When a friend or loved one is in financial need, it’s natural to want to help. You may even consider lending them money personally. However, referring your friend to a licensed moneylender instead can often be the smarter, safer decision.
In this article, we outline 7 compelling reasons why you should consider this option, as well as the pros and cons of each approach.
1. Legal Protection and Regulation
A licensed moneylender operates under strict regulations set by the government. This ensures that your friend will be dealing with a professional entity that must comply with legal standards, including transparent interest rates and fair loan terms.
2. Avoiding Financial Strain on Personal Relationships
Lending money to friends or family can strain your relationship, especially if the borrower struggles to repay the loan. By referring your friend to a licensed money lender, you can remove the emotional burden of loan collection and the potential resentment that may arise from financial difficulties.
3. Professional Loan Assessment and Creditworthiness
Licensed moneylenders are trained to assess creditworthiness and offer loan terms accordingly. They have the tools and expertise to evaluate a borrower’s ability to repay the loan. When you lend personal money, you may not have the means to assess your friend’s financial situation thoroughly, which could lead to unrealistic loan agreements.
4. Clear Repayment Terms and Interest Rates
When your friend takes a loan from a licensed moneylender, they receive a formal agreement outlining the repayment terms, including the interest rate, payment schedule, and penalties for late payments. This helps ensure that both parties have a clear understanding of the loan terms. In contrast, personal loans are often informal, and repayment expectations may not be fully understood, leading to misunderstandings.
5. No Financial Risk for You
Lending your own money to a friend puts your personal finances at risk, especially if the loan is not repaid on time—or at all. When you refer your friend to a licensed money lender, your finances remain untouched. This protects you from potential financial strain and allows you to maintain your savings and financial stability.
6. Professional Debt Collection Process
In the event that your friend struggles to repay the loan, a licensed money lender has a formal debt collection process that complies with the law. This ensures that all actions are taken professionally and legally. When you lend personal money, you may not have the means or experience to handle loan recovery, which can lead to awkward or aggressive interactions.
7. Access to Payday Loans and Other Financial Solutions
Many licensed moneylenders offer a variety of loan products, including the payday loan, personal loan, and foreigner loan. These options provide flexibility for borrowers, allowing them to choose a loan product that suits their financial needs. When you lend personal money, you can only offer a one-size-fits-all solution, which may not meet your friend’s specific financial needs.
Conclusion
In summary, referring your friend to a licensed money lender is a smart and responsible choice. It ensures that they receive professional financial assistance while protecting your personal relationships and finances. Licensed money lenders provide clear loan terms, legal protection, and a range of financial solutions that are designed to meet different needs.
On the other hand, lending personal money carries significant risks, including financial loss, emotional strain, and the potential for damaged relationships.
If you like this article, you might want to read this article about What Do Borrowers Need to Learn About MLCB Loan Information Report.
The post 7 Convincing Reasons Why Referring a Friend to a Licensed Money Lender is Better Than Lending Personal Money appeared first on Swift Credit.