Many people believe that loan sharks are a thing of the past, but the truth is that they’re still out there, and they prey on unsuspecting borrowers.
Commonly known as “ah longs” in Singapore, these unlicensed moneylenders tempt borrowers with fast and easy money. The catch? They charge exorbitant interest rates. They are also infamous for their harassment tactics and threats of violence when collecting a debt.
If you’ve been harassed by these predatory debtors, it’s important to know how to handle them. This post will provide you with information on how to deal with loan sharks, and what borrowers are advised to protect themselves from unlicensed moneylenders.
Read Also: Licensed Moneylenders vs Bank
Are There Loan Sharks in Singapore?
It is illegal in Singapore to lend money without a license. Unfortunately, that hasn’t stopped loan sharks from preying on innocent consumers with financial problems. Over the years, loan shark activities have evolved, such as sending unsolicited WhatsApp messages and posting loan advertisements via social media.
That said, if you encounter any of these loan advertisements, ignore the messages and immediately block the number. Remember, Singaporean loan sharks have been known to be notorious for their dangerous business practices.
Is It a Crime To Borrow From a Loan Shark?
The Moneylenders Act in Singapore aims to regulate licensed moneylenders in Singapore. The Act also specifies that no person/business shall carry on a business of money lending without a license. Loan sharks are not registered under the Ministry of Law’s Registry of Moneylenders.
As such, it is also illegal to deal with loan sharks. Under The Act, any individual found to have opened a bank account and given away their ATM card along with the PIN, to help an unlicensed moneylender, is presumed to have assisted in unlicensed moneylending
Additionally, if an individual had assisted in making bank transfers – whether via ATM and/or online, on behalf of these loan sharks, they will also be presumed to have assisted in unlicensed moneylending.
In fact, in June of last year, a total of 166 suspects are being investigated for their alleged involvement in loan shark activities. 121 suspects allegedly opened bank accounts and provided their ATM, PINs, or Internet Banking details to unlicensed moneylenders.
For assisting in the business of unlicensed moneylending:
- Fine between S$30,000 and S$300,000
- Imprisonment for a term of up to four years; and
- Caning of up to six strokes
For acting on behalf of an unlicensed moneylender to commit harassment:
- Imprisonment for a term of up to 5 years
- Fine between S$5,000 and S$50,000; and
- Caning of between 3 and 6 strokes
Why You Should Never Borrow From Loan Sharks in Singapore?
If you ever need urgent cash, make sure that you are dealing with a legal moneylender in Singapore. Do your due diligence in verifying the lender’s license and credibility. Unknowingly borrowing from an unlicensed money lender involves plenty of risks.
Aside from exceptionally high processing or admin fees and interest rates, these loan sharks will also resort to harassment. Here are more reasons why you should never borrow from loan sharks:
- Loan sharks will harass you and your family: These illegal lenders are notorious for their harassment tactics. In fact, there was a report about loan sharks bombarding victims with food deliveries to their homes. Some even stalk their victims on social media.
- You might not be able to repay the debt: Unlicensed money lenders charge extremely high interest rates unlike licensed lenders in Singapore who are restricted from charging more than 4% in monthly interest rates. Loan sharks can charge more than 10% per month.
Additionally, loan sharks impose processing fees even before the loan is granted. All these can cause your debt to quickly get out of control.
- Unlicensed lenders will use different dirty schemes: Some loan sharks may ask you to sign up for a phone line and handset plan before approving your loan. Others may ask you to buy a certain number of gift cards within a specified period. All these can add to your financial strains in the long run.
- There are safer and better alternatives: If you’re in a financial crunch, there are legal borrowing options that will help tide you over.
- Borrow from family and friends. This may be an uncomfortable subject, but it’s better to seek their help first since there are no checks or loan approvals, unlike borrowing from financial institutions.
- Get a personal loan from a bank. This is a good option if you meet their minimum income requirement which is at least S$20,000. However, traditional bank loan applications may take a few days up to a week to be approved.
- Borrow money from a licensed moneylender. Licensed lenders are registered under the Ministry of Law. They can provide you with up to 6x your monthly income at an interest rate between 1-4%. To verify the credibility of a lender, check out the complete list of licensed moneylenders on MinLaw’s website.
Licensed vs Unlicensed Moneylenders
Borrowing from a licensed money lender in Singapore is a viable alternative if a traditional bank loan is not available to you. These legal lenders also make it possible to get emergency cash without a long waiting period.
But how do you differentiate a licensed moneylender from an illegal one?
|Licensed Moneylenders||Unlicensed Moneylenders|
Provide a loan contract complete with details, including the loan terms, amount, tenure, and interest rate
Will not give you a loan contract or will have you sign a blank note
Obligated to thoroughly explain the terms and conditions of the loan in a language you understand before you sign the contract
Fail to explain the terms
Charge an interest rate of not more than 4% per month. This cap applies regardless of your income or whether the loan is secured or unsecured
Charge sky-high interest rates
Can only charge a processing fee of not more than 10% of the principal loan amount when the loan is granted
Will ask for a processing fee upfront before the loan is approved
Only advertise via three channels: directories, own websites, and within their business premises
Advertise via other channels, such as flyers, WhatsApp messages, emails, and social media
You can loan up to 6 times your monthly income if you have an annual income of at least S$20,000
There is no limit to the loan amount and will allow you to borrow more than what’s legally allowed.
How Do Loan Sharks in Singapore Operate?
Loan sharks are ruthless and will do whatever it takes to get their money back. They’ll make threats, and use intimidation tactics like vandalizing your property if you don’t pay them on time.
