Almost everybody in this world feels the need for money with urgency at any given point in their lifetime. The requirement of money can be for anything starting from a medical emergency to personal expenses. These requirements of money can be fulfilled by taking loans from money lenders or even from banking and financial institutions.
However, depending on the urgency of the requirement, an individual can decide whether to consider a bank / financial institution or to go for borrowing money from money lenders.
The banks and financial institutions can facilitate you with loans of big amounts but might take a longer time to process the same. At the same time, the money lenders will process your loan amount in a short time as compared to the banking and financial institutions.
There are a few things and tips to be considered by the person who is planning to take a loan or borrow money from licensed or unlicensed money lenders. Though taking a loan was considered a sin in the earlier days, but now a day it has become a necessity of life.
You might feel a need of taking a loan or borrowing money at any point in life these days because of the various ups and downs happening in the entire surroundings of human life culture.
Tips while taking loans from a licensed moneylender
The major things to keep in mind while applying for a loan or to borrow money from a licensed money lender are listed below with a detailed explanation.
- Validity of Moneylender
The first and foremost terminology to consider while applying for a loan or borrowing money from a licensed money lender is to check for the validity and authenticity of the moneylender. You will find the validity and registration of the moneylender on the website of the finance governing body of the region.
Simply go on the website of the governing body and search for the name of the moneylender that you are planning to deal with. The next thing you need to check on the website is the registration details and validity of the licensed money lender.
If the registration details of the specific money lender are present on the website, you can proceed further with the money borrowing process with that money lender.
The entire process of borrowing money with these registered, licensed money lenders makes sure that you are dealing with the right people and that the deal is safe and secure.
- Repayment time
The loan that you are taking from the lender always has a fixed time span for repayment.
You need to make sure about the repayment time span before processing the loan or borrowing the money from any licensed money lender. This way, it helps you in setting up a timeline for the planning of repayment of the borrowed money.
- Rate of loan Interest
The next important thing you need to consider while borrowing money from a licensed money lender is the rate of interest that is being charged on the principal amount that you are borrowing as a loan. The interest rates have a fixed capping in the case of licensed money lenders.
The interest rate capping ranges anywhere between 10% to 18%, and this is a fixed capping set up by the local or regional governing bodies.
This is not the same case if you are borrowing money from an unlicensed moneylender since they can charge you any rate of interest with respect to your principal amount that you are borrowing from the moneylender.
Hence it is always recommended to try and avoid the unlicensed money lenders and possibly try to stick with the licensed money lenders only. This way, you will get a better interest rate against your principal amount, and this won’t make you pay more for the money you borrowed.
This tip helps you in saving your money as well as time since a lot of processes becomes hassle-free for you and saves time ultimately.
- Market Research
The foremost important aspect of being considered while borrowing a loan from any licensed money lender is that you study your exact expenses and research well in the market. The reason for you to borrow the money or take a loan from the licensed money lender should be very prescribed.
The amount that you are to borrow from the moneylender should exactly match the requirement and should not exceed. The case where you exceed the amount than your requirement is when you fall into the trap of being caught in the loan cycle.
You should be extremely careful while planning the loan amount that you are about to borrow from a licensed or unlicensed moneylender. The extra amount that you borrow from the moneylender than your actual requirement becomes a direct liability on you at the time of repayment.
Therefore, only borrow the amount that is actually required instead of taking up the extra amount. The more money you borrow is, the more money you have to repay, and the interest also adds up to that amount.
Especially if you are a woman and planning to take up a personal loan for women, make sure you are keeping it all well planned about the repayment options.
- Never to get loan to pay loan
The most important tip for borrowing money from any moneylender, either licensed or unlicensed, is that you always make sure that you are not borrowing money or taking up a loan to repay another loan that is already due.
There are times when people borrow money or take up loans from money lenders in order to repay their previous loans.
This is a trap, and you should never fall for it because this most of the times become a never-ending cycle of loans. Therefore, it is always recommended to take up a loan from money lenders only if you are already debt-free.
If you already have a few loans on your shoulder, you should rethink planning or proceed with another loan and especially from money lenders.
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