No one wants to deal with an unlicensed money lender. Unfortunately, people who are desperate for cash might fall for loan scams. Recent moneylending laws may have put a lid on loan harassment. However, loan sharks have become very cunning, expanding their illegal activities in the digital landscape.
Thankfully, not all money lenders in Singapore are bad. There are licensed money lenders who can provide you with quick cash without the added anxiety.
But how do you detect an unlicensed money lender? What can you do if you’ve unknowingly dealt with a loan shark?
Key Differences Between Licensed & Unlicensed Money Lenders
Avoid falling victim to loan sharks. So don’t immediately trust the first money lender you come across with. That said, you must first verify whether they are licensed or not.
Visit the Ministry of Law’s Registry of Moneylenders. Here, you’ll find the complete list of licensed money lenders in Singapore. Use the information listed to make an informed decision.
On top of that, you must consider these factors and watch out for red flags:
1. Loan Service Advertisements
Licensed Money Lenders
Under the advertising rules in Singapore, licensed money lenders are only allowed to advertise through these three channels:
- Business or consumer directories both in print and online media
- The money lender’s own website
- Advertisements placed within or on the exterior of the lender’s business premises, including the side of the wall, door, gate, or window.
Unlicensed Money Lenders
Today, loan sharks are using new and advanced tactics to attract unsuspecting borrowers. Here are some red flags to watch out for:
- If a money lender sends advertisements through text messages or Whatsapp.
- If they reach you through emails and social media.
- If they send out flyers outside of their office premises.
2. Loan Amount
Licensed Money Lender
You can get a secured loan of any amount from a licensed money lender.
For unsecured loans, such as a personal loan, there’s a limit to how much you can borrow depending on your annual income. Please refer to the table below.
| Borrower’s annual income | Singapore Citizens and Permanent Residents | Foreigners residing in Singapore |
| Less than $10,000 | $3,000 | $500 |
| At least $10,000 and less than $20,000 | $3,000 | |
| At least $20,000 | 6 times monthly income | 6 times monthly income |
Additionally, licensed money lenders will ask you to present relevant documents to prove your identity as well as your income.
Unlicensed Money Lender
One of the red flags that will help you detect an unlicensed money lender is if they have no limit to how much you can borrow.
This means they will immediately approve your loan, no matter the amount. But this comes with a hefty price. For one, you’ll be charged with hidden fees and unrealistic interest rates beyond the 4% per month limit.
3. Fees and Charges
Licensed Money Lender
Effective since October 1, 2015, all money lenders in Singapore are only allowed to impose the following fees and charges:
- An administrative fee not more than 10% of the principal loan amount. It should be deducted only after the loan is granted.
- A late repayment fee not more than $60.
- Legal costs ordered by a court for a successful claim for the recovery of the loan.
The total fees must not exceed the principal loan amount. The total fees include interest, late interest, administrative fee, and late fees.
For example, if you take a loan of $5,000, then the interest, monthly $60 late fees, and 10% administrative fee must not exceed $5,000.
Unlicensed Money Lender
Loan sharks are known for imposing unreasonable fees before they even grant you a loan. This is in addition to an already high-interest rate.
As part of their illegal tactics, they send out advertisements through SMS or WhatsApp. This attracts desperate and unsuspecting borrowers. These loan sharks will then ask borrowers to pay a deposit amount for the loan processing fee.
What happens when you cancel the loan? Loan sharks will harass the borrower, forcing them to pay additional fees to cancel the loan.
4. Interest Rate
Licensed Money Lender
Effective October 1, 2015, licensed lenders can charge the maximum interest rate of 4% per month. MinLaw regulates this limit, and it applies regardless of your income, loan amount, and whether the loan is secured or unsecured.
Additionally, credible lenders will charge an interest rate based on your creditworthiness. Lastly, the interest can only be charged based on the outstanding loan balance.
What happens when you fail to repay the loan on time? The money lender can charge up to 4% per month for each month you’re unable to pay the loan.
Unlicensed Money Lenders
An unlicensed money lender will loan you any amount to earn interest in a short time. That said, these loan sharks will charge an unrealistically high-interest rate and late interest rate – above the 4% per month cap.
5. Loan Term and Process Transparency
Licensed Money Lenders
The law requires a money lender to thoroughly explain the terms and conditions of a loan. In doing so, borrowers will understand what they’re getting into. Legitimate lenders will provide you with clear and concise answers.
That said, before agreeing to any loan, here are a few things to take note of:
- The repayment term and schedule
- The consequences of not repaying the loan on time, such as late repayment fees and late interest charges
- The terms and conditions of the loan
Unlicensed Money Lenders
Loan sharks want to give you the loan as soon as possible so they can start collecting money from you. These shady lenders will not explain the terms and conditions of the loan. Often, they don’t provide you with a loan contract or have you sign a blank loan contract.
