How to Spot an Illegal Money Lender (Singapore)

Loan sharks: we see a lot of them in movies and sometimes in the news when these predators lurk about in neighbourhoods. While Singapore’s strict moneylending laws make it difficult for these lenders to find victims, they still try anyway.

These loan sharks, known as ah longs, are unlicensed moneylenders that are constantly on the prowl, and when an individual with poor credit is desperate, they smell blood in the water.

Loan sharks operate in many different ways and hunt for victims in a variety of methods. Still, there are a few telltale signs that should alert you that you are dealing with an unlicensed lender, and in this article, we’re going to talk all about the signs you should look out for.

How to Spot an Illegal Money Lender in Singapore

Loan sharks aren’t usually as stark and violent as they are portrayed in movies. While violent threats are still a possibility and something to be worried about, most will usually run scams to trick borrowers into a contract.

Unlicensed lenders or loan sharks have also gotten with the times–they have expanded their shady business into the internet, all the more reason for people to be more cautious with their money online. Unlicensed moneylenders can operate in multiple different ways, so it’s best to confirm if they have activities that suggest that they could be a loan shark.

Here are a few things that you should take note of before getting into a loan contract with any lender:

1. No Physical Address
2. Remote Loan Application
3. Advertisement Methods
4. Unsecure Website
5. Didn’t Confirm Your Ability to Pay
6. High Interest Rates
7. Upfront Fees
8. Incomplete Loan Offer
9. Demands Important Documents
10. Threats and Violence

 

1. No Physical Address? Must Be a Loan Shark

Are you in the middle of trying to borrow money from a money lender? Consider informing them that you would prefer a personal visit to finalize a contract and confirm their address. If they try to steer the conversation away from their business’s physical location, you could be dealing with unlicensed moneylenders.

Licensed moneylenders in Singapore are required by law to have a physical location for their company, which you have to go to for personal verification of the loan contract.

If you also get in touch with money lenders online, it’s best to look for any contact details, specifically a landline number. An email address, social media page, and site are easy to whip up, but a landline will require more detailed records, which questionable money lenders are not likely to have.

2. Remote Loan Application? That Could Be Loan Shark Behavior

More and more licensed moneylenders in Singapore are going digital. Borrowing money and getting approved online is convenient and safer in light of recent events, after all.

However, you’re also going to find questionable money lenders among the licensed moneylenders who are just adjusting their business model. The increase in remote loan applications gives them more opportunities to scam people out of their money.

Licensed money lenders will insist on a face-to-face verification before your loan is approved. Still, loan sharks will have your application approved through SMS, phone call, or email without a physical contract, just to get it over with, and will likely just send over the loan amount directly to your bank account.

So if you get your loan from a money lender without going through the proper legal process and verification, it’s best to confirm whether they are licensed or not.

3. SMS Texts and Calls to Advertise? That’s an Illegal Money Lender

It’s the digital age, and there are new means to advertise. You’ve probably received SMS about loans before, but this is actually not an activity that a licensed moneylender should do and is a good sign you are receiving solicitations from loan sharks.

Licensed moneylenders are required by the Ministry of Law in Singapore to use proper channels such as:

• Business or consumer directories in print media.
• Ads placed on the exterior or within the lender’s approved place of business.
• Websites belonging to the money lender.

This means that SMS, phone calls, Whatsapp, emails, or even flyers outside of their company building were where you heard of the lender; it’s a sign that they are likely unlicensed for practising methods that aren’t legal in Singapore.

So if you are in the middle of the loan process with a money lender that contacted you through SMS, block the number immediately and borrow cash somewhere else. Instead, peruse business or consumer directories to find licensed money lenders to get your loan from a reputable Singapore establishment.

4. Unsecure Website? Sounds Like Loan Sharks

The digital nature of a modern loan application requires the borrower to impart sensitive, personal information. Because of this, it’s important to be careful about the websites you are asked to use during the process.

One sign Singaporean borrowers should take note of is whether or not there is a padlock icon beside the web URL. This indicates that the site is secure and borrowers’ personal information is safe.

Another is to simply look at quality. If you look at loan application websites from Singapore banks, you can see that the user interface is clean and orderly and good speed due to proper web-hosting. Unlicensed lenders and loan sharks will often not have enough budget to maintain their site, and this can affect its overall function.

5. Didn’t Confirm Your Ability to Repay the Loan? Most Likely Illegal

Offering a large loan amount is risky for Singaporean money lenders. As such, part of the process before borrowers get approved to give a thorough look at the borrower’s credit history, monthly income, and other factors that can affect loan repayment.

Banks especially are stricter when it comes to these checks, and while licensed Singapore lenders are more lenient with their requirements, your monthly income/annual income still plays a large part in getting approved and deciding how much loan principal you can borrow.

