The world today is full of hungry people looking forward to making a kill, whether straightforward or weirdly. Unfortunately, Singapore being one of the renowned business hubs globally, is not an exception to this.
While businesspeople, families rely on getting an extension of credit from the moneylenders here, not all of them are honest. During these times, Covid 19 has brought businesses down, and people are left looking for a way to make an income.
However, one should not fall into the trap of being scammed while searching for credit facilities. All that one needs to check is identifying the red flags in any company presuming to give out loans. In Singapore, they are known as loan sharks and have rampant illegal activities revolving around now and then.
This could be inform of defrauding unsuspecting prospects by giving them lucrative interest rates, performing ATM transfer transactions, and many more.
At Avis Moneylender, we work round the clock to create awareness of such illegal activities and how to keep away from them.
This article will expound more on how to identify illegal and legal moneylenders and give an idea of how to settle for the best.
• Clear terms and Conditions of the loan contract.
Singapore has laws that are governed by Singapore’s ministry of law. Any legal moneylender will take their time explaining all the terms and conditions laid down before convincing the borrower into taking a loan with them.
They are also ready to answer any question that may arise due to not understanding what is contained in the terms and conditions.
However, when it comes to illegal moneylenders, they will not have time to explain such but will be in a hurry without signing a contract and end up being defrauded.
It’s important, therefore, to keep away from such individuals or organizations but seek to get the one that has ample time to explain further about their loans.
• Illegal Moneylenders have numerous fees they charge.
In the Moneylenders ACT being practiced in Singapore, three main fees are chargeable when being advanced a loan. These are;
• The administrative fee 10% – This is also called the loan processing fee whereby, it is charged upon the disbursement of the loan.
• With effect from 1 October 2015, the maximum interest rate moneylenders can charge is 4% per month. This cap applies regardless of the borrower’s income and whether the loan is an unsecured or secured one. If a borrower fails to repay the loan on time, the maximum rate of late interest a moneylender can charge is 4% per month for each month the loan is repaid late.
• Legal fees- Being known as lawyers’ fees, this fee is payable in anticipation of any court-related challenge that may arise in the course of loan processing or later during the repayment periods.
When it comes to illegal moneylenders, they will have additional fees to make sure that they mint as much money as possible, should they get caught up by the law, and their business comes to an end.
• Illegal Moneylenders charge exorbitant interest rates.
While there is a law that governs how any moneylender in Singapore should work, this is contrary to illegal companies.
For instance, the maximum allowable interest charge is 4%. No Legal Moneylenders will go above this rate.
One of the red flags experienced in dealing with scam moneylenders (the loan sharks) is charging as high as 40%.
As soon as you come across such companies, borrowers should always keep away from them since they will take your hard-earned cash in exchange for little and expensive monies.
• Legal Moneylenders have a physical office and official ways of communication.
Most illegal Moneylenders have briefcase offices and move along with them from one town to another.
In case of a successful scamming, they will go into hiding, never trace them and run away with your money.
However, anyone practicing legal business will have a physical office, according to the Ministry of Law in Singapore. This is where the borrowers can go and make further inquiries, channel their loan repayment and at the same time ask for assistance on any queries that may arise.
Therefore it’s important to carry out critical research and ensure that the company you are dealing with is reachable through phone, websites, or physical meetings at any time of need.
• A Legal Money Lender will have defined Limits on the Loan Capping.
Genuine moneylenders will work on one’s ability to secure a loan from the income levels.
They ensure that they will not leave the borrower empty-handed as much as they need the business, which may lead to default of the advanced loan.
However, the loan sharks will not care and could go ahead, promising innocent borrowers that they would extend as much as they need. Anyone advising you of such should be flagged red, and one should keep away from them.
• Legal Moneylenders have Official Documentation.
Before being advanced the loan, any legal moneylender will forward a contract letter for signing off, ensure that the borrower goes through the document and understands every bit of it. This includes the loan amount, interest rate, loan schedule, and any options of fines or waivers in case of any late repayment.
On the other note, illegal moneylenders may offer the contract but with shallow information and could be lacking some of the vital information that may render one into getting scammed.
• Request for SingPass.
Every Singaporean resident has a SingPass which is a unique code that carries very sensitive information. Fortunately, there is no legal moneylender that will ask you for such information.
Be wary of the illegal moneylenders since it is their business to ask for the SingPass in a very cunning way to access one’s information. This can be used either through phone or when you meet physically with them. So never share your secret code with them, as they will only mess around with your information to their advantage.
With this information in mind, one will spot a loan shark from the initial stages and keep away from them.
Keep away from unacceptable practices so that you do not fall prey to the hands of the loan sharks.
As much as the Singaporean government is working hard to protect its citizens, it’s also important to do your part for a better tomorrow.