When you need money, you can easily fall victim to loan sharks. The loan sharks know how to find their victims so well. They are unlicensed individuals or companies that offer loans without following the right procedure.

They tend to operate the financial institutions without the authorization or permits needed. In many cases, they tend to charge high-interest rates on the loan they give after forcefully giving it to you.

They don’t even offer their terms and conditions or a contract before giving you a loan. Therefore, when they start to harass you to pay up the loan, you won’t have any evidence of dealings with them. They are very cunning and can hugely frustrate you.

How to Identify Loan Sharks

1. No Physical Location

In most cases, the loan sharks tend to operate online with no physical location. In many cases, you even find that they don’t even have a website. Instead, they send SMS, emails, or calls to give you the offers.

If you are desperate for money you will fall victim. The government only allows licensed moneylenders to advertise their products and goods through their websites, business directories, or on their business premises.

However, it is different for loan sharks. They will look for you by any means possible even invading your privacy.

2. They Dictate Their Interest Rates

The loan sharks dictate their interest rates over the money you borrow. Therefore, they can impose any interest rate based on what they feel like. Also, you can find that some fees are charged that you were not aware of.

The legal moneylenders are always open about their interest rates and any other charges that you will incur. Therefore, you can identify a loan shark when they are not transparent. They will seem to have some fishy business.

3. Complicated Loan Application

Some of these loan sharks tend to have complicated kinds of loan applications. Even if they send it online, you will find it is missing some crucial details, or it is badly written. If you are not careful, you will end up signing to get a loan from a loan shark.

A good moneylender is always upfront with the application form with enough details on what is needed of you. In some cases, they even provide the terms and conditions document so that you understand what you are getting into.

4. They Can Cause Havoc in Delayed Payments

The loan sharks can cause a lot of havoc when there are delayed payments. They tend to charge a fee for late payments and even can include some fees that you didn’t know about.

You can even get harassed through the phone due to delayed payment. This is unlike legal moneylenders who are always upfront and use the right channels to get in touch.

5. Major Warning Signs

The loan sharks are never clear on their requirements. They tend to have no paperwork or rushed paperwork so that you can take the money. They also don’t check your credit history.

Licensed moneylenders tend to check your credit history to see whether you are capable of paying the loan on time. They can’t risk. However, for the unlicensed ones, they will just give them to you. The loan terms also are never clear.

6. Be Attentive When They Are Giving Offers

The loan sharks know how to play with someone’s psychology when they are desperate for money. They tend to check for names in financial distress areas.

So if your contacts are there they will reach out to you. Therefore, always be careful about where you input your personal information.

If they just call you out of nowhere with an offer, try and ask questions to know their legitimacy. If they are lying, they will start to stammer and your instincts will tell you they aren’t genuine.

7. Check the Lender’s Records

While discussing, try and buy time that you can use to research the moneylender. Try and look up the moneylenders’ business name and see its reviews.

Check whether they have a website and if they are on Minlaw’s list of licensed moneylenders.

Take your time before making any rush decision. Also, remember to check their contact information and the number they are using to reach out to you.

8. Ask Questions

Also, remember to keep asking questions about the offer they want to give you. Be wise to ask for the loan contract so that you can see what they expect of you.

Loan sharks, never have these documents nor do they ever ask you for any documents. Therefore, it will be an easy way to know their malicious ways. When the loan officer is hesitant when answering some questions that should act as a red flag.

What to Do Not To Fall Victim to Loan Sharks

To prevent falling victim to loan sharks, you can do this:

  • Have a savings plan to ensure you have money always for emergencies.
  • Stay within your budget.
  • Don’t buy goods on credit when you don’t have the cash yet.
  • Resist the urge to borrow if it’s not necessary.
  • Only borrow from licensed moneylenders or financial institutions.
  • Avoid an extravagant lifestyle.
  • Don’t give in to financial pressure to take a loan.


Regardless of how urgent you need money, never go to a loan shark. You will end up paying twice or thrice what you borrowed in the case that you delay in payment. Also, all licensed moneylenders often follow the guidelines of the money lending act that allows only a certain percentage of interest rate to be charged.

Therefore, you would rather go the right and long way of borrowing rather than the unlawful way of getting a loan from an unlicensed moneylender.

You can always get long-term and short-term loans from legal moneylenders in Singapore. Loan sharks can make you take a loan on bad terms, pay a huge interest rate, and get harassed or pressured into borrowing a loan.