Money is part of our everyday life, earning it is how we spend most of our time, and in our free time we in one way or another spend it for our livelihood or enjoyment. Perhaps we put away some for the future, in the form of savings or investing. For young professionals, our lives will basically be a never-ending cycle of working to earn money and paying the bills. But even if the average adult earns a steady income of livable wage, there can be moments when their cash flow won’t be enough. This is especially true when unforeseeable circumstances happen, such as sustaining injuries in an accident, being in a medical emergency, or incurring monstrous debt that they can’t repay.

It’s understandable if you find it difficult to move forward when you’re in an overwhelming situation, but you must know that you don’t have to face all these problems alone. That’s why there are lending institutions that you can borrow money from in case of emergent situations so that you won’t need to drain all your accounts. Although I don’t believe in going into debt to obtain short-term pleasurable things that we can’t afford now, I do recognize that debt can be a powerful tool and sometimes it’s necessary if we’re in a tight spot financially. Most people’s go-to solution for their financial problems is to approach a traditional bank to apply for a loan because that’s what everyone else does. But here are three reasons why you should consider approaching a private lender instead of a traditional bank when you’re strapped for money:

Friendlier Borrowing Terms

First-time borrowers tend to lean towards conventional loans from banks because they offer much lower interest rates compared to a private moneylender in Singapore. The reason behind this is that banks have direct access to funds that they can lend to borrowers because they have many retail customers, which means they can get those funds with very minimal to no interest fees at all.

However, this benefit comes with a lot of stringent borrowing guidelines that can make it that much harder for borrowers to comply with or get approved. And even if banks can lend money to borrowers with lower interest rates, they hardly ever do because they would lose potential profits in the process.

On the other hand, private lenders take the money they lend out from investors or financial institutions, which is why they have much higher interest rates than banks. But since private lenders are more flexible when it comes to their borrowing guidelines, their approval process is faster than conventional loans. Perhaps it’s the ability to borrow more with less collateral, or perhaps your credit isn’t great. Maybe you’re looking for a longer-term than a bank will lend you. Although you’ll pay more in interest, it could be worth it depending on your situation!

Also, you can find private lenders that are willing to negotiate regarding interest rates. In fact, some lenders will try to match the interest rates offered by other lenders or even offer lower rates because that’s how much they are willing to show that they care for their customers.

Wider Selection of Loan Solutions

Banks and other traditional financial institutions are often regulated by the government, which means that they have to be compliant with the standards and follow strict guidelines themselves. This explains why banks are more inflexible when it comes to their loan options, unlike most private lenders.

Since the main purpose of private lending institutions is to lend money to borrowers, they have the capacity to offer more loan options to their customers. Among these are payday loans, debt consolidation loans, personal loans, renovation loans, fast cash loans, and even foreign loans.

Having such flexibility in the financial industry is uncommon, which is why the private lenders that are capable of this are real game-changers. They may also be able to offer higher borrowing limits and flexible loan tenures to their customers, which are valuable factors that can be considered during decision-making.

Streamlined Application Process

If you have ever tried applying for a conventional loan at a bank, you will know that most of the application processes are bureaucratic and time-consuming. This is because banks would have to check your credit score and history, cash flow requirements, and debt-to-income ratio, to name a few before you can be approved for the loan application.

Understandably, these strict lending standards exist because traditional banks are subject to law compliance. So, to eliminate all potential loopholes to the agreement, banks will have to conduct a thorough investigation of the borrower’s eligibility, which can result in a longer approval process.

However, private lenders don’t share those stringent guidelines because they are autonomous bodies. This makes the entire approval process quicker because private lenders are more flexible when it comes to application requirements. Some lenders even offer online loan applications for their potential customers which can further expedite the approval process.

Summary

At the end of the day, what matters is that the decision you’re going to make will benefit you. Going into debt is a big decision, not to be taken lightly, and there’s no perfect loan out there for you. To make the best possible decision, you’ll have to weigh all the pros and cons of your options so that you can make an informed decision. Doing this will prove that you are a financially responsible adult who can take care of yourself, even in the toughest of times.

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