Illegal Money Lender Singapore Red Flags to Be Aware of

Illegal Money Lender Singapore: Red Flags to Be Aware of

Taking out a loan is a great option to finance assets you want to buy. It’s also a great option when you’re paying off other debt obligations. That’s why many Singaporeans consider getting a loan from a money lender.

Unfortunately, not all money lenders are credible. In fact, you’ve probably heard of horror stories involving an illegal money lender Singapore. Victims of loan sharks recounted terrifying experiences. Some were harassed on social media. Others experienced having their home vandalized. In the worst cases, victims were threatened with violence.

Learn the difference between a licensed moneylender and an unlicensed moneylender. In doing so, you’ll be sure to get the best and safest deal.


How To Verify The Legitimacy Of The Moneylender

Singapore law has strict rules and regulations against illegal moneylenders. For one, all licensed moneylenders need to be registered with the Ministry of Law. They are also regulated under the Moneylenders Act. These agencies must comply with the Code of Ethics set by the Credit Collection Association of Singapore.

Visit this link to verify the legitimacy of the money lender.

The PDF contains the list of moneylending agencies that are registered with the Ministry of Law. Additionally, the list also indicates whether the company has a suspended license.

Equip yourself with the necessary information. Verify the legitimacy of the financial institution to protect yourself from problems.

Learn more: What You Should Know About Singapore Moneylenders Act


Some Tactics Loan Sharks Use To Trick Borrowers

Scheming tactics of loan sharks are constantly evolving. In fact, some unlicensed moneylenders use subtle tricks to lure unsuspecting borrowers. Here are a few things to watch out for to avoid dealing with loan sharks.


1. Send Messages Through SMS or WhatsApp

Loan sharks are now using modern tricks to lure borrowers. This includes approaching individuals through SMS or WhatsApp messages. Borrowers might receive a message offering a hassle-free loan application process.

Remember, this type of advertising and messages is not allowed. It violates the advertising rules for licensed moneylenders. Credible and licensed money lenders advertise using these tactics:

  • Through business or consumer directories
  • They have their own website
  • Flyers inside or outside their business premises.


2. The Phone Line and Handset Trick

You should also watch out for loan schemes that ask you to sign up for a phone line and handset plan. These illegal moneylenders will not care whether you can pay the contract. They’ll let the telephone company chase after you.

So how does this work?

The loan shark will give you money for the phone and handset plan. Then they’ll ask you to sign up for different telephone companies. Based on how much you want to borrow, you may have to sign up for two or more phone lines.

Once done, the illegal moneylender will be gone. They’re off to resell the phones at a higher price. While you’ll have the money you want to borrow, you’ll also end up paying multiple phone bills.

So beware of schemes like “smartphone lease” that promises you easy money.


3. Portray Themselves as Licensed Moneylenders

Some illegal moneylenders are smart. That’s why you need to be smarter.

Loan sharks even go so far as creating fake websites and social accounts. They make their business look legit. Some even have fake license numbers displayed in their office or social accounts.

This is how they lure an unsuspecting borrower. Then they will use the borrower’s personal information for unlawful purposes. Additionally, some illegal moneylenders don’t offer loan schemes outright. At times they use clever phrases like “flexible financing”. Others also offer “financing” for start-up businesses.

So no matter how legitimate they look, always check for their credibility. Visit the Ministry of Law Singapore website. Look for their business name on the list of licensed moneylenders. If they’re not in it, they’re most likely a loan shark.


4. Selling An Item With A Promise To Buy It Back Trick

This scheme is when the loan shark buys something from you at a high price. Think of it like when you pawn an item. They will give you the amount you need. For example, you’re selling your watch and need $10,000. The loan shark will buy it at that amount even if its market price is a lot less.

The catch? They will have you sign a contract that states you’ll buy back the item at a much higher price later. If you think about it, it’s just like getting a loan using your valuable as collateral. But you’ll end up paying a much higher interest.

And since you dealt with a loan shark, you might face harassment when you fail to pay back. So don’t be fooled into this scheme.


5. Hari-Hari Lending Scheme

This is another loan scheme by unlicensed moneylenders. The term originated from Malay meaning “daily”. The loan shark will let borrowers loan some money and will collect a portion of the payments daily.

Individuals with low-income jobs usually resort to this. The borrowers and the loan shark usually have an amicable relationship under this scheme. But an unlicensed moneylender will not hesitate to use unfair means of debt collection if borrowers default on their loans.


How To Deal With Loan Sharks?

A licensed money lender in Singapore will not resort to harassment. They will abide by the code of ethics set by CCAS. That said, they will remain reasonable when collecting debt.

But if you encounter situations wherein you’re being intimidated or harassed, here are things you should do:


Keep Calm

This may seem difficult, especially when you’re fearing for your safety. But it’s important to stay calm. Don’t give in to their threats and don’t show them that their threats are working. This could escalate the situation, putting you more at risk.

Note: Consider changing some of your personal information like your mobile number, social media accounts, as well as your bank account number.


Call The Police

Have you been approached by a loan shark? Or is an illegal money lender harassing you?

