One of the things making loan sharks so popular in Singapore is their low-entry barrier. No pre-requisite requirements exist to get approved for a loan, even when your credit score is bad.
Plus, they’re everywhere, so Singaporeans don’t have much trouble finding one.
Even so, loan sharks use unethical lending tactics, and because they are unregulated, they make the lives of debtors a misery.
Now, if you’re a borrower and have unfortunately fallen into a loan shark trap, you must be looking for a way out.
The good news is there are different ways to solve loan shark problems in Singapore. In this guide, we’ll share everything you need to know on how to run away from loan shark.
Identifying a Singapore loan shark is the first step to not falling into its trap.
Some of the signs of loan sharks in Singapore are hard to spot, but there are general tell-tale signs of a predatory financial institution to look out for.
In general, loan sharks:
The first indicator of a loan shark is it has no address or business location.
Loan sharks work illegally, so they purposefully run their practice by shirking tax and licensing responsibilities and harming clients who fail to pay up. So why would they have an office?
So beware of a lender that simply refuses to meet you at its office.
When you work with legitimate and reputable money lenders, getting loan approval from them seems like a Herculean task.
Most will go through your credit score and sometimes check with the credit bureaus. They need to establish your creditworthiness. Others will request for your proof of income.
On the other hand, loan sharks aren’t interested in any of these and will grant loan access to anyone remotely – even those with little or no access to credit.
They love high-risk borrowers and foreigners who will likely fall behind on loan repayments.
Another clear sign of a loan shark is if it advertises loans through calls, text messages, WhatsApp, flyers, or door-to-door solicitation.
Licensed money lenders or financial institutions are prohibited from using these platforms to advertise. It’s a violation of the Moneylenders Act.
While many lenders generally offer competitive rates to stand out, loan sharks will usually propose an abnormally low rate. After your loan is approved, this will skyrocket.
If the deal seems too good to be true, it probably is and should be a red flag.
A good way to gauge their rates is by inquiring from established lenders and comparing them.
Be wary of lenders that ask for an upfront deposit before loan approval.
Of course, some personal loans require processing, application, or an origination fee, but usually, this comes from the loan itself after it is approved – and not out of pocket.
Generally, loan sharks will pressure you to make decisions or disclose personally identifiable information. They may also force your hand or rush the application process before you are clear about the loan terms.
It’s a major red flag if the lender asks you to sign on a blank or incomplete loan contract. A loan shark may also rush you into signing off the Note of Contract of the loan.
But usually, loan sharks do not offer any loan contracts since they are operating illegally.
Loan sharks are a bunch of bullies and usually operate by fear and threats to push you into submission. Unlike banks, loan sharks will stop at nothing to get their money back.
Some are real psychos and will threaten you, your family, and your loved ones until you pay up. Their intimidation methods are sometimes crude and primitive.
Their favourite method, however, is splashing your residence or office with paint or locking you out of your home. They also like playing mind games by waylaying you when getting from work, and sometimes physically assaulting you.
In short, their tactics are a bottomless pit and will go out of the way to coerce, harass and intimidate you to submission.
Remember, they don’t operate under industry rules or regulations and will employ thuggery tactics if you fail to repay your loan.
If you’re already experiencing loan shark harassment in Singapore, the first thing to do is calm down. You’re not the first one, and you’re not alone.
We’ll tell you how to run away from loan shark and fight loan shark harassment.
Many Singaporeans think paying a loan shark will free them from the shackles of debt. Far from it.
Paying off a loan shark will never fully clear your loan because they’re likely to tag more late fees to trap you in a seemingly endless spiral of debt. That’s their business model.
When you borrow from loan sharks, they don’t tell you the amount paid is just the interest. If you ask to pay the principal, the interest goes up.
Their “math” is usually largely made up to trap you in a cycle of debt and to keep hounding you for “interest payments” forever if they can, or at least before the well dries up.
And surprisingly, they care less if you never repay the loan in totality as long as you keep paying the interest.
So there’s no point in paying back in the first place.
Next, it’s important to consider your personal safety. Take basic precautions and don’t allow them into your home. Keep your front door closed and locked all the time.
More importantly, keep flammable materials away because they’ve been known to douse the door with kerosene and set homes on fire.
In short, always act with a clear mind and be conscious of your surroundings.
Loan sharking in Singapore is illegal, so should a loan shark intimidate or threaten you, you’ve a legitimate case of intimidation. It’s covered under the penal code, and the police must get involved.
Always remember you’re the victim, and they’re breaking your legal rights.
So call the cops every time they do something, and if you do it enough, maybe the loan sharks might just get fed up. Or even better, they may get arrested.
The other thing is to cut all contact with loan sharks. Don’t talk to them, either in person or over the phone. It’s already bad enough that loan sharks have your number.
Talking to them makes them think you’re willing to negotiate. So change your number immediately.
If possible, share your predicament with your family and trusted friends. Make them aware of the situation, and underline the importance of sticking together during tough times. There’s also safety in numbers.
Of course, the sharks may send runners. Hence, it may also help to install CCTVs. It’s an effective deterrent against runners.
Assisting or allowing loan sharks to use your bank or ATM is punishable by law. And so is harassing debtors as a runner.
Facilitating unlawful moneylending can attract a fine between $5,000 and $50,000, a jail term of up to five years, and a maximum of six strokes for men.
Harassment and vandalism, on the other hand, can result in much higher fines and penalties. It progressively gets higher for corporate bodies.
The first step on how to run away from loan shark is staying away from loan sharks in the first place.
However, if you’re already got a loan shark on your tail, there are several ways around it.
You can start by calling The Samaritans of Singapore. They may not help with any financial reprieve, but they’ll provide you with more help and advice than you could ever imagine.
The other alternative is to see a financial counselling service – after all, financial woes can lead to significant distress.
Credit Counselling Singapore can negotiate with money lenders on your behalf and advise you on the best financial course of action to take.
However, if you’re in a really bad financial situation and need some help, consider a licensed and regulated money lender.
Rather than going to loan sharks for money, borrow from a trusted licensed money lender like 1AP Capital.
We’re a reliable and professional financial company registered under the Ministry of Law, and guarantee no hidden costs or charges.