There has been a recent development in the advancement of credit facilities by money lenders. Money lenders provide loans based on the creditworthiness of the individual. The effect of money lenders on credit providers is positive as they help reduce the credit problems of poor and small sections of the society. There are two types of money lenders who provide credit facilities to the people. Licensed money lenders are those institutions or groups of individuals that are regulated through the government by the law of the land. Unlicensed money lenders are not regulated by any authority and provide credit facilities. However, it is always recommended to take a loan from a licensed money lender, as there is no risk involved. Money lenders provide a quick loan to the borrower as they don’t ask for any collateral security. This article provides a general overview of how to distinguish between licensed and unlicensed money lenders.
How to distinguish between licensed and unlicensed money lenders
An individual should always be cautious in availing credit facilities from any institution, whether banks or money lenders. It is to be noticed that there is a great development in money lending companies in facilitating the credit requirements of the people. However, an individual should always check that the money lender is licensed and registered with the appropriate regulatory authority. An individual should always read the terms and conditions of the money lending company and ask questions and voice doubts about the eligibility criteria, etc. For more information click best money lender in chinatown.
If the money lending company is not able to answer all the questions, an individual should take the facility from someone else. Licensed money lenders have always had transparent loan conditions. It Is to be noted that licensed money lenders always have a reasonable rate of interest. So, if any money lender is charging a high rate of interest, it is an unlicensed money lender. An individual should always ask for a written contract of loan entered into with a money lender. If any money lender refuses to enter into a contract, there are high chances that it might be an unauthentic money lending company. A licensed money lender has always had a physical and registered office, whereas an unlicensed money lender usually does not have any physical office.
It is always recommended that an individual always take a loan from licensed money lenders, as there are many benefits to doing so. There are some ways in which a person can easily distinguish between licensed and unlicensed money lenders.