Although licensed moneylenders in Singapore have been a good alternative to banks for personal loans, there are still many who borrow money from loan sharks despite several horror stories about their illegal ways of collecting payment.
Some of the terrifying experiences recounted by victims include harassment on social media and even setting fire to the borrower’s home!
What is a loan shark?
So, what exactly is a loan shark? Loan sharks are illegal lenders who often use threats to collect debts with extremely high interest rates. Most of them tend to target low-income and desperate individuals who are in need of immediate cash.
Essentially, all licensed moneylenders should have a license number issued by the Ministry of Law. Those who are not authorized – loan sharks – are basically breaking the law.
The loan services offered by loan sharks are faster and easier compared to licensed moneylenders as they generally dodge legal formalities. Do not fall victim to these schemes as these entities are notorious for running frauds with unjustifiable charges.
How do they trick you?
1. You May Be Unable to Repay the Debt
Unlicensed moneylending involves sky-high interest rates. Licensed money lenders in Singapore will never offer personal loans with more than 4% in monthly interest rates. On the other hand, loan sharks can charge more than 10%.
A story involving a woman who needed to pay bills even had to pay $400 after missing the first week of payment. The unlicensed moneylender originally lent $250, which is more than a 50% interest rate in just seven days!
While the female victim had an agreement to pay $300 after one month, the loan still carried a 20% interest rate that’s higher than the 4% cap on loans from a licensed moneylender.
The scam usually happens through unsolicited phone calls, but fraudsters have become wise enough to avoid detection by using WhatsApp to victimize people.
2. Loan Sharks Make You Believe That You Don’t Have Other Options
Those who borrow from illegal money lenders in Singapore usually don’t have the necessary paperwork needed by banks or licensed lenders, or they simply need to get the money as fast as possible.
Loan sharks capitalize on this by promising clients with personal loans that don’t require documents and can be disbursed immediately.
However, you should be aware of financial assistance programs by the government before thinking about borrowing money from a loan shark.
Some banks and legitimate money lenders can now process a loan application and release the approved amount within 24 hours.
If you don’t have the documents, a licensed money lender will be your best alternative.
Borrowers with poor credit scores are also inclined to borrow from loan sharks, but licensed lending companies also cater to this group of people.
3. Unlicensed Lenders Use All Sorts of Dirty Schemes
The scheming process of loan sharks evolves constantly. Watch out for those who ask you to sign up for a phone line and handset plan before approving your loan.
These companies engage in this trick to let telephone companies do the work of chasing after you, in case of failure to repay the monthly instalments.
How does this work? The loan shark will ask you to sign a two-year contract with M1, Singtel or another company.
Once approved, the lender will give money in exchange for the phone. Let’s say the phone from the contract costs $1,500. The loan shark will give $1,000 and you won’t have to repay them. Your responsibility now involves paying the telephone company.
There are several red flags from this scenario, but the most prominent one is the exchange of money for the phone. Some phone companies provide discounted mobile devices for their plans or even give them to customers for free.
In other words, you’re paying money for something that’s not in your hands because you “sold” it to a loan shark.
Unlicensed lenders do this because they don’t want to bother chasing after clients who defaulted on small loans, which usually cost from $1,000 and $3,000.
By asking the customer to sign up for a phone plan, they pass on the chore of hunting defaulters to telephone companies.
If you need to borrow $3,000, then the loan shark will ask you to sign a phone deal with a handset that’s worth the same as your desired loan amount.
Another shady tactic involves loans with the promise of buying gift cards. Customers will need to agree to buy a certain number of cards within a specific period.
If you borrowed $1,000 from a loan shark, you will have to agree on buying a $100 gift card each week for two months. The cards can be either common gift cards such as AliPay or those from the loan sharks themselves.
4. Loans Build Relationships With Clients
The Hari-Hari type of lending is just another yet milder version of unscrupulous lending money. The term means “daily” in Malay, which refers to the frequency of collecting payments from borrowers.
Loan sharks have become familiar with their clients through this scheme, as they see each other each day to collect the money.
People with low-income jobs are usually the clients of Hari-Hari lenders.
Both parties have a good-natured relationship because of the daily encounters, but loan sharks still won’t think twice of harassing their clients if they default on their loans.
Most illegal money lenders who use the Hari-Hari system rarely fail to collect payments, possibly because the amount is small when divided into daily instalments.
The problem, however, lies in the accumulated interest payments that can last for several years. Some borrowers even pay 10 times the principal amount!
The idea of being familiar on a personal level with their creditors becomes another problem, as they may feel embarrassed when they miss a single payment.
Imagine owing money to a close friend or family member and being unable to repay the loan. How would you feel about it?
5. No Paperwork Needed as a Hook
Those who borrow from loan sharks Singapore usually don’t have the necessary paperwork needed by banks or licensed lenders, or they simply need to get the money as fast as possible. Loan shark Singapore capitalize on this by promising clients with personal loans that don’t require documents and can be disbursed immediately.
