The rise of loan scams or unlicensed moneylending has been a big concern for local authorities as cases reached over S$9.3 million in value. Sadly, the amount continues to grow with new variants of scams being launched by illegal money lenders in Singapore. Because these unlicensed money lenders may not appear unsavoury at plain sight, innocent victims often fall prey to their advances and end up with an unexpectedly large debt.
What Are Unlicensed Money Lenders or Illegal Money Lenders in Singapore
‘Loan shark’ and ‘Ah Long’ are common names that refer to unlicensed or illegal money lenders in Singapore. These entities typically conduct unlicensed moneylending without obtaining the necessary licences or permits from the Ministry of Law (MinLaw) and Registry of Moneylenders.
Unlicensed money lenders often prey on unknowing borrowers and take advantage of them
They operate outside of legal boundaries to charge exorbitant fees and sky-high interest rates to unsuspecting borrowers who are usually desperate for a loan but do not meet the requirements of traditional banking services.
It is common for such unlicensed money lenders to use predatory practices to entice individuals into borrowing from them and later adopt illegal debt collection tactics like harassment or violence, to demand repayment from victims who are unable to meet their payment obligations.
Unfortunately, many of these lenders do get away with their scams because victims are too scared to report their unlicensed money lender to the police.
3 Signs of an Unlicensed Money Lender
It may not be immediately clear if you are dealing with an illegal money lender in Singapore, but there are three signs you can look out for to determine if you are borrowing from unlicensed money lenders or licensed lenders.
1. Advertisement
If you come across advertisements offering loans on social media platforms like Facebook, or receive unsolicited text messages on applications like WhatsApp, you are most likely a target of unlicensed moneylending.
Take note that legal money lenders in Singapore are only permitted to promote their services through:
- Business directories or consumer directories online or in print
- Websites owned by the money lender
- Advertisements placed inside or directly on the lender’s office exterior
Tips: If you encounter lenders who are not using regulated channels to advertise their services, you should report the unlicensed money lender to the Ministry of Law’s Registry of Moneylenders at 1800-2255-529.
2. Interest Rates and Late Fees
The maximum interest rate that any licensed money lender can charge is 4% per month regardless of borrowers’ income. If a lender attempts to offer you a loan at a higher interest rate, it is bound to be a loan scam.
MinLaw also imposes very strict guidelines on chargeable fees. The legal limits are as follows:
- Late fee must not exceed S$60 for every month of late repayment
- Administrative or processing fee must not exceed 10% of the loan principal when the loan is granted
- Legal costs as ordered by the court for a successful claim by the lender to recoup the loan
Tips: Do not let a lender harass you into committing to higher charges. This is one of the most common tactics that unlicensed money lenders use to trap their victims into insurmountable debts. If you suspect that you’ve been targeted by an illegal money lender in Singapore, check the lender’s licence number against the Registry of Moneylenders’ approved list of money lenders to ensure you are dealing with a licensed loan provider. It is important that you know how to check a money lender’s licence properly.
3. Loan Sum
Again, MinLaw has a very structured guideline on the loan amount a borrower can obtain. This is to protect individuals from borrowing beyond their means.
While you can obtain a secured loan of any appropriate amount because it is backed by collaterals such as property and vehicles, the maximum loan amount you may borrow for unsecured loans at any time across all money lenders in Singapore is dependent on your yearly income and citizenship:
| Your Yearly Income | Singaporeans and Permanent Residents | Foreigners Living and Working in Singapore |
| Less than S$10,000 | S$3,000 | S$500 |
| S$10,000 to S$19,999 | S$3,000 | S$3,000 |
| S$20,000 and above | 6X of monthly income | 6X of monthly income |
Tips: Borrowing from unlicensed money lenders that attempt to hook you with larger loan sums than the regulated framework can create more financial woes for you in future. If a money lender promises a loan beyond the above listed limits, you should immediately stop engaging with them!
What steps should you take if you think you’ve encountered an unlicensed money lender?
If you suspect that you’ve been targeted by an unlicensed money lender but want to give the lender the benefit of doubt, ask to meet the lender at their registered business address and check the lender’s licence number against the information listed in the official list of licensed lenders provided by the Registry of Moneylender. Make sure their landline number, business address, licence number all tally with official records!
If the lender is not willing to meet you in person, it’s a sign for you to cut off all contact with them right away — do not proceed further.
To protect yourself, call the Police at ‘999’ or the X-Ah Long hotline at 1800-924-5664 to lodge a report against the unlicensed money lender in question.
Only borrow from a trusted lender like Soon Seng Credit
So long as you are mindful of your legal rights, finding a reliable money lender in Singapore can actually be an easy task.
Always choose to work with a trusted lender like Soon Seng Credit. As a loan provider with various services, from wedding loans to renovation loans, we’re here to help you navigate your financial challenges safely. With over 3,700 5-star ratings on Google, we offer affordable rates so you can make your repayments with ease.
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