Because questionable lenders are eager to have you borrow money and bury you in hefty interest rates, they will no doubt be almost impossibly lax when it comes to checking your financial information.

6. High Interest Rates? Likely a Loan Shark

Singapore is very supportive of borrowers and wants to make sure that people are safe from being buried in loans and being unable to make their monthly loan repayment.

For this reason, licensed Singapore money lenders are not allowed to charge interest rates of more than 4% for their loans.

If you borrow from a money lender and provide interest rates higher than that, you are likely dealing with an illegal lender.

7. Requires Upfront “Processing Fees”? Smells Like Loan Sharks

When lenders ask for upfront fees, like an administrative fee or a processing fee, as payment before disbursing a loan or before a loan gets approved, it’s a sign of questionable activities (especially if they use a conspicuous bank account!)

Licensed money lenders in Singapore will not ask you to transfer money before giving you a loan. They may charge an administrative fee of up to 10% of the loan amount, but usually only after the loan is approved.

Moreso, even if you fail to make a repayment, the only fees licensed money lenders in Singapore are allowed to charge are:

• An administrative fee no more than 10% of the principal, deducted only after a loan extension;
• A fee of no more than $60 for each month of late repayment, and
• Court-ordered costs for a successful claim for loan recovery.

8. Incomplete Loan Offer? That Lender Could Be Unlicensed!

Part of the Singapore government’s efforts to keep Singapore citizens from taking loans that may overwhelm that is that licensed money lenders are required to read out the contents of the contract properly.

It must include information such as the total loan amount, repayment scheme, and the interest rate, and the licensed lender must provide you with the information in a way that you can understand.

If you find the information vague, you may ask the money lender to explain the loan contract to you as much as you need.

But if the money lender is hesitant to divulge the loan contract details to you, it’s a better idea to avoid signing it.

Loan providers in Singapore must be able to provide the following information to you:

• Nominal interest rate
• Late interest charges
• Other permitted fees to be charged
• Instalment details

9. Asking for Your Credentials and/or Important Documents? Loan Shark Alert!

In Singapore, licensed lenders will only process your SingPass with approved methods by the Singapore government and are required to return your NRIC and other important documents to you.

Questionable money lenders can use the information to harass you and get more cash, but a licensed lender will work with you to get you to pay through legal means.

10. Resorting to Threats? Definitely Loan Sharks

Violence is a major red flag and completely against the rules. While under no specific regulatory law, licensed money lenders follow a code of conduct that controls how they go about their methods.

They may not resort to the use of threats, violence, vandalism, impersonation of officials, and more, to get you to pay their loans. If dealing with your loans incurs any kind of abusive behaviour, you are likely dealing with loan sharks.

How to Avoid Unlicensed Moneylenders

Aside from taking note of all of the above signs, one of the simplest ways to tell if the lender is licensed or not is to go online to the Ministry of Law site and check their list of all the licensed loan providers in Singapore. It’s best to confirm if the lender you are considering getting a loan from is actually licensed and recognized by the Singapore authority.

The list can be found here.

If you do experience abusive behavior from possible loan sharks, you can report them either to the police or the Registry of Moneylenders in Singapore, with the lender’s business name, license, and contact information.

You can send the report to the Registry through their website or contact this number: 1800-2255-529.

What to Consider Before Taking up a Loan from a Moneylender

• Consider alternative money-assistance schemes. Different government agencies have various financial assistance schemes that help you when you are pressed for cash. Consider researching the different programmes and contacting the different agencies.
• Loan fulfilment. You are legally obliged to pay the money you borrowed from a lender; as such, it is best to consider your ability to make repayments by factoring in your income and other financial obligations.
• Contract details. As stated earlier, money lending services have to divulge the loan in a way that you can understand before giving you said loan. Make sure you fully understand the loan contract terms, particularly the loan repayment schedule, the interest rate charged, and applicable fees that come with the loan.
• Shop around for other loan providers. Don’t just jump in with the first lender to offer you money. It’s best to check offers from other lenders before taking up a loan. Don’t get a loan until you are sure you can handle the interest rate and other terms and conditions.

Why Go for Singapore Licensed Moneylenders?

Licensed money lenders and other financial institutions recognized by Singapore should be the first places you should consider borrowing from when you need cash. Part of their service is adhering to rules and laws that not only help you get the money you need but help you when you can’t pay the loan.

It’s important to be vigilant when dealing with anything involving money, especially when it comes to lenders.

Be wary of the different signs that can alert you of possible illegal practices because dealing with the wrong lender can cost you more money than you can get. Don’t be afraid to abandon ship when you do find questionable practices.

Get loans from a money lending service you can trust. Consider going to 365 Credit Solutions. 

365 Credit Solutions is a recognized, licensed moneylender in Singapore that offers trustworthy, efficient, and, most importantly, completely legal solutions to resolve your financial needs.