However, you should be aware of financial assistance programs by the government before thinking about borrowing money from a loan shark. Some banks and legitimate money lenders can now process a loan application and release the approved amount within 24 hours.
If you don’t have the documents, a licensed money lender will be your best alternative.
Example of loan shark harassment cases
7 Nov 2019 – A 30-year-old man has been arrested for his suspected involvement in loan-sharking harassment activities by setting fire on the doors of the units.
The police said they were alerted on Nov 5 to two separate cases of loan shark harassment at residential units along West Coast Road and Ang Mo Kio Avenue 5.
Source from : Channel News Asia
24 April 2020 – The police are now seeing a rising trend of unlicensed moneylenders using food delivery services to harass debtors.
In a statement on Wednesday, the police said that these illicit moneylenders would order large amounts of food or make multiple orders a day to be delivered to debtors’ homes, often late at night. Occasionally, the moneylenders would order the food to be delivered to debtors’ relatives.
The deliverymen would then request payment from the debtors or their relatives for the food.
Source from : The Strait Times
Loan Scam Tactics
23 October 2019 – $200 loan balloons to $65,000 after internet scam targets man in Singapore.
The victim’s mother said her son was offered a loan $200 through an Internet scam some time ago. “Although he didn’t want it, the money was transferred into his bank account.
“He returned the money immediately after sensing something was wrong, but the loan sharks began harassing him.”
Suspected loan sharks poured petrol and set ablaze a woman’s gate,and it was chained with a padlock.
“There was a big paper note saying ‘Now you want to cheat my company money ah? Now you never contact me I will keep burning it”.
A video of her gate being set ablaze was sent to her daughter by the suspected loan sharks as a warning, where one of the two men could be heard saying in Tamil “burn it first”.
3 January 2020 – Between January and November 2019, at least 1,700 cases of loan scams were reported, with victims losing at least $6.8 million, said by the police said in a press conference.
They said these scams have possible links to unlicensed moneylending. The victims would typically receive a text message or WhatsApp message offering loan services.
The scammers would tell victims they have to pay a deposit sum and 7 per cent goods and services tax (GST) for the loan amount, before the loan can be approved to deceive the victims into believing they were dealing with a licensed moneylender.
Interested victims are told to transfer a sum of money as a deposit. However, after transferring the money, no loan would be disbursed.
On the other hand, when these victims declined to make the payments, the scammers would claim that the loans had already been approved and would demand a processing fee to cancel.
Another version of the scam involves perpetrators sending PDF documents, the victims received PDF document informing them the loan request had been processed, purportedly from the Ministry of Law (MinLaw) or Monetary Authority of Singapore (MAS), or both.
Source from : The New Paper
What should you do when faced with them?
If you or your family members find yourself being a victim of a loan shark harassment, worry not! There are existing laws that can be of help.
The best resort to call is to the police at 999 or 1800-255-0000, or submit an online police report at www.police.gov.sg/iwitness.
The contacts below are also useful for loan-sharks related cases:
- National Crime Prevention Council’s (NCPC) ‘X Ah Long’ Hotline
- Credit Counselling Singapore
- Registry of Moneylenders
- National Council on Problem Gambling
Do note that there are many existing voluntary welfare organisations for help in managing these debts. List as below:
- Adullam Life Counselling
- Arise2Care Community Services
- Association of Muslim Professionals
- Blessed Grace Social Services
- Centre for Domestic Employees
- One Hope Centre
These pages are a community with undisclosed identity determined to help victims of unlicensed money lending activities. Hence, they are able to be of great help in assisting legal advice.
It’s better to seek financial assistance from licensed lenders
Opting for financial help from licensed moneylenders is always the best choice. It is stated in the Singapore’s Moneylenders Act that no entity can run money-lending business in Singapore unless it is authorized by a license.
So, having a license is crucial as this acts as a guarantee that the institution is abiding the law. In fact, the act helps to regulate the money-lending business as it provides protection for the borrowers in case there are any problems between the lender and the borrower.
There are several characteristics that make licensed moneylenders the best option for financial help such as their undeniable credibility, low-interest rates with no hidden charges, and also flexible terms and conditions.
Any good money-lending institution should be able to give reasonable and negotiable terms to its borrowers.
Who can you seek?
So now you might want to know the licensed moneylenders operating in Singapore. Don’t worry, we’ve got you covered! This is a list of all the moneylenders in Singapore which is authorized by the Ministry of Law: List of Valid Moneylenders in The Republic of Singapore (last updated 1 April 2020)
However, we do recommend that you want to check out Bugis Credit. Being known as the most reliable licensed moneylender in Singapore, Bugis Credit offers a reliable and fast way to take out a loan with no hidden fees and flexible repayments.
A licensed money lender should be your first option for borrowing money instead of looking for a loan shark. Although Singapore has tough rules to deter unscrupulous lenders, some companies and individuals still ignore these regulations since they know a lot of people need money urgently.
Don’t let your money problems become bigger by choosing a loan shark. Call us today and find out more about our services.