How to Spot Illegal Money Lenders and Loan Sharks in Singapore?
There are times when you may need some financial assistance at different stages of your life. It might be for a medical emergency, your child’s education, renovation, or financing a home. Rather than putting your relationships with family and friends at risk by asking for help from them, you may turn to financial institutions that can resolve your problem.
However, there is a possibility of falling prey to illegal money lenders. That would result in the issue becoming worse. Many people have heard the terrible stories linked to borrowing from illegal money lenders. No one wants to get entangled in this type of situation.
Legal vs. Illegal Money Lenders
Unlicensed money lenders or loan sharks are well known for their outrageous interest rates. Since they do not adhere to stipulated laws and regulations, they typically resort to illicit methods of harassments that they use to terrorise their customers when seeking repayment.
Unlike unlicensed money lenders, a licensed money lender gets governed by the law and follows a stringent set of rules. Licensed money lenders are alternative financial services that offer customised loan products to individuals. These loans are often unsecured, and you are not required to provide collateral when getting the loan. If you are interested in finding out more, check out this list of the top legal money lenders in Singapore.
Illegal Money Lending in Singapore
A significant drop in illegal money lending activities got attributed to a rise in the use of security cameras that were facilitated by the police force in different neighbourhoods as well as concerted efforts within the community. However, this is not something that can get celebrated yet. Unlicensed money lenders have resorted to non-confrontational and less damaging methods to reach their clients.
With digital advancements in technology and access to smartphones, it has been easier for unlicensed money lenders to harass their clients. They use an electronic approach via messaging services, SMS and others that allow them to target more people. Aside from this, they have also been sending out letters.
Unfortunately, people are often negligent when they reveal their details online, and unlicensed money lenders can use information from social media platforms to blackmail individuals. Be careful when posting anything online that you may regret in the future. You should also use security features such as passwords to secure your accounts to prevent them from being hacked.
Preventing Harassment by Loan Sharks
The best way to avoid harassment is by not dealing with loan sharks at all. It is essential to stay away from any situation that makes you susceptible to being harassed by an unlicensed moneylender. The following is a list of things that can get done to stay safe:
- Do not borrow money from loan sharks. The methods that they use to harass their clients continue after you pay them back.
- Do not act as a guarantor for any illegitimate transactions
- Do not provide any personal details
- Please do not get involved in gambling as it is usually addictive
If you need financial assistance but are reluctant about getting money from family and friends, consider the available alternatives.
You can get help from financial institutions such as licensed moneylenders and banks. They are always ready and willing to provide a loan with reasonable loan terms. You will not get subjected to the frustration and distress that comes with being harassed by loan sharks.
Considering all the risks linked to unlicensed money lenders, you probably do not want to work with them. Some illegal money lenders may also make unethical requests for confidential information. You should not provide this type of data under any circumstances.
Make sure that you always borrow from a legal money lender who has a contact number and official physical address. Licensed money lenders do not ask for private information like details of your SingPass login or ATM. They will not ask you to sign blank or incomplete contracts.
Benefits of applying for a loan from with a legal money lender include the following:
- In Singapore, licensed moneylenders are under the law
- The quick and straightforward application process
- No paperwork
- Unsecured loans
- Flexible repayment terms
- Citizens, permanent residents and foreigners can apply
Examples of Loan Scamming Activities
In May 2019 a residential unit was linked to a loan shark harassment case. There was red paint splashed on the door, and debtor notes found. Officers made enquiries and used security cameras during their investigations that led to the arrest of a 20-year-old man and 20-year-old woman who were allegedly involved in the case.
In April 2019 police were informed about a loan shark harassment case in a residential area. The residential unit had been locked up intentionally and sprayed with red paint. Additionally, there was graffiti all over the walls next to the residential unit. Two teenage perpetrators got arrested.
Another case in April 2019 involved a 25-year-old male suspect who got arrested due to a loan shark harassment at a residential unit. This unit also got spray painted, and a bicycle lock used to secure the unit alongside a debtor note. Enquiries on the ground and images from security cameras led to the accused person’s arrest.
In November 2019, a man in Singapore shared his experience of owing a loan shark thousands of dollars. He failed to pay back a loan of $13,000, and as the interest accrued rapidly within a week, he found himself in deep debt. His entire family has been affected and traumatised by the incident since the loan sharks started knocking on their door.
A woman who needed money desperately to pay bills ended up paying $400 when she missed a payment in the first week after being lent an initial amount of $250.
Dealing with Loan Sharks’ Unsolicited Messages
If you are the unfortunate recipient of unsolicited WhatsApp or text messages from illegal money lenders, you should:
- Ignore any message
- Do not send any replies to the loan shark
- Block the number and report it as spam
In Singapore, licensed moneylenders have been popular alternatives to banks when seeking personal loans. However, many people still choose to borrow funds from loan sharks even when there are numerous horror stories regarding the illegal tactics that they use to collect payment.
Some of the traumatising experiences include being harassed endlessly on social media and locking up people’s homes. Illegal money lending typically consists of extremely high-interest rates. Scams often occur through phone calls, but the scammers can use WhatsApp to avoid detection.
People who borrow from unlicensed money lenders may not have the paperwork that so required by licensed lenders or banks, or they need the money within an unrealistic period. Loan sharks take advantage of these scenarios by assuring customers that they can provide personal loans immediately without any paperwork.
Borrowers who have low credit scores may think that their only option is an illegal money lender, but in reality, licensed lending services also accommodate these clients.
Loan sharks are continually working on their schemes, including asking people to sign up for handsets before loan approval to create a way to chase after you if you fail to pay the monthly instalments.
Licensed money lenders should always be the first option when you want to borrow money rather than getting involved with a loan shark. Singapore has strict rules to discourage illegal lenders, but there are still some individuals and companies that ignore these rules because they know many people require funds urgently. Picking a loan shark can make your financial problems worse.