Occasionally, you may run into situations where you need some money urgently and end up turning to different kinds of loans to tide you through.
Some may opt to take a bank loan, while some may prefer to take a loan from a licensed money lender instead due to greater accessibility, faster approvals and less stringent credit checks.
However, there has been a rise in cases where unlicensed money lenders are posing as “licensed” lenders, preying on people who lack knowledge about legitimate avenues to obtain loans from. This often results in the borrower having to pay off a large sum of interest and deal with unnecessary harassment.
How can you avoid borrowing from unlicensed money lenders by mistake? Here, we will share 9 obvious signs of illegal money lenders in Singapore, along with tips on how you can safely report the unlicensed money lenders. Also, we’ll shed light on the key differences between licensed and unlicensed money lenders so you can be more guarded and stay safe when searching for a loan to tide over an emergency situation or two.
9 signs of unlicensed money lenders in Singapore
It pays to be able to identify unlicensed money lenders so you can avoid all dealings with these illegal money lenders in Singapore to your best ability.
1. No money lender licence and registration with MinLaw
Unlicensed money lenders are not registered with the Ministry of Law hence not part of the official list of licensed lenders. These lenders operate illegally and do not have any valid money lender licence to show borrowers who ask to see this moneylending certificate.
2. Sends unsolicited loan advertisements through many channels
Unlicensed money lenders in Singapore are infamous for sending unsolicited loan offers and advertisements to anyone and everyone via social media platforms, messaging apps, flyers, SMSes, emails, etc.
3. No cap on interest rates and fees charged
As unlicensed money lenders are not bound by Singapore law when it comes to moneylending, they often introduce extra fees and raise penalties whenever they please. Additionally, they are well-known for blatantly charging exorbitantly high interest rates and processing fees in bid to extort unsuspecting borrowers in need of urgent funds.
4. Requires upfront payment before loan approval
Another sign of unlicensed money lenders — often requiring borrowers to fork out upfront payment prior to loan approval, terming it as loan processing fee or loan administrative fee. Note that this practice is not permitted if you were to borrow from licensed lenders — authorised lenders can only impose this fee at the point at which the loan is granted, right before loan disbursement.
5. Demands for your Singpass login details
Unlicensed money lenders have no shame in demanding your Singpass login details or iBanking login details to gain access to your accounts, blatantly putting you at risk of fraud and identity theft.
Note that although many licensed lenders use the Singpass system to retrieve borrowers’ information for convenience, they will only do so with your permission and will never ask you for your sensitive personal information such as your Singpass ID and password! All authorised lenders in Singapore have to adhere to MinLaw’s strict laws and regulations.
6. Lack of in-person identity verification
Unlicensed money lenders are more than happy to take everything online, the remote way. They wouldn’t want to be identified by borrowers in real life, hence are thrilled to not impose any in-person identity identification for borrowers.
If you don’t already know, authorised lenders are required to verify your identity in-person at their registered business premises before approving and disbursing your loans — despite the fact that you can submit your loan applications online 24/7 for the most part. The signing of loan contracts must also be done in-person at their office.
7. Remote loan disbursement
Extending from the point above, it is highly unlikely that unlicensed money lenders operate from a physical office space that borrowers can visit whenever they need to. As such, any loan disbursement that they do is usually online and remote.
8. No clear loan contract in black and white
Unlicensed money lenders are known to keep things as vague as they possibly can for borrowers in an attempt to confuse and trick.
It is only natural that they avoid giving borrowers clearly drafted loan contracts that spell out all loan terms such as the loan amount, interest rate, late interest rate, repayment terms, processing fees, and late payment fees.
Even if they were to present a borrower with anything that resembles a loan contract, the document might be blank, incomplete or fraught with utterly vague clauses and terms.
Needless to say, these illegal money lenders in Singapore are in the business of unlicensed moneylending; they will not take the time to explain loan terms and ensure you fully understand what you are signing up for.
9. No clear loan repayment documentation and updates
Unlicensed money lenders are out to prey on unsuspecting borrowers — they enjoy taunting and keeping borrowers wrapped around their fingers for as long as they possibly can.
To extort borrowers and milk them as much as they can, these lenders are hesitant to provide borrowers with accurate updates, often doing away with repayment documentation and other forms of documentation to ensure they can change the loan terms and conditions to their advantage any time.
What happens if you engage with illegal money lenders in Singapore?
You probably have heard about the lengths unlicensed money lenders go to get their payments from borrowers. “O$P$” splashed in red paint across the front door of debtors, incessant threats, and the use of abusive language are often methods they use to collect debts.
Unlicensed money lenders may act friendly and approachable to get you to borrow from them initially, only to turn nasty when it is time to collect the money owed.
#1 Disadvantageous unlicensed money lenders’ contracts
When borrowing from unlicensed money lenders, you might inevitably end up signing a disadvantageous and vague contract. Yet, the contract binds you to the terms of the loan, which can include exorbitant interest rates and hidden fees. If you fail to comply with the terms, you may face penalties, which can make your financial situation even worse.
