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|
|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|
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 Period||30 Days||30 Days||30 Days||30 Days|
|*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|
|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!