In Summary
| Licensed Money Lender | Unlicensed Money Lender |
| Only advertise via directories, own websites, and within or on their business premises | Sends flyers or unsolicited emails, texts, SMS, or WhatsApp messages. |
| You can borrow up to 6x your monthly income for unsecured loans if you are earning at least $20,000. | You can borrow more than what is legally allowed regardless of your income. |
| An administrative fee not more than 10% of the principal loan amount when the loan is granted. | Will ask you to pay a deposit amount for loan processing fees before the loan is approved. |
| Follow a 4% interest rate per month cap regardless of loan amount and income | Unrealistically high-interest rate – more than 4% |
| Thoroughly explains the terms and conditions of the loan and will give you a clear loan contract | Will not explain the loan terms and will not give you a contract. |
6 Unlicensed Moneylending Offences
- Loan sharks advertise and solicit loan applications through emails, text messages, or WhatsApp messages.
- Loan sharks will grant any amount of loan without assessing your ability to pay.
- Loan sharks in Singapore charge higher than 4% interest rate per month.
- Loan sharks will ask for a processing fee before approving your application.
- Loan sharks will not discuss the terms and conditions of the loan and will not provide a loan contract.
- Loan sharks use abusive language or behave in a threatening manner towards you.
How to Deal With Unlicensed Money Lenders?
A legitimate money lender in Singapore will abide by the rules set by the Credit Collection Association Of Singapore (CCAS). Unfortunately, unlicensed money lenders can use tricks to scam innocent borrowers.
If you become entangled with errant lenders, or if you are put in a situation that involves intimidation, violence, or damage to your property, here are a few things you should do:
1.Verify the Credibility of a Money Lender through the Ministry Of Law’s Registry Of Moneylenders
The Ministry of Law oversees all legal money lenders. They’re the ones who will issue licenses. So before dealing with any lender, verify their claim against the list of licensed moneylenders on MinLaw’s website.
2.Report the Loan Shark to the Authorities
If you suspect that you’re dealing with a loan shark, immediately report them to the Singapore Police Force i-Witness reporting page. The police can help determine whether the moneylender has acted illegally. They will also advise you when further action is needed.
Alternatively, you can also lodge a complaint to the Registry at 1800-2255-529 or through the Ministry of Law’s website.
3.Don’t Let Harassment Tactics Get To You.
You must remain calm. Do not yield to the threats of loan sharks because this will make them braver. What you need to do is immediately report to the authorities and let them handle it.
That said, you must not agree to do anything for these loan sharks. Do not assist them or allow them to use your bank or ATM card. Most importantly, they do not agree to do their bidding against other debtors.
Here are some of the most common harassment tactics that loan sharks employ:
- Vandalizing your property
- Locking your gate with a chain lock
- Causing you shame by publicizing your debt
- Harassing you at your workplace
- Intimidate you by threatening your loved ones
- Sending runners to your house to intimidate you on their behalf
- Post photos of non-paying borrowers online with their personal information
- Threaten violence in rare cases, use violence
You can apply for a Protection Order or Expedited Protection order against these loan sharks.
4.Halt All Payments to the Loan Shark
After lodging a report to the authorities, you must stop making further payments to the loan shark. They might threaten you with legal charges, but these lenders are operating illegally. They don’t have the right to lend as well as collect payments.
5.Seek Assistance from Social Service Agencies
Are you unable to repay the licensed money lender? You can seek the assistance of social service agencies. They help borrowers recover from serious debt by:
- Providing general credit management information
- Credit counseling
- Providing assistance in debt repayment negotiations
Here are some of these social services agencies:
| Social Services Agencies | Contact Number |
| Adullam Life Counselling | 9423-8832 |
| Association of Muslim Professionals (AMP) | 6416-3960 |
| Arise2Care Community Services | 6909-0628 |
| Blessed Grace Social Services | 8428-6377 |
| Credit Counselling Singapore | 6225-5227 / 6338-2663 |
| One Hope Centre | 6547-1011 |
| Silver Lining Community Services | 6749-0400 |
Conclusion
We never know when a financial crisis will strike. So when you find yourself strapped for cash, it’s best to seek financial assistance from legitimate institutions, like banks or other financial agencies.
What if you don’t qualify for their loan? You can turn to a legitimate money lender to help you meet your immediate financial needs.
1 Fullerton Credit is a reputable licensed moneylender that offers hassle-free, fast, and affordable loan plans. With an excellent 5-star rating from over 550 satisfied clients on Google Reviews, they offer outstanding customer service and financial knowledge.
