A money lender is a person who lends money at higher interest rates. Lenders charge higher rates of interest as the risk factor in lending money privately has more risks than banks, due to many reasons. Moneylenders are at an advantage as they lend money to people who are in urgent need of money but do not have any bank account. Also, people with bad credit history and those who cannot manage to borrow money from their friends and family also approach money lenders for credit.
Advances from private lenders work a lot more equivalent to advances from banks or credit affiliations. You get financing to buy a property, make a purchase, combine commitment, and make home improvements or many various expenses. By then, you pay the entirety you procured back in instalments, with interest. That is the methods by which the lender acquires money but the higher interest rates are of private lenders as compared to the banks.
Now, lets’ have a look at the procedure of becoming a licensed money lender.
FACTORS TO CONSIDER ISSUING A LICENSE
A money lenders’ license is usually approved by the revenue department within the time period of 3-4 months counted from the date when the application form was submitted. Once the application is received by the concerned department, it is valid for the duration of one year. Nevertheless, there are a few factors that must be put into consideration when you are issuing, renewing or endorsement of your license.
Following is the list of all the required documents to become a licensed money lender.
- Fill the application form: the application will ask you to fill in the details like name, address, father’s name, you are a native to Indian state, address of the business place, if you have more than one business property or more, if more then how many, date of business commencement, the financial year the licensed is applied for, money to be lent during the financial year, and many more details.
- Passport-sized photographs
- Three sampling signatures mentioning the money lender's name or his nominee.
HOW TO APPLY FOR BECOMING A LICENSED MONEY LENDER
The following are the steps to be followed to become a licensed money lender.
Step1: Visit the tax officers’ office
In order to attain the license the applicant has to visit the nearest tax office.
Step2: receive the application form
The next step will be to visit the tax office and pay a fee of Rs. 1000 to receive the application form from the tax office.
Step3: enter the correct details
The applicant must enter all the required details asked in the application form, don’t forget to crosscheck the document to make sure you have filled in all the correct and required details.
Step 4: submit the form
The application form filled by the applicant is to be submitted to the tax officer’s office itself by filling all the required details.
Becoming a licensed money lender in India is quite easy. Just follow these few little steps one can become a moneylender with a license. Becoming a private lender is risky but also beneficial. It is risky as there is no security that you will definitely get your money back, and it is beneficial as you receive high-interest rates on lending money privately. So, to have safe lending do check the documents of the person you are lending money to.