Money lending is a practice of lending money to people who are in need of capital. It can be for any purpose; it can be for building a home, for education or for some personal matter. People who lend money are called money lenders. Banks are a type of money lender. There are also money lenders who work individually. Money lending or borrowing is also known as giving or taking loans.
When it comes to borrowing money, people generally have two options. Either they can approach the bank; the process is tedious. Or they can go to a private money lender such as money lender toa payoh central; the process is simpler and less tedious than a bank.
Here are some pros and cons of money lending.
Pros
1. Interest
The number one pro of lending money is charging interest. Interest is the amount you get for the money lent. Interest is the profit that grows the business of money lending.
2. Helping someone in need
Another pro of lending money is helping someone in need. Money is an essential commodity in the world. And it is something that many of the people lack the most. So by lending money, you are helping the person in some way or other.
3. Making more money
By lending money you make more money. The interest you charge is the extra money you make on the capital you just lent. Lending wisely to many people simultaneously is a kind of business.
Cons
1. Risk of losing money
Risk factors are always associated with lending money. It is something you cannot eliminate entirely. There are solutions in place to avoid such situations. However, things can always go wrong. Therefore, risk assessment is a necessary tool.
2. Can get dirty
If you are a private money lender. Things can get dirty or might need to be made dirty in order to get your money back. It is not always rainbows and butterflies with people. Sometimes you might need to be like Kingpin and be the necessary evil.
Conclusion
Therefore, the pros of lending money is that it pays interest. An opportunity to help someone in monetary need. Also, lending money provides a window for making more money. The cons of lending money involves the risk of losing the money if risks are not properly managed. In order to manage the risk, the lender might need to get a bit dirty.