Nobody wants to be harassed by anyone, especially by your lenders,  

Some experiences can be humiliating and shameful, and to some extent, even involve criminal activities.

Generally, a licensed money lender in Singapore with a moneylending license has to abide by certain rules that protect borrowers.

Find out more about unlicensed money lenders, acceptable practices in licensed moneylending, and how to lodge a complaint against a licensed money lender.

What Is Unlicensed Moneylending?

Unlicensed moneylending is when an unlicensed lender offers a loan to a borrower. 

The illegal money lenders are often called loan sharks. They give quick loans with high interest and unfair debt collection terms.

A loan shark in Singapore targets low-income individuals or people in difficult financial circumstances. 

As the interest charged is often impossibly high, the money borrowed, however small, can easily turn into a large amount in no time.

Loan sharks don’t provide legal documentation on loan repayment. When a borrower cannot pay, they resort to threats, intimidation or violence. They will also harass the family members of the borrower. 

They may even force borrowers to make bad decisions such as committing crimes to meet their loan repayments. 

When borrowers are forced to such an extent, it can be dangerous for them and their families.

How Do You Recognise Unlicensed Moneylending?

A money lender may claim they’re licensed to lend money in Singapore, but you should always verify it. Use the Ministry of Law’s list to see all the blacklisted money lenders in Singapore.

Here are a few other ways to identify loan sharks in Singapore.

Lack Of Legal Documentation

Unlicensed money lenders do not concern themselves with documents on the conditions of the loan. 

If they provide it, they are likely to send it as a PDF on WhatsApp or a text, which is the best way to identify a scam.

This is unlike legal money lenders that provide clear documentation of their loan terms and conditions such as repayment methods, period, interest, or other loan details.

Loan Limit

Loan sharks or unlicensed money lenders do not provide you with any limits on the amount of loan you can take. You borrow as much as you like.

This is unlike licensed money lenders, which follow the borrowing regulations. Unsecured loans have a limit in Singapore based on your annual income. 

Secured loans, though, don’t have any limits in Singapore.

Loan Fees

Unlicensed money lenders in Singapore never abide by the set rules. An illegal money lender in Singapore asks for deposits and fees for processing the loan even before you’re given the loan.

Licensed money lenders abide by the regulations. You don’t have to pay any fee until you’re provided with your loan.

Advertisement Methods

If you receive loan advertisements through calls, texts, flyers or emails, be alarmed. Licensed money lenders are only permitted to advertise their loans on platforms such as their official websites.

Excessive Interest Rates

Unlicensed money lenders in Singapore give loans on ridiculously high interest and may charge exorbitant late interest. 

In most scenarios, the rates are higher than the government’s allowed 4% per month.

This is not the case for licensed money lenders that abide by the 4% set by the Singapore government.

Unfair Practices Of Money Lenders

Also known as predatory lending, unfair practices of money lenders refer to unethical ways that are used to trick borrowers. They can be employed by unlicensed or licensed lenders. 

When this happens, you can make a complaint against a licensed money lender. Here are some common malpractices:

• Inadequate disclosure. A money lender may hide the real amount of your loan. It may also misrepresent the risks of loan terms, or in some cases, change the terms after you’ve taken the loan.

• Targeting high-risk borrowers. Unethical money lenders abuse the practice by charging high interest rates to high-risk borrowers. They know they’re most likely to default, even though all lenders rely on risk-based pricing, which links interest rates to credit history.

• Infiltrated fees. A money lender may exaggerate its fees.

• Asset-based lending. A money lender may offer a loan based on the amount of an asset such as a home, instead of what the borrower makes or is able to pay.

• Loan flipping. The lender suggests refinancing a loan without disclosing how much more it will cost you in the future.

• Negative amortisation. A lender allows you to make monthly payments that are not equal to the supposed monthly interest. As a result, you end up paying more than what you borrowed and for many more years.

• Reverse redlining. A lender grants loans without considering the borrower’s ability to pay or his or her credit history.

• Abnormal prepayment fines. A borrower who pays their loan before the agreed date is charged for paying it early.

When To Lodge A Complaint Against A Licensed Money Lender

Nobody wants to be harassed by a lender because of a loan, especially when one cannot pay. 

This is why a licensed money lender in Singapore is tied to rules set by the Moneylenders Act. These rules are there to protect a borrower under any circumstances.

But you should lodge a complaint against a licensed money lender if they are making threats, harassing, or intimidating you. 

Any Singapore licensed money lender is required to abide by the Protection from the Harassment Act. This act states that nobody is supposed to threaten you, call you names, insult you, embarrass you, etc.

• Stalking. The Protection from the Harassment Act says that lenders can’t stalk you at any time. This includes following you, stalking anyone close to you, watching your place, and spying on you or your family.

• Inflicting hurt. A money lender has no right to use violence on you when collecting its debt. If anyone hurts you, call 999 for an emergency. Singapore’s government does not tolerate physical harm to a person. The offence is punishable by jail time.

• Property vandalism. Any money lender in Singapore is not allowed to write anything in a public place. They can’t splash paint outside your home or hang posters on your door or car. Singapore strictly abides by the vandalism act regardless of any debt collector.

• Engage in unlawful assembly. If at least five people gather for unlawful activity in Singapore, it is an offence. So any money lender that hammers your door demanding to collect its debt is going against Singapore law.

• Damage or take your property. A money lender that threatens to take or damage your property is going against the law. Debt collectors in Singapore cannot threaten to take or damage your property.

How To Lodge A Complaint Against A Licensed Money Lender

To make a complaint against a licensed money lender, you can call the Registry of Moneylenders at 1800-2255-529 or email at [email protected].

You might need to attend an interview with one of the officials. 

Then provide them with all the necessary information and documentation about your loan transactions, together with the details of your interactions with the money lender for the Registry to evaluate your complaint properly.

The Registry takes complaints against money lenders seriously and conducts in-depth investigations. 

You can be confident that the Registry won’t give the lender your information without your permission.

Licensed money lenders that misbehave will face the consequences. If a money lender has treated you unfairly, you may file a claim with the Small Claims Tribunal.

You can also approach a court under the Consumer Protection (Fair Trading) Act. 

In addition, the Court has the authority to annul loan arrangements that are outrageously expensive or significantly unjust.

How Not To Fall For Loan Scams

Loan scams are common in Singapore, and finding yourself on the wrong side of the law is easy if you’re not careful. 

So make sure you understand loan terms and laws set by the government. Here are some prevention tips on how to solve loan shark problems in Singapore:

• Any licensed money lender in Singapore is not allowed to send any cold calls or unwelcome text messages to the public.

• • A licensed money lender in Singapore has to verify a borrower’s particulars in its place of business. It cannot verify a borrower’s identity remotely. The address of a licensed money lender is listed on the list of licensed money lenders on the Ministry of Law’s Registry of Moneylenders website.

• A licensed money lender will not ask for any fee before the loan is disbursed, but may charge an administrative fee after the loan is granted. The amount will be deducted from the loan principal given to you.   

You Can Make A Complaint Against A Licensed Money Lender

At some point, you may need a quick loan. 

But before you take any credit, ensure you know what unlicensed moneylending is, unfair practices of money lending, and how to make a complaint against a licensed money lender. You don’t need to suffer in silence. 

If you need a reputable moneylending institution, get in touch with Horison Credit. 

You will get a financial solution to your urgent money needs from an institution with a money lending license Singapore.

Get help from our friendly loan officers or get started by applying for a loan now.