To avoid these baddies from snatching up all of our hard-earned cash in one swoop—here’s what red flags look out for:
1. Send Messages Through SMS or WhatsApp
If loan sharks approach you through SMS or WhatsApp messages. Loan sharks claim to provide loans that seem too good to be true so keep your wits about you! Loan sharks advertise through social media platforms as well.
Remember, all licensed debtors are limited to advertising to only three channels:
- Business or consumer directories (in print or online media)
- Websites belonging exclusively to them
- Advertisements placed within or on the exterior of the lender’s business premises.
All other means of advertisement have been barred.
2. No Physical Office
The government of Singapore requires all licensed debtors to have a physical office for their business, which you must visit in person to discuss the terms, sign the contract, and receive the cash. Loan sharks usually approve loans remotely and therefore cannot provide an address for the brick-and-mortar office.
3. Approve the Loan Without Considering the Borrowers’ Repayment Capability
Loan sharks are in the business of lending money, but they don’t check to see if their customers can pay back what is borrowed and approve packages without checking credit scores, employment status, and identity.
Note that licensed lenders, even though known as lenient when it comes to requirements and eligibility, will still factor in your income and credit score before approving your application.
4. Charge More than the Permitted Fees
Interest rates: The interest set by licensed lenders are regulated to not exceed 4% per month. Loan sharks usually charge more than the permitted rates monthly.
Charges: If you fail to repay the loan by its due date, then your monthly late service fee will not exceed 4%. This applies regardless of whether or not you have income and if this was an unsecured or secured loan.
Fees: There are restrictions placed by law in Singapore about what fees can be imposed:
- $60 per month late fee
- 10% of the principal upfront (the amount borrowed)
- Legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.
On the other hand, moneylenders, as regulated by the Moneylenders Act, are licensed businesses that provide loan packages with fair terms and no high credit score required.
5. Lend you More than 6 Times your Monthly Salary for Unsecured Loans
For secured loans, your loan amount is up to you! For unsecured loans, the table below will tell you exactly how much moneylenders in Singapore are willing to lend.
|Borrower’s annual income||Singapore Citizens and Permanent Residents||Foreigners residing in Singapore|
Less than $10,000
At least $10,000
Less than $20,000
At least $20,000
6 times monthly income
6 times monthly income
How Does Singapore Deal With Illegal Money Lenders?
The first thing you should do is make a police report to seek protection and assistance. You can call 999 or dial the X-Ah Long hotline at 1800-924-5664. You can also report the moneylender to the Registry of Moneylenders at 1800-2255-529. You’ll need to provide the lender’s business name and contact number.
1. Stay Calm
This may seem difficult, especially when you’re fearing for your safety. But it’s important to stay calm and not give in to their threats! This could escalate the situation putting you more at risk and worse off than before.
Consider changing some of your personal information like mobile numbers, social media accounts, as well as bank account numbers if needed.
2. Call the Police
An unlicensed moneylender is scaring and harassing you? Don’t let them get away with it. Call the policemen immediately! They’ll be able to protect your life, property, or both.
Here’s what you can do:
- Call ‘999’ or the X-Ah Long hotline at 1800-924-5664
- Or submit information online at www.police.gov.sg/iwitness
3. Stop making further payments
Once you’ve contacted the police report and filed a complaint, stop making payments to your loan sharks. They may threaten you with legal action, but remember that it is illegal for them to do so because of their debt collection practices as well as how they are transacting illegally.
4. File a complaint with the Registry of Moneylenders
You can contact the Registry at telephone number: 1800-2255-529.
The Registry views complaints against them seriously and investigates thoroughly so it can take appropriate measures against unlicensed moneylenders providing no leniency is granted on their side either.
How To Get Out Of Loan Shark Debts?
Don’t pay the loan shark and don’t submit to harassment. Paying the loan shark or providing them access to your ATM is a huge mistake. Remember that loan sharks are conducting their business illegally. That said, you are not obligated to reimburse an unlawful debt.
Stop your payments at once and immediately contact the authorities.
What if you Need to Settle or Negotiate your Outstanding Debt with a Licensed Moneylender?
Thankfully, Singapore has plenty of social service agencies that can assist you in recovering from serious debt problems. These social services can provide credit management information, credit counseling, and where applicable, assistance in debt consolidation loan plans or negotiating a debt repayment plan with creditors.
Note that the Registry of Moneylenders cannot assist you and is not in a position to negotiate your loans.
Here are some social service agencies recommended by the Min Law:
1. Adullam Life Counselling
- Address: 151 Chin Swee Road #08-04 Manhattan House Singapore 169876
- Tel no.: 9423 8832
- E-mail: firstname.lastname@example.org
2. Association of Muslim Professionals (AMP)
- Address: 1 Pasir Ris Drive 4 #05-11 Singapore 519457
- Tel no.: 6416 3960
- E-mail: email@example.com
3. Arise2Care Community Services
- Address: No. 5 Harper Road #02-01A Singapore 369673
- Tel no.: 6909 0628
- Email: firstname.lastname@example.org
4. Credit Counselling Singapore
- Address: 51 Cuppage Road #07-06, Singapore 229469
- Email: email@example.com
In the event of a financial crisis, you may be desperate to take out easy credit loans from loan sharks. However, there are legal and reliable debtors that can provide assistance in these situations.
As a responsible borrower, always keep in mind to:
- Verify the license with the Ministry of Law in Singapore
- Check the lenders’ credibility with Google Reviews
- Seek the Police help when dealing with loan sharks
- Licensed lenders can offer you up to 6 times your monthly salary with no collateral and a high credit score required
- Only borrow what you can afford to avoid getting into deeper debt
Lastly, shop for loan options to compare and get the best deal! Loan Advisor is an online comparison service that allows you to request up to 3 loan quotes from legal lenders. Just fill out the form and get your options in a few minutes!