Loan sharks are illegal money lenders operating in Singapore and usually target poor and desperate borrowers.
As compared to the recommended licensed moneylender, they pretend to be the best lenders that you can ever get.
They attempt to lure you into borrowing with them by being friendly and offering very attractive terms when the bank has turned you off due to a poor credit rating.
However, the money that they give you comes with a very high price, not to mention the risk. You might think it won’t be bad if you are applying for a small loan that you’ll clear within the shortest time period but that’s not the case. Here is why
Never Ending Interest Rates
Borrows get attracted to loan sharks because they find the loan application process very simple as they don’t have to make trips to the bank or money lender’s offices since everything is handled online.
However, that convenience comes with a cost, they add extra charges not agreed upon at the point of the loan application. That is not enough, they add daily interest upon default which makes a small loan build up to huge amounts leaving you into a financial crisis.
The sad thing is that, instead of empowering these poor and desperate borrowers, they burry them deep into the pit of debt.
Unlike banks and other recommended licensed money lenders loan sharks do not necessarily have clear loan terms and conditions. So you are never sure what your terms are and therefore, they can subject you to some crazy interest and other illegal charges.
In most cases, illegal money lenders will give you a blank paper for a contract to sign, of which they add some information that you are not aware of later after they’ve processed the loan. Whatever is put there in becomes binding as you’ll have signed the document though you signed when it was blank.
Personal Possessions Taken as Security
Although illegal, loan sharks will ask for your passport, bank cards, and other important personal documents as a security deposit. This is to guarantee that you won’t run away before settling your debt
Your personal identification documents are yours by law and they should be in your possession at any given time. Your personal information should be protected to avoid access to illegal identity duplication or identity theft.
Trading your personal identification documents for a loan is not worth any amount of money as it can easily be abused and cost you more than the benefit derived.
No Option of Full Settlement
Unlike the recommended licensed moneylender, loan sharks rarely allow the borrower to settle the loan in full. This is to keep you paying the high-interest rate that is ultimately their profit. In the event that they allow you to pay in full, the load full interest that you could have paid if you waited for the full term.
Pressure to Clear One Loan with Another
Loan sharks will come with all sorts of solutions in the name of helping you fix your financial problems. If they find you struggling with loan repayments, they’ll advise you to borrow from another loan shark so as to clear their loan fully to avoid future penalties.
Don’t be fooled, this will just get you into a larger debt with even higher interest rates and you’ll be left to pay that loan forever.
Violence and Harassment
When you are unable to meet your monthly installment, they’ll issue threats and subject you to a lot of harassment. They even involve family members and friends in their coercion to force you to clear the debt.
In a nutshell, the best way to deal with loan sharks is not to deal with them at all.
In almost all business fields you will never miss a scammer or just some corny businesspeople who do not follow the respective business ethics.
For example, in the money lending business section there are legit moneylenders and there are scammers who are loan sharks.
You should be aware of unlicensed money lending in Singapore. Some of these loan sharks are clever enough to tell you that their agency is unlicensed because the business is too new to be on the government database. Try to research the good and legit moneylenders in Singapore to be safe.
One of the best legal money lenders is Su Credit Singapore PTE Ltd. They have favorable interest, repayment terms, privacy terms, and terms and conditions.
Loan sharks can trick you into getting a personal loan through:
1. Advertising to you through unofficial platforms using unknown or unidentified accounts
These loan sharks might send you messages on Whatsapp, SMS, Facebook private messaging, calls, and flyers. This could be quite suspicious because “how did they get your phone number?” or your“Facebook account details” in the first place.
This is where you should trust your instincts. Their advertisements and messages may look persuasive and attractive but please do not fall into their traps. Additionally, they get these private details using the wrong means that should make you doubt them.
Licensed moneylenders in Singapore should only use business directories, consumer directories, social media official sites, and official websites as their advertising mediums. You should disregard these other weird channels of communication.
2. Offering you limitless amounts to be borrowed
In the normal moneylending sector, there are some rules that one should follow when it comes to borrowing. It is your collateral value that determines the maximum amount you can get.
When it comes to these loan sharks they offer you any amount without considering your collateral or even other assets. They also try their best to look generous and very considerate to you which is not quite normal in moneylending. This should be a red flag to you as an individual since the deal seems too good to be true.
When you are in such a desperate mood, you may end up falling into their traps and when you fail to pay, get a lot of harassment. They may even end up auctioning your properties unlawfully.
At times during repayment, they may claim some other hidden fees and failed payments that they initially never told you when you were signing the loan contract. When the deal is too good, think twice.
3. Minimal or no procedures followed
These loan sharks can trick you by telling you that there are no documents needed when applying for the loan. You as an individual may get attracted to such a deal fast since maybe you have no work ID to show your employment status.
Your identification card and residence may also not be asked but when it comes to money lending companies, they will require those details. These loan sharks give you an easy time in the beginning since they are aware of what you are in for in the future as they make their profit.
4. Make paperwork seem simple
These loan sharks know that people do not like long processes and lots of paperwork. Hence, they make things easy. They also track people and lie to them about the policies in moneylending. This is where they trap people who are never keen when it comes to paperwork.
Hence, they draft unreliable contracts. Their contracts may lack the repayment term, their legal obligations, clients’ rights, and legal measures in case of loan defaults. Please take your time when reading contracts.
Loan sharks might even hurry you up in the signing of the contract to avoid you noticing that there are some missing elements in the contract. Be wise!
5. They try to convince you that there is no other option
These loan sharks are very good in reverse psychology. They may talk to you and make you believe that there are no other options to get money apart from them. They will make you feel like you will remain miserable if you don’t get financial assistance from them.
It is important to note that most of these loan sharks ask for your bank pin and other private matters regarding your family which should not be the case. You might even be charged a large fee in the name of processing fees which adds up to your loan resulting in a very huge debt.
How to deal with loan sharks.
There are various ways you can deal with loan sharks. These include:
- Report them to the authorities –
This could apply when these loan sharks persuade you on taking the loan online without even showing you the contract. They might even be asking for your details that are irrelevant in moneylending. Try to ask for their location as a tactic then inform the authorities or the concerned party.
They might try to harass you and force you to take the loan. Be firm on your stand and refuse to take the loan and find a way to get out of there.
Please be careful when you are planning to get a loan. Do not just go to any moneylender you hear of. You must do a background check to make sure that they are not scammers or something of the sort.
Before accepting these loans make sure that the mentioned interest rate in the contract is a maximum of 4% per month. If you see a moneylender giving higher interest rates than that please do not sign the contract or take the loan since that is not legal.
Most loan sharks are connected to other illegal businesses and criminal organizations. Hence, they could even be dealing with money laundering. When one is unable to repay the debt these loan sharks can even threaten your family or even take away all your stuff even those that were not in the agreement and disappear.
Choose the legal money lenders in Singapore like Su Credit and you will never regret it!