgent repairs.
Flexibility in Loan Terms. The terms of repayment are always flexible. Whether you want a short-term loan or would want to extend your payment, the lenders will try their best to accommodate you.
Less Stringent Eligibility Criteria. No excellent credit score? That is quite alright! The licensed lenders are much more prepared to lend to individuals with poor credit since they will be interested in your present capability to repay the loan, not your credit history.
Legal Protection. The good news is that if you borrow from a licensed one, the law has your back: the interest rate is capped, and abusive collection practices are illegal. You can also report them to relevant authorities if something feels wrong.
Conclusion
When done correctly and understood correctly, borrowing from a licensed money lender is a safe and feasible solution to your financial needs. It is safe to borrow from one, provided you have done your homework