The citizens of Singapore mostly confront the challenge of running out of cash. While most people might seek help from friends or family, others try to reach for personal loans in Singapore. Now, as the public is unaware of licensed and unlicensed money lenders in the city, they often fall into the trap of hoax money lenders. This creates a hurdle and causes people to lose their precious money.
The people of Singapore need to be aware of the government laws that grant licenses to moneylenders. These licensed moneylenders follow the rules laid down by the government, and hence lending money from them is safe. To make an informed financial decision, let’s have a look at the differences between legal and illegal loans in Singapore.
Difference Between Legal Loan Singapore and Illegal Loan
Lucid and Understandable Terms and Conditions
The most primary aspect with a legal or licensed money lender is that these people elaborate their terms and conditions in a simpler way for you to understand. Furthermore, these people will be completely honest and transparent while answering your queries. On the other hand, a fraud money lender will not have written or staunch terms and conditions.
As stated above, legal moneylenders are bound by laws formulated by the government of Singapore.
As per the Ministry of Law of Singapore, a certain amount to borrow is stipulated which depends on your income. Thus, you cannot borrow an amount higher than what you earn. That’s a sign that will help you differentiate between a legal and illegal loan.
A signature is an indication that you agree with all the terms and conditions of the money lending company. A licensed moneylender involves lots of paperwork and a contract approved by the Ministry of Law before lending you the money. This agreement includes the loan amount, repayment interval, late payment fees, and interest rates. Hence, you need to watch before signing any document and ensure that everything is impeccable.
ID and Account Password
Your identification cards, numbers, and passwords are highly confidential – no one should ever know or retain them except for you.
If any firm asks for your ID, it should be only for the initial confirmation process. No licensed money lending company will ask you to submit your ID or password to them.
Reasonable Market Rate
Another point to consider is the market rate. As you might have heard that the interest rates keep on fluctuating with time. However, the government of Singapore has fixed the maximum amount of interest a legal money lender can charge. For instance, the interest rates usually charged by legal moneylenders in Singapore should not exceed 4% per month for personal loans. If you come across an interest rate higher than the stipulated amount, it might be a case of a loan shark.
What is Loan Shark?
A loan shark is any person or entity who loans money at exorbitant interest rates as well as uses threats of violence to collect debts. As mentioned earlier, these people do not abide by the interest rates established by the government. These loan sharks can be found in under-banked neighbourhoods or on the internet claiming urgent financial assistance to people in need.
Recently, a huge racket in Singapore has been busted that revealed 199 people involved in loanshark activities. The accused were also found harassing the debtors. The police revealed that most of these activities were conducted by spreading advertisements over text messages or online platforms to lure common citizens.
The loan sharks involved in such activities do not require any kind of background check or your credit reports (which are obligatory) to lend money. They will be ready to lend even higher sums of money to charge high-interest rates far above the stipulated amount. For instance, a loan shark might lend $10,000 with a provision that $20,000 be repaid within 30 days. Furthermore, these people as given in the recent incident will call to threaten or even use violence for repayment.
Hence, identifying such unlicensed or illegal moneylenders in Singapore is crucial to ensure the safety of you and your family. Let’s see how you can do it.
Tips to Identify Illegal Moneylenders
Often, people with bad credit scores fall for almost any scheme for a personal loan. That’s exactly where loan sharks or scam artists gain an advantage.
The desperation to have immediate financial assistance lands them into losing their money as well as being threatened. Instead of getting a legal loan Singapore, they get scammed and pay very high interest rates.
Identifying the red flags is highly important before borrowing money from any money lending firm. Here’s what you should check:
This is also known as an “advance-fee loan scam” in which lenders may provide you lower interest rates in exchange for an upfront payment. Often, these people talk in such a convincing manner that their true intent of seizing money from you is not recognized. However, you should know that you don’t need to pay money to be loaned money.
As stated above, no licensed or legal money lending company will ever ask you for advance money. They might require their fees for the processing of documents. However, it shall be clearly stated in their documents.
Offers Over Phone
No legal company will ever call you over the phone and provide you a loan offer. Any offer that is provided is always in written format along with mentioned fees.
If any company wants you to wire money as fees, it is a red flag that you need to notice. You are not supposed to wire money to any individual. Rather what you can do is ask for the address of the lender, contact the Attorney General or Financial Regulations office in Singapore to verify the business.
No Credit Reports
As we stated earlier, the loan amount lent to you depends on your credit scores. Hence, any legal money lending company will first evaluate your credit history before granting you the loan. Never fall for such companies that blatantly do not care about your credit scores.
Common Company Names
Another way to recognize loan sharks is by looking at their name. Often, these people disguise their scam by inventing a business name or website that looks convincing. What you can do is have a thorough look at their website, they might have a URL that can give you cues.
A legitimate moneylender will never ask for your social security number, bank account number, passwords, or any other personal information. Do not reveal such information unless you are fully convinced.
The best way to know a legal money lending company is that they have a licensed number. You can check the registration number through an attorney general office to guarantee your money and protect yourself from fraud.
Looking at the current situation and financial distress of people in Singapore, it is easy for them to get lured by scams. However, keeping your eyes open and checking various aspects before borrowing money is important to ensure safety. Always do some research and choose to get a legal loan Singapore from licensed money lenders.
We hope this information was useful. If you want to connect with a licensed moneylender in Singapore for your financial needs, consider contacting the team of Online Credit. We’ll help you apply for a loan online and receive money in 3 simple steps. To know more, visit us here.