How To Run Away From A Loan Shark In Singapore
January 27, 2023
When you are hard-pressed for money, you need help fast – even if it’s from the wrong places. You may even end up dealing with loan sharks.
You may be initially utterly oblivious of the situation, only to discover later that you are dealing with the notorious “Ah Longs”. Unfortunately, by dealing with a loan shark, you expose yourself to exorbitant interest rates, threats, harassment, vandalism, and injuries to you or others.
But even if it sounds hopeless, there’s a way out. In this article, we tell you how to run away from loan shark and free yourself from the distress that loan sharks bring.
If you can’t identify these unlawful lenders, we tell you six ways to look out for them to avoid falling into their trap in the future.
Lastly, we’ll teach you how to fight loan shark harassment in Singapore.
How To Know If You Are Dealing With A Loan Shark
The best way to know you’re dealing with a loan shark is by learning how to differentiate them from legit money lenders in Singapore.
Here are some common characteristics of loan sharks:
1. They Contact You Through Cold Calls, Emails, Texts, Or Hand Out Flyers
Loan sharks have taken to modern communication methods to contact their prospective clients. They may call you, write you emails and texts, or even contact you on social media, asking you to take a loan with them.
They refer to their loans as hassle-free, and guarantee that you will qualify for them. But this doesn’t seem right. With a licensed money lender, you are not assured that you will qualify for a loan. The money lender must first conduct checks to verify your ability to repay the loan.
Also, seeking out borrowers in this manner violates licensed money lenders’ advertising rules. Money lenders can only advertise on their websites, in the interiors and exteriors of their office premises, or on consumer and business directories.
So if a lender approaches you in any other way or uses any other method, be suspicious of it.
2. The Lender Offers To Give You Any Amount You Ask For
Qualifying for a loan requires some checks on your income level, your moneylender report, and others, to verify your ability to pay the loan.
If a money lender is willing to disregard the process and offer you whatever amount you ask for, it is likely trying to reel you into a trap.
3. The Interest Rate Exceeds The Legal Limit
Loan sharks get into the moneylending business to reap outrageous profits in a short period by charging exorbitant interest rates.
But by law, legal money lenders can only charge interest rates of up to 4% per month, regardless of the amount borrowed or the borrower’s income. Also, the interest is only set on the amount yet to be paid, not on the entire principal amount borrowed initially.
4. They Ask You To Pay A Loan Processing Fee Before They Approve Your Loan
Loan sharks, and some fraudulent individuals out to con people, often come up with different types of fees that you must pay before the loan is issued.
They justify this fee as some form of collateral or mandatory administration fees. This is an outright red flag.
A licensed money lender will not ask you to pay any money to have your loan approved. Any fees charged are deducted from your loan after it’s granted, and the fees must not exceed 10% of the principal amount.
5. You’re Not Given A Loan Contract To Sign
The foolproof way to know that the deal is fishy is a lack of a contract – or if you’re given one, it’s incomplete or blank.
Loan sharks may also offer to complete the loan application and disbursement process online or via text messages. This arrangement allows them to lend you money without explaining the full details and conditions of the loan.
But a licensed money lender must present a contract that fully explains the terms and conditions, interest rates, applicable fees, and repayment schedule.
After you sign it, the lender gives you a copy of the contract, and you leave fully aware of the details of the loan and your contractual obligations.
6. Uses Threats, Intimidation, And Abusive Language
If a money lender uses abusive language, threatens or intimidates you or other customers, that’s an outright sign that they do not practice professionalism.
No licensed money lender is allowed to treat borrowers this way. The same goes for debt collectors, which may be sent by licensed money lenders to recover debts.
A licensed debt collector in Singapore should have a debt collector license that prohibits it from these illegal practices.
So before you approach a lender, ensure that it is a licensed money lender by checking the Ministry of Law’s list of licensed money lenders in Singapore.
What Happens When You Don’t Pay A Loan Shark
Loan sharks enforce strict measures as soon as you delay or miss a payment. They immediately implement a high interest rate as a late fee.
If you are not forthcoming with the payment, they resort to intimidation, threats, abusive language, stalking, or even violence. Being on the receiving end of these antics can be very scary and stressful.
But don’t worry, we will show you how to run away from loan shark.
How To Deal With Loan Shark Harassment In Singapore
If the loan shark is unfortunately already harassing you, here are three critical steps to end the harassment:
1. Cease Making Further Payments
Once you realise that you’re dealing with a loan shark, stop making the monthly payments. By now, the loan shark has probably already charged you very high interest rates and will be demanding payments no matter how much you deposit.
Some may even pretend not to have received any payments from you and intensify their harassment. So stop enabling them by cutting off your repayment.
2. Change All The Personal Information You Provided
Treat any personal information you gave the loan shark as compromised and change it. Now that you have stopped making the payments, they could use it to pester and harass you.
So change your mobile number, block their contacts, and shut down your social media accounts. If you gave your home address, you could move elsewhere temporarily. Avoid any channels that the “Ah Long” could use to communicate with you directly.
3. Report The Harassment To The Authorities
The third and most critical thing to do is report what has been happening to the authorities. Start by calling the police hotline on 999 or 1800-255-000.
In Singapore, the police take harassment allegations seriously. They will investigate and take action.
Second, report the harassment to the National Crime Council through the loan shark Singapore hotline at 1800-924-5664. You may also inform the Registry of Moneylenders, which investigates licensed money lender harassment, through the loan shark helpline in Singapore at 1800-2255-529.
Once you make your report, you may be asked to make yourself available to provide a more detailed account of the events. Don’t hesitate to do it because your identity will be protected.
Punishment For Loan Sharks In Singapore
After the investigations, loan sharks don’t get to walk away freely. They must suffer punishment for the offences attributed to them.
The Moneylenders Act has set specific laws to regulate the moneylending business in Singapore, and failure to observe them results in penalties.
For starters, those participating in the loan shark business as accomplices are liable to a $300,000 fine, imprisonment, and caning.
So to avoid being termed as a facilitator of any illegal business, stop making the payments and contact the authorities immediately.
The punishment is progressively heftier for the loan sharks themselves, especially if they are corporate bodies.
Where To Get Help
Amid the financial difficulties and confusion you may be going through, there’s still hope and a solution to the prevailing situation. You could do the following:
Consolidate Your Debt
Seek a licensed money lender to consolidate or bring together all your previous debt and start paying it off as a single loan.
The advantage is that you could land a lower interest rate and better terms, making the debt more manageable in terms of the monthly repayments and loan tenure.
Get Debt Counselling
Without a good moneylender report, getting a money lender to give you a debt consolidation loan may be challenging. But you can approach a credit counselling agency to negotiate on your behalf. You will also receive counsel on how to manage your money better to avoid financial strain in the future.
Learn How To Run Away From Loan Shark
If you’re still wondering how to run away from loan shark in Singapore, do not worry because Credit Thirty3 is a licensed money lender that offers accessible loans at reasonable rates.
We offer unsecured debt consolidation loans to help you eliminate the current pressure, and enable you to manage money and debt better.
We are a long-serving licensed money lender with an established reputation for our loan products and the excellence of our services.
Frequently Asked Questions
Is It An Offense To Borrow From A Loan Shark?
It is not illegal to borrow from a loan shark, but you would be exposing yourself to unfair debt practices and possible harassment.
How Can I Avoid Loan Sharks?
Do not transact with a money lender that exhibits any sign of being a loan shark. Only seek credit from licensed money lenders.
Check the Ministry of Law’s list of licensed money lenders in Singapore before approaching a money lender.