Difference Between Licensed Money Lenders And Banks

Banks do lend money. But when? When you show them two houses, adequate monthly income as security. If only you have all those things with you, why will you even borrow money for? The only reason we borrow money is because we are in a financial crisis and we need a source that helps us lend money without making it a sick joke! In this scenarios, comes licensed money lenders who are viable. The question is, are they better than banks are just sharks with blood lust that act in a sophisticated way? Let’s see!


In most of the countries, the money lenders are often licensed by the group of money lenders. They have a Registrar appointed. This license is to restrict the lending amount, charging fees and also on the interest rest on the amount they are lending. The license is only given once the lender passes the test. Does this mean there won’t be any scope for vandalism?

The basic idea behind money lending is making it a business. The interest of moneylender lies in building a good reputation and therefore, lending more money by enlarging the borrower domain. Therefore, they don’t usually get into scams by doing vandalism or scaring the clients. In case if the debtor is not being timely, the only way to do it is by sending them reminder letters just the way banks do. While these are similarities, money lenders act differently while compared to the banks.

Some differences are:

  1. Lending small amounts for smaller purposes.
  2. Speed of circulation.
  3. Relatively high interest.
  4. Forgiving and giving credit assessment.


Therefore, if you’re looking for a small amount to use as an investment or source for a smaller purpose, money lenders are always at your help. The one thing you should know is to weigh the pros and cons and act accordingly keeping the interest and rate of return in mind.