When you need a loan, the last thing you want is to fall into the hands of illegal money lenders in Singapore.
Usually, no one ever intends to get into financial trouble by dealing with unethical and unlicensed money lenders. However, the money lending industry is not free from loan sharks and heartless lenders taking advantage of unsuspecting borrowers.
However, on the bright side, you can protect yourself from them if you know what to avoid and what to do or not to do.
Therefore, below, we will discuss ways you can avoid fake money lenders and even be able to spot a genuine one.
6 ways To Avoid Dealing With Unlicensed Money Lenders in Singapore
1. Check for a Proper License
To begin with, make sure that the lender is licensed by the Ministry of Law in Singapore. Usually, properly licensed money lenders are strictly regulated. Importantly, they ensure reasonable interest rates, and prioritize sound business practices.
To check the lender’s license, don’t just stop at asking them since they will likely lie even when they know they are unlicensed. Instead, check the Ministry of Law’s list of licensed money lenders to see if their name is there.
Also, look at the lender’s physical office since licensed lenders must have a registered office address. Importantly, please don’t proceed to deal with lenders who refuse to let you visit their office and only want to lend to you through the Internet or are not on the official list.
2. Avoid Money Lenders That Lend Without Proper Verification
As a rule of thumb, a reliable lender will always confirm your repayment capacity before lending. Therefore, avoid a lender willing to disburse a loan in the blink of an eye without verifying your income, employment, or credit history.
The unscrupulous lenders disburse cash quickly to trap you into unsustainable debt cycles with hidden charges and excessive interest rates. On the other hand, good and legit lenders practice fair lending, so you will never be loaned more than you can repay.
3. Push or Scare
Unfair lenders and loan sharks push and intimidate individuals into borrowing. It is a red flag if any of that occurs in cold calls or SMS spam.
After they entice borrowers and even offer you loans, they will likely begin threatening and harassing them when payment is overdue.
On the other hand, a reputable lender will never harass you. Instead, they will assist you in creating a reasonable repayment plan.
4. Clues on Interest Rates and Fees
By law, interest rates in Singapore are capped at up to 4% monthly for registered money lenders. A lender who exceeds that is breaking the law.
To be safe and avoid illegal money lenders, avoid money lenders who, without proper disclosure in advance, charge exorbitant fees, processing charges, default charges, and admin fees poorly.
Importantly, in your future borrowing, always demand full disclosure of all charges at the beginning before signing. If the lender is reluctant and provides evasive responses, it’s a warning sign.
5. Never Give Personal Documents
A legitimate lender will request ordinary documents such as your NRIC, income proof, and address proof. However, if the lender requests unnecessary documents such as your account login credentials, ATM card, or passport, then they are scammers.
They want to gain access to your documents to misuse your information for illicit lending or harassment.
Therefore, be safe and give only ordinarily necessary documents and never sensitive login information.
6. Trust Your Instincts
If your intuition feels like you are about to deal with an illegal money lender, chances are high that it’s true. Usually, real lenders are honest, professional, and ready to explain to you precisely everything, and you feel you are in safe hands.
However, if a lender pushes you to take a loan and refuses to provide a contract, you will likely feel unsafe to proceed. Therefore, in such instances, you should trust your gut feeling and leave immediately.
Choose a Licensed Lender with a Good Reputation
The best way to avoid loan sharks is to borrow from a legitimate, duly licensed money lender with a clean record of good business and transparency.
Mainly, look for transparency in communication, reasonable loan terms, and professional customer service.
Lastly, at Power Credit, we believe in honest lending. We are dully licensed, charge legally acceptable fees, and we are committed to offering financial assistance when needed. Therefore, if you need a fair and legal loan, contact us. We will help you the right way.