Contact the police immediately at 1800-255-000. Here’s what you can do:

Contact the National Crime Prevention Council’s X-Ah Long hotline at 1800-924-5664

  • Submit the information online at

Not sure whether you’re dealing with a loan shark? The police can determine whether the money lenders have acted out of bounds. They can also recommend legal action against these illegal money lenders.

Contacting the police will help keep you safe. Additionally, it gives you time to fulfill your debt obligations.


Stop making further payments

Once you’ve contacted the police and filed a complaint, you can stop making further payments.

The loan shark may threaten you with a legal case. They might say you’ll be prosecuted. But remember, loan sharks are the ones using illegal debt collection practices. Plus, they’re transacting illegally.


Report to the Registry of Moneylenders

Lastly, you can file a complaint with the Registry of Moneylenders at 1800-2255-529. It could be for any of these reasons:

  • Unfair lending practices
  • Unjust contracts
  • Illegal collection practices
  • Violation of the rules and regulations

They will handle all borrower complaints. You don’t have to worry about your personal information since all cases are handled confidentially. They will not release your information to the moneylender.


Advantages Of Taking A Loan From Licensed Moneylenders


1. They Are Governed By Law

Licensed moneylenders are registered with the MinLaw in Singapore. These licensed agencies follow the rules and regulations set by the Singaporean government. That said, taking out loans from credible moneylenders will not pose as much risk as dealing with loan sharks.


2. Interest Is Calculated Using The Remaining Balance, Not Original Principal

Licensed moneylenders offer reasonable interest rates. In Singaporean Law, the maximum interest rate these credible lending agencies can charge is up to 4% per month. Additionally, the interest rate is charged based on the remaining balance instead of the original principal loan amount. This lowers the risk of falling deep into debt.


3. Approval Procedures Are Quick

One of the reasons why individuals choose to take out loans from a licensed moneylender is because of the hassle-free application. And compared to banks, they can approve loans faster. That said, you can quickly get funds. Licensed moneylenders have a simple approval process and require fewer documents compared to banks.


4. Lawful Collection Procedures

With credible lending agencies, you don’t have to worry about getting harassed. They will abide by the lawful procedures of debt collection. Additionally, they will adhere to the stipulated fees, interest rates, and lending limit set by the law. For these reasons and more, you need to borrow from a licensed money lender. You can find some of the top trusted lenders at Moneylender Review.


Red Flags To Be Aware Of

There are warning signs you should look out for when choosing a moneylending agency. The number one red flag is if they’re operating without a license number from the Ministry of Law.

Here are more red flags to watch out for:

  • They contacted you through SMS or WhatsApp: Advertisements offering hassle-free loan process via these channels are already a red flag. Ignore such text messages and block the number.
  • Willing to lend any amount: An unlicensed moneylending agency is willing to approve any loan amount. They will not even consider your income level. Additionally, they will not ask for proof of income, like payslips.
  • Ask you for SingPass user ID and/or password: They’re willing to lend you any amount, but you’ll have to provide them with these documents. This is because it’ll make it easier for them to harass you in the event you can’t pay.
  • Fails to explain the loan terms: Licensed money lenders are required to thoroughly explain the loan terms in a language you understand. Loan sharks will not explain the terms and conditions. In fact, some will not even provide you with a copy of the contract.
  • Pressures you into signing a contract: This is another red flag. If an illegal moneylender asks you to sign an incomplete or blank contract for your cash loan, it’s time to bail.
  • Transactions are made via phone call, SMS, or e-mail: If the moneylender refuses to meet with you, that’s another red flag. Chances are, they don’t have a physical office address.

If you spot any of these red flags, stop dealing with them immediately. It’s best to first verify their legitimacy before communicating with them.


What Happens If I Cannot Repay The Loan?


Negotiate With The Lender

If for some reason you are unable to repay your debt, you can consider renegotiating with the lender. For instance, you can negotiate to amend the loan repayment schedules and terms. But the lender will have the last say. Plus, it might come with extra fees.


File For Bankruptcy

Filing for bankruptcy is an option for borrowers who can’t pay at least $15,000. When this happens, the lender will stop charging interest rates. Plus, the moneylender can’t file legal charges until the borrower gets out of bankruptcy.


Debt Repayment Scheme

For borrowers whose outstanding balance is less than $150,000, they can consider the debt repayment scheme. With the help of the Ministry of Law, a mediator will step in. The Official Assignee will assist in negotiating an acceptable repayment schedule between the lender and borrower. The repayment schedule will last less than 5 years.

Read more: What Is the Debt Repayment Scheme (DSR) in Singapore?


Get Help From Social Service Agencies

Lastly, you can seek the assistance of a social service agency. The Credit Counseling Singapore is the only social service agency that offers repayment arrangements for borrowers with licensed moneylender debts. But of course, borrowers will be subject to assessment.


In Conclusion

There are various reasons why you might need to take out a loan. If you find yourself in need of funds, make sure to deal with a licensed money lender.

Do your due diligence. Ask important questions. And most importantly, verify their license and credibility with the Ministry of Law in Singapore. Take necessary precautions to avoid loan scams by illegal money lenders.

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