3 Ways Moneylenders are Better Than Their Newer Alternatives

These days, modern alternatives to traditional moneylenders have popped up. There are online lenders and P2P lending, and more of them are entering the Singaporean financial industry. Mostly, you can find them as apps for mobile phones promising easy loan applications, fast approval times, and generous principals.

Still, a traditional authorised money lender can be a better choice. Here are three significant reasons to put your trust in conventional lenders.

Traditional moneylenders are regulated by the Government

Legitimate moneylenders must be registered with the MinLaw. As such, these lenders are bound by the rules set by the MinLaw, such as maximum interest rates and ethical business practices. If any of them misbehave, you can report them right away for corrective action.

With regulations in place, you can be more confident in borrowing money from traditional moneylenders. Newer alternatives like online lenders and peer-to-peer (P2P) lending expose you to greater risks. You may face higher interest rates, lots of hidden charges, and unfair loan terms. In the worst cases, you may even fall victim to unethical collection methods like intimidation and threats to your privacy or safety.

Traditional moneylenders have established reputations

Many traditional moneylenders in Singapore have been in the industry for several years. As such, they are already well-known and have built solid reputations that make them more reliable. They also have an incentive to conduct business properly and treat their clients with respect, as they have to keep their good reputations.

Alternative lenders, on the other hand, are not yet that established. Sure, loan approval may be much easier, and their requirements may be less stringent, but you may not know how they operate, their core values, as well as how they treat their clients. The ‘convenience’ these alternative lenders give is quite tempting, but the risks do not outweigh the potential benefits. 

Knowing these, you are better off borrowing money from trusted moneylenders. 

Traditional moneylenders have more reliable sources of funds

Most importantly, moneylenders have ready access to the funds they need to lend money. If they happen to be running out of funds, they can simply tell you that they cannot accommodate your loan application. With that, at least you are sure that you need to find another lender.

Newer alternatives like P2P lenders do not have the same sense of certainty when it comes to funds. For instance, P2P lenders depend on the people willing to pool their money to fund loans. If not enough investors contribute, your loan may not be fully funded. That can lead to more problems down the line.

At least with traditional moneylenders, you are sure that if your loan gets approved, you will get the money you need. The only thing you need to be concerned about is repaying the loan. 


Traditional moneylenders are still the better options when you’re looking to take out a loan. They are Government-regulated, backed by solid reputations, and have better sources of funds to lend to you. With these, you can borrow money with more confidence.

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