DBS Cashline VS Moneylender
How DBS Cashline compares to a legal money lender in Singapore? Is it better or cheaper?
You’re strapped for cash and you need it urgently. Borrow from a licensed money lender? No thanks. Because you heard that lending from a credit line such as DBS Cash line is much better (or cheaper).
Actually, it’s not true – it depends a lot on your situation.
You will need to ask yourself 3 simple questions.
- Do you need the money now?
- Do you have a bad credit score?
- Is it a one-time loan (frequency = once a year)?
If all your answers are “No”, a credit line is likely a better option for you.
If all your answers are “Yes”, taking a loan from a licensed money lender is not only faster but maybe even cheaper.
Let us illustrate it for you below.
But before we do that, let us run through the 2 options.
What is DBS Cashline?
A DBS Cashline account is a credit line facility that allows you to do the following:
- Top-up your current/savings bank account
- Transfer/withdraw money or pay bills with ATM, iBanking or cheque
- Transact via AXS or NETS point-of-sale
It offers flexible repayment – only need to fulfil minimum repayment every month.
But you should be able to repay it within days to a few months to avoid paying excessive DBS cashline interest.
What is a Licensed Moneylender?
It is an unsecured loan provider like Platinum Credit, that offers you the following:
- Fast approval and minimal paperwork
- Instant cash upon approval
- Less focus on credit score
You can opt for up to 3 months of the repayment period.
And you should be able to repay it within the agreed period to prevent overpayment in interest.
DBS Cash line vs Moneylender
Here’s a quick breakdown of what these 2 borrowing options entail:
| DBS Cashline | Licensed Moneylender | |
|---|---|---|
| Annual Income | S$20,000 onwards | S$18,000 onwards |
| Advertised Interest Rate | 20.5% to 29.8% / Year | 3.92% / Month (By Law) |
| Effective Interest Rate (EIR) | 20.5% to 29.8% / Year | 15.56% / Month |
| Max Credit Limit | 4-10X monthly salary | S$300 to 6X monthly salary |
| Min Repayment | 2.5% of outstanding amount OR S$50 (whichever is higher) | 3.92% of the outstanding balance |
| Annual Fee | S$120 | - |
| Processing Fee | - | 10% of loan amount |
| Late Fee | S$120 / Month | S$60 / Month |
| Credit Score (CBS/ DP Credit Bureau) | Excellent to Good | Flexible - based on moneylender's discretion |
| Documents Required | NRIC, & CPF Contribution Stm (Last 9 mths); NOA (Latest); or Computerised Payslip (Latest) | NRIC, Proof of Income, & Bills or Bank Statements (to verify address) |
| Cash Disbursement | Pending account approval by bank | Instant |
Example
Depending on your loan amount and frequency, a loan from the moneylender may be cheaper than the bank.
You can see from the following example. If you borrow S$1,000 once a year, DBS Cashline will become more expensive from the 2nd year onwards.
| DBS Cashline (Year 1) | Licensed Moneylender (Year 1) | DBS Cashline (Year 2) | Licensed Moneylender (Year 2) | |
|---|---|---|---|---|
| Loan Amount | S$1,000 | S$1,000 | S$1,000 | S$1,000 |
| Loan Period | 30 Days | 30 Days | 30 Days | 30 Days |
| Processing Fee | - | S$100 | - | S$100 |
| *Annual Fee (1st Year Waived) | S$120 (Waived) | - | S$120 | - |
| Advertised Interest Rate | 29.8% / Year | 3.92% / Month | 29.8% / Year | 3.92% / Month |
| Amount You'll Receive | S$1,000 | S$900 | S$1,000 | S$900 |
| Interest Amount | S$24.49 | S$39.2 | S$24.49 | S$39.2 |
| Total Cost (Interest + Fees) | S$24.49 | S$139.2 | S$144.49 | S$139.2 |
*With effect on 2 December 2019.
So if you are facing one of the following scenarios:
- Do not borrow often and needed cash urgently
- Do not have a fantastic credit score
- Had your DBS Cashline application rejected
You can contact a reliable money lender like Platinum Credit today!
