Loan Shark Singapore: Can a legal moneylender compete with them?

Splashes of red paint across someone’s front door. Obscene messages smeared on walls or across a vehicle. Threats, intimidation and acts of extreme violence. These are not fictitious scenarios but real incidents of Singapore loan shark harassment reported in the news, even recently. Welcome to the world of loan sharks in Singapore.

Loan sharks, known colloquially as Ah Long in Singapore, are illegal money lenders. They were a much bigger problem about a decade ago before the government enacted the Moneylenders Act in 2008. Since then, their activities have been suppressed but, unfortunately, not completely eliminated.

The Ministry of Law’s Registry of Licensed Moneylenders lists all companies authorised to engage in money lending practices within Singapore. Any individual or company not listed in the linked document that lends money with the intention of receiving a higher sum in return is considered a loan shark in the eyes of the law.

This is because they are not regulated by the provisions against unfair practices and limitations on interest rates designed to protect consumers from exploitation. A licensed lender on the list that contravenes the set guidelines may be delisted and prosecuted as well.

Together, the combination of government regulations and consumer awareness have largely strangled the loan shark industry. Borrowers find that legal money lenders offer better terms, a wider range of services, more professionalism and courteous conduct, all within a comprehensive legal framework. The appeal of illegal lenders is just not there anymore.

Why do people turn to loan sharks?

Despite the decline in the number of people turning to loan sharks, it continues to raise its ugly head, particularly in less wealthy regions of Singapore. There are several reasons for this:

• Need for urgent cash – Illegal lenders have no formal vetting process and are eager to give you the money you need within minutes.
• Unemployment – Most lenders prefer to lend to employed individuals, so the unemployed who can’t get a loan elsewhere sometimes have no choice but to turn to loan sharks
• Bad credit – A poor credit history means either loan rejection or higher interest rates from legal lenders
• Habit – Some people are caught in a cycle of borrowing from illegal money lenders because they have been doing it for many years
• Ignorance – Most victims of loan sharks do not have much education, may not know how legal lenders operate or even be completely unaware that legal lenders exist

What are the differences between licensed money lenders in Singapore and loan sharks?

It is relatively easy to tell apart licensed and unlicensed money lenders.

These are the typical characteristics of a licensed money lender:

• Offering legal loans – all their loan packages conform to the Moneylenders Act 2008.
• Practising strict regulation – they provide transparent terms in writing and abide by them
• Professional – there is no aggression, intimidation or cunning in their interactions
• Easily accessible – there is a physical office, working landline number and website
• Transparent – they are listed on online where customers can read reviews

These are the typical characteristics of a loan shark/ illegal moneylender:

• Illegal – They do not appear on the Ministry of Law’s Registry of Licensed Moneylenders
• Not regulated – They impose high interest rates or do illegal things such as harass borrowers if they don’t repay their loans.

Why should you take a loan from a licensed money lender instead of a loan shark in Singapore?

If you are still considering taking a loan from a loan shark in Singapore, remember that borrowing from legal lenders gives you these advantages:

• Legal option – First and foremost, it is illegal to take a loan from a loan shark. That should be all the motivation you need to only visit legal money lenders in Singapore.
• Legal protections – Legal lenders are prohibited from intimidating or threatening you; violence is strictly forbidden.
• Limits on interest rates – Legal lenders can charge you a maximum interest rate of 4% per month, and a further late interest of up to 4% per month on overdue installments. Note that they are also authorised to charge up to $60 in fees for late payments. Processing fees when approving the loan is limited to 10% of the loan principal.
• Lower risk – As licensed money lenders have to adhere to a strict code of conduct set by MinLaw, you have a lower risk of being harassed for payments or being charged exorbitant interest rates.

Here’s how to solve loan shark problems in Singapore and how to deal with loan sharks in Singapore:

If you are being harassed by loan sharks in Singapore, call the police immediately,

To avoid harassment by loan sharks, it may also be a good idea to install security cameras around your home and vehicle.

Also, try to avoid being alone when you leave your home and stick to brightly-lit areas with a lot of foot traffic.

However, if a licensed moneylender is employing illegal methods and unpleasant behaviour against you, this is what you should do:

• Call the police
• Complain against the moneylender with Credit Association of Singapore (CAS)
• Make a complaint with the Ministry of Law’s Registry of Moneylenders through their online form

Apply for a legal loan with a reliable licensed money lender

It is much safer to take a loan from a legal licensed moneylender. Also, why put up with potential loan shark harassment when licensed money lenders offer far superior terms and services?

At CompareSing, we offer reliable and trustworthy loan services as well as fast loan approval. If you are looking for a loan, apply now with us online.