Even though the licensed money lending sector has come a long way, illegal money lenders in Singapore still unfortunately exist. These shady organisations prey on individuals with pressing financial needs, dangling easy and fast loans to ensnare them. Here are the top nine signs to look out for to avoid illegal money lenders.
Received an SMS, Whatsapp message, or phone call promising an easy loan from an unknown number? Found an advertisement on social media or a flyer for money lending services? They are definitely unlicensed or illegal money lenders in Singapore.
- Business or consumer directories (print or online)
- Websites belonging to the moneylender
- Advertisements at the moneylender’s own premises
All other channels and platforms are not allowed, so it’s best to ignore such advertisements.
Legal money lenders registered with the Ministry of Law are required to maintain and operate from a registered office.
They are only allowed to process and disburse loans from their official place of business and are not allowed to conduct money lending activities elsewhere. Borrowers are also required to visit the moneylender’s office for face-to-face verification during the loan application process to ascertain their identity.
If a money lender insists on processing your loan outside of their office or tries to prevent you from visiting their premises, you should not proceed any further.
Licensed moneylenders are only allowed to charge a maximum interest of 4% per month on your loan. This limit is stipulated under the law, and flouting this rule can cause a moneylender to lose their licence.
Illegal money lenders in Singapore, of course, would ignore this limit and charge a higher interest rate. While some are blatant about how much they charge, others may try to hide the true interest rate using complicated calculation methods.
If they cannot state clearly what the interest per month is or you are unable to understand how much interest is being charged on your loan, that’s a huge warning to stay away.
Unfair interest charges aren’t the only way an illegal money lender in Singapore exploits your vulnerabilities to make money off you. Other ways for them to do so are high processing fees and other hidden charges.
While it is common practice for licensed moneylenders and banks to charge an admin fee for processing your loan, this is kept to a flat fee or a small percentage of your loan. Licensed moneylenders are allowed to charge a maximum processing fee of 10% of your loan. They are also allowed to charge a late payment fee of not more than S$60 per month.
Illegal money lenders, on the other hand, are likely to charge a fee greater than 10% for processing your loan. They may also impose other hidden charges and high late fees that unfairly increase how much you have to pay back on your loan.
On a related note, the processing fee of a loan is deducted from the loan granted to you. It should not be charged separately. That’s to say, if you apply for a S$5,000 loan with a 10% admin fee, S$500 will be deducted from your loan, and you will receive S$4,500.
The admin fee should also not be collected upfront. It should only be charged once your loan has been successfully processed.
If you come across a money lender who asks for upfront fees to “confirm” or “guarantee” your loan, know that this is not allowed and you’re dealing with an unlicensed money lender.
Before approaching a moneylender, be familiar with how much you are legally allowed to borrow, as follows:
- Annual income S$20,000 and above: Borrow up to 6x monthly income
- Annual income between S$10,000 and S$20,000: Borrow up to S$3,000
- Annual income less than S$10,000: Borrow up to S$3,000 (Citizen or PR) or S$500 (Foreigner)
These limits are set by the authorities to help borrowers avoid falling into unmanageable debt. Licensed moneylenders are required to adhere to these limits, and cannot offer a loan that exceeds them.
Therefore, if a money lender is offering to lend you more than what’s stated above, that is a sure sign you have encountered an illegal money lender.
As part of upholding professionalism and transparency in the money lending sector, licensed moneylenders are required to provide a Note of Contract.
This is an official document that clearly spells out the full terms and conditions of your loan along with all other important and necessary information. Additionally, they are also required to provide official receipts for each repayment you make to your loan.
During the application process, you will have to provide your NRIC or work pass, or other personal documents for verification and record keeping. These should be promptly returned to you before you leave the moneylender’s premises.
However, illegal money lenders in Singapore have been found to withhold personal documents such as your NRIC to gain leverage over you. They are also unlikely to provide any official loan contracts (or if they do, an incomplete one) or receipts that verify your loan repayments.
Also, be wary of anyone who asks for your personal data or sensitive information over the phone. You should only disclose your information in person at the registered premises of a licensed moneylender.
Acting unprofessionally or in a way that makes you feel unsafe is one of the biggest warning signs that you are dealing with an illegal money lender in Singapore.
If you encounter threatening, rude, or harassing behaviour such as vandalism from a moneylender, immediately contact the police. Do not give in to their threats, stop all contact, and do not do anything they tell you to.
Know that licensed moneylenders will not resort to illegal means, even if you are having problems paying back your loan. They will professionally approach things and work out a solution with you.
First impressions count, and this goes double when spotting illegal money lenders in Singapore, which may direct you to unsecured websites or dodgy-looking ones.
Watch out for websites that are not secured with HTTPS (Hypertext Transfer Protocol Secure) – you’ll likely encounter a warning when trying to visit one from your browser or antivirus suite, and you should not proceed any further.
Also, be wary if the website looks poorly designed, has spelling mistakes, or just looks plain untrustworthy. Chances are, these are fraudulent websites that are used to illegally capture personal data and sensitive information, exposing you to online threats.
- Unauthorised advertisements over SMS, Whatsapp, social media, flyers, or cold calls.
- No registered place of business or office address
- Unclear interest rates or interest exceeding 4% per month
- Processing fees exceeding 10% and other hidden charges
- Collecting fees upfront to “confirm” or “guarantee” your loan
- Ignoring borrowing limits set under the law or offering suspiciously high loans
- Withholding loan contracts, repayment receipts, personal identification, and other important documents
- Rude, threatening, vandalism and harassment, or any behaviour that makes you feel unsafe
- Using websites that trigger security warnings, contain errors, or are unprofessional looking
If you suspect you have been targeted by an illegal money lender, there are two things you should do.
Firstly, verify the moneylender against the official list of licensed moneylenders maintained by the Registry of Moneylenders, Ministry of Law. If the company’s name is not found in the list, that proves they are not a legal moneylender.
Secondly, you should contact the police at tel: 1800-924-5664 to report the illegal money lender. If you are in danger or being harrassed, call 999 immediately for assistance.
At Elite Investment and Credit, we are committed to providing professional and legal moneylending services to all our clients. Our friendly team is standing by to help you get the loan you need, so contact us today!