Money lending has become a popular way to get financing in recent years. The government has even taken steps to regulate the industry to make it safe for investors. This means that social lending is no different than investing in the stock market. The only difference is you get to help out people trying to get on their feet. How do you make money being an authorised money lender Singapore?
Authorised money lender Singapore gets paid each month until the loan is fully repaid. Most sites allow borrowers to pay back loans over one, three or five-year time periods. Longer loan terms accrue more interest for the lender. Riskier loans can also come with higher interest rates. Expect a 10 percent return on average.
Investors don’t make loan decisions blindly. They have much of the same information any bank would have when making a loan decision. Information such as the borrower’s credit score, debt-to-income ratio, and any recent delinquencies is made available. Borrowers can also list other financial information to convince people to help fund the loan.
Lenders are also made aware of the level of risk each level possesses. Each borrower will be given a letter grade to identify their risk. The type of loan being requested is also listed. This is important because different loans come with different interest rates. All of this information can be used in tandem to make an informed lending decision.
It is vital to make a good choice because borrowers may not make payments. You are then left standing with a loan that is no good. Your only option is to sell the note in the open market. It might not be worth anything at that point. The good news is that you may collect a late fee for any late payment.
Investing your gains into new loans will create a steady revenue stream. Each loan you fund will generate interest for you. Eventually, you will make enough money from interest payments alone to fund new loans without having to invest any new money. Your money will continue to grow from there without any additional funding from you.
Looking into authorized money lender Singapore can be an excellent way to make some extra money.