#2 Harassment and threats that degrade your quality of life
One of the most unpleasant consequences of borrowing from unlicensed money lenders is the harassment that you and your family members may experience.
Unlicensed money lenders employ various tactics to ensure that you pay off the loan, including making threatening phone calls, sending intimidating letters, or even visiting your home or workplace to make a scene. This can create an extremely stressful and uncomfortable situation for you and your loved ones.
On the other hand, licensed lenders are not permitted by law to exercise any of the above tactics. They can only either send you a Letter of Demand (LOD) to your residential or employer address, visit your home or workplace to recover the debt or take legal action against you.
#3 Negative mental and emotional health impact of persistent harassment
Unfortunately, the disturbance will not stop until the loan and its high interest are fully paid off. This can be particularly challenging if you are struggling to make ends meet and are already under a lot of financial pressure. You may find yourself constantly worrying about how you will manage to make your payments and avoid the constant harassment from the loan shark.
Engaging with an unlicensed money lender is not only risky, but also comes with serious consequences. The high interest rates and hidden fees can make it extremely difficult to repay the loan, while the harassment can make your life miserable mentally and emotionally over a prolonged period of time.
How to safely report unlicensed money lenders or unlicensed moneylending?
You have a few ways of informing the authorities of illegal money lenders in Singapore or unlicensed moneylending activities that you have knowledge about.
- Call the police at 999
- Dial the X-Ah Long hotline at 1800-924-5664
- Utilise I-Witness to furnish the police with information on unlicensed moneylending activities
- Block and report unsolicited messages from unlicensed money lenders in-app, for example, in WhatsApp
Remember, it is safe to report unlicensed money lenders. In fact, you should!
Borrowing from unlicensed money lenders is not safe
It is critical to learn about the types of money lenders available to ensure your financial safety. There are plenty of unlicensed money lenders operating in Singapore, preying on innocent ones who lack the knowledge necessary to make informed decisions.
Tips to protect yourself from unlicensed money lenders:
- Don’t disclose any sensitive information (Singpass, NRIC, bank details).
- Don’t sign a contract if it lacks important information.
- Don’t act as a guarantor for any illegal loans.
- Report any hostile treatment and suspicious activity to the authorities.
- Most importantly, do not engage with them in the first place.
Differences between licensed and unlicensed money lenders
| Licensed lenders | Unlicensed money lenders | |
| Must have a physical office registered with Minlaw | Yes | No |
| Using a landline approved by Minlaw | Yes | No |
| Using a website approved by Minlaw | Yes | No |
| Required to go to the office for a face-to-face verification before loan approval | Yes, according to law | No, in most cases all processes are done online or via messages |
| Signing a loan contract in-person at their office | Yes. All contracts need to be signed in the lender’s registered office | No, but some loan sharks will ask you to sign a contract online or in a public place as they want to act as a genuine licensed lender and get hold of your particulars |
| Ask for your SingPass ID and password | No, licensed lenders are not supposed to do that | Yes, in most cases they do ask for borrowers’ Singpass ID and password
To escape the police, they avoid face-to-face verification The only way to verify borrowers is using their Singpass and log-in into government websites (e.g. CPF website) to retrieve borrowers’ information and income proof |
| Cap on interest rates and fees charged | ✅ Interest rates capped at 4% monthly
✅ Late payment fees of no more than $60 monthly ✅ Late interest rates capped at 4% monthly ✅ Court-ordered legal fees for loan recovery |
❌ No cap on interest charged
❌ Sky-high interest rates and fees |
| Required to pay an upfront payment before the loan is approved | No, this is illegal | This is a loan scam. There are many loan scams now, including those executed by unlicensed money lenders |
| Send a receipt to the borrower after every payment is made | Yes. Receipts have to show payment breakdown, how much goes into principal, interest, late charges, and the outstanding amount owed | No |
| Send a half-yearly statement of account to the borrower in Jan and July before the 21st of the month | Yes | No |
| Advertising channel | Only these three channels are permitted under the law:
|
Unsolicited flyers, SMSes, WhatsApp messages, social media platform messages, emails, or other forms of advertisements |
Conclusion: Only borrow from licensed lenders, not unlicensed money lenders
Many loan companies in Singapore are trustworthy and operate lawfully to give the best loans to borrowers. However, it is important to always verify a lender’s legitimacy and to check the money lender’s reviews on Google before reaching out to the lender. A good and reliable lender will usually have many good reviews from past and existing customers.
No matter how desperate you may be for quick cash solutions, do not engage with unlicensed money lenders at all costs. Consider borrowing from a trustworthy, experienced lender like Goldstar Credit — we offer affordable private money lending rates with professional yet speedy services to all borrowers.
Apply for swift loans or chat with us to find out more.
About the Author
Building brands by day, crafting narratives by night. I leverage my dual expertise to create compelling and effective content.
