If you plan to borrow money to start a project or pay your bills, you must know the difference between unlicensed and licensed moneylenders. Identifying and avoiding unlicensed moneylenders will help you get the best bargain. You can check the moneylender list on the Ministry of Law’s website to get started.
Why Should You Refrain from Dealing with Unlicensed Moneylenders?
Money lending in Singapore is a booming sector as many people turn to it for quick cash without the headache of bank loans. These lenders have lesser standards than banks and might even offer greater interest rates or repayment options.
Sadly, while this is a lucrative industry, others will seek to profit from it by taking advantage of those unaware of the risks. Unlicensed Lenders put borrowers in a financial bind. Loan shark harassment can be quite intermediating, putting the borrower in financial crisis and psychological danger.
Unlicensed moneylenders in Singapore are notorious for imposing exorbitant fees and interest rates, forcing borrowers into greater debt. Loan sharks aren’t always as brutal as they appear in movies. While violent threats are still a possibility, most will use deception to coerce you into signing the loan contract with them.
How to Spot Unlicensed Moneylenders in Singapore?
Illegal lenders or loan sharks have also adapted to the times, expanding their business online, giving customers an additional reason to be cautious with their money. These moneylenders can operate in many ways, so it’s best to clarify if they act like loan sharks.
The most efficient way to spot an unlicensed moneylender in Singapore is to go to the officially approved moneylender list available on the Singapore Ministry of Law website.
Apart from checking the list, you can look out for the tell-tale signs when a moneylender:
- Becomes a little menacing and hostile
- Agrees to offer any loan amount without checking your monthly income
- Starts abusing you by using profane and derogatory phrases
- Offers you a loan that you did not apply for, or they try to get around some of the application formalities
- Gives you a loan without following any strict legal documentation
- Asks for a copy of your ID to keep on file
- Asks for a higher interest rate than 4%
- Offers loans that appear to be too good to be true
A Licensed Moneylender Should Have a Registered Physical Branch
According to the Ministry of Law, only moneylenders with a physical location are allowed to operate and enter the officially approved moneylender list.
If a moneylender wants to open a branch in Singapore, they must first approach the Registry of Moneylenders. The registrar will make the final decision on these new branches. On the other hand, all moneylenders must have only one main location for business, where many of their intensive and confidential activities will take place.
Any moneylender who does not have a licensed branch and instead uses an online facility or even a social media account for every transaction is likely a scammer.
How to Deal With Unlicensed Moneylenders in Singapore?
Even after being as cautious as you can be, you will probably run into a few fake lenders. Following are some tips if you, unfortunately, meet one:
- Avoid direct contact or any interaction
- Ask for a business license and check the moneylender list to confirm it
- File an official complaint
- Hire a professional advisor
- Learn more about money lending adverts and legal channels
You should take time to research and learn about the moneylenders you are considering before you decide which one to do business with. Be on the lookout for unlicensed moneylenders. Remember, due diligence can be essential to avoid being victimized by a loan shark in Singapore.