Who is a moneylender?

A moneylender is an individual or group that usually lends relatively small amounts of money at very high rates of interest. They say they charge more than established banks do because their lending tends to be riskier.

In the most basic sense, lending is the act of giving money to someone now with the expectation they will pay you back in the future. Usually, lenders are reimbursed by ongoing, monthly payments made by the borrower until the total amount owed is received. In return for lending the money, the lender charges the borrower a percentage of the amount borrowed, which is known as an interest rate. If you want to lend money, you can contact well Good at money lending in toa Payoh central.

For most people with no bank account, bad credit histories, as well as those with too much debt (so banks won’t lend them anymore), who do not have relatives or friends who can offer a loan, going to a moneylender is their only option.

In most countries today, there is legislation that limits how much money lenders can charge. In Singapore, for example, they need to be registered and are governed by Money Lenders Acts in different states.

In general, the lender determines the interest rate, and it reflects the likelihood that the borrower will repay the amount owed on time. Lenders use different ways to calculate interest rates, but typically an individual’s credit score has a lot to do with it since that’s how the lender predicts an individual’s ability and likelihood to pay (higher credit score = lower interest rate).

Many moneylenders are predatory – they actively seek out vulnerable individuals in financial trouble who have nobody else to turn to.

Loan sharks are people or firms that lend money at outrageously-high interest rates. The term may be used for legal moneylenders or illegal ones – what they all have in common are their exorbitant interest rates.

The moneylender is Geldverleiher in German, prestamista in Spanish, prêteur in French, agita in Portuguese, ростовщик in Russian, and 金貸し in Japanese.

Are banks moneylenders?

Banks lend money, so why aren’t they included in the definition of moneylender?

A moneylender (one word) refers to a specific type of lender. When talking about proper banks, we could use the components of the term ‘money lender’ but would need to separate the two words, i.e. a bank is a moneylender (banks also take deposits).

Conclusion

While getting into the details of lending can be complex, the basic principles are fundamentally simple. Don’t let the big words or sophisticated calculations confuse you.

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