Singapore has many laws that protect its citizens from shady practices and financial burdens when getting loans. Because of this considerate amount of accessibility, falling prey to loan sharks isn’t common, but that doesn’t mean it is uncommon.
A loan shark, also known as an ah long, is a business that collects loans for people on low incomes, usually from those who are in dire financial straits and unable to pay their debts or the loans they have taken out. In Singapore, there are certain laws enacted to prohibit the collection of such loans.
If you ever realize that you are in a tough position because of ties with an illegal lender, this article can help you deal with loan shark harassment.
Loan sharks will often prey on people with financial difficulties. Those who have poor enough credit and are desperate enough to feel they had no other options once these victims sign a contract with a loan shark, the ugly side of loan shark activities surfaces.
Loan sharks make money by collecting fees from the people who owe them, usually with excessive interest rates. This way of making money comes with several risks, including the possibility of violence, arrest, and other negative occurrences.
How to Fight Loan Shark Harassment?
If you find yourself in a situation where you realize you’ve signed a loan contract with a loan shark all along, don’t worry. There’s a way to handle the situation while avoiding any danger of losing more money.
Here is how to deal with loan shark harassment in Singapore:
- Do not make any further payments to the loan shark
- Secure your personal information if you’ve given them to loan sharks
- Report the loan sharks to the authorities
- Do not give in to the loan shark’s threats
Interest rates are already a big caveat of taking loans. As much as possible, you want to get low rates for a loan to don’t have to pay a large sum of money. However, when dealing with a loan shark, this can get more complicated than how it would be if you had dealt with a licensed moneylender.
Loan sharks charge exorbitant interest rates, which can rack up your borrowed money in a short span of time. This is already illegal, as Singapore limits the monthly interest charges of licensed moneylenders to 4%.
If you failed to do your due diligence during loan application, unknowingly signing on with an ah long, your best bet is to cease making payments entirely.
The benefit of this is to avoid dealing with a loan shark any further and to avoid falling into loan scams where loan sharks claim to not receive payments despite money having transferred between both parties’ bank accounts.
One of the signs you are dealing with a loan shark is acquiring personal information from you. Generally, borrowers are advised to avoid giving your SingPass even to a licensed money lender.
Even if required during loan applications, a licensed moneylender will only process your SingPass through means approved by the government and return your NRIC and other important documents to you.
So if in the case you have given personal information to a lender and it turns out that you have been in contact with loan sharks, make sure to change your personal information as soon as possible, especially if you’ve stopped your payments.
Illegal moneylenders will use those documents as leverage to harass you, while a licensed lender will recover unpaid loans through legal means.
They may even give your details to other loan sharks, who will pester and harass you with loan offers.
The next step to deal with loan shark harassment is to go to the authorities. Find a nearby neighborhood police post and report the loan sharks to make sure you are protected.
If you prefer not to go out of the house for fear of being assaulted, you can also call the police at 999 or the X-Ah Long hotline at 1800-924-5664 (1800-X-AH-LONG) to get further assistance with loan sharks.
The police will advise you on what you need to do next, including avoiding further contact and payment to the loan sharks, and will make sure to patrol your area.
Avoiding contact with loan sharks will likely spur them into further violent actions and threats to frighten borrowers into paying as much money as they want. This is easier said than done, but it’s important to hold out until the authorities deal with them.
To make sure you are prepared, here are some of the tactics they may employ for intimidation when a borrower fails to make contact or repayment:
- Using abusive language
- Harassing you through social media accounts
- Harassing you at your workplace
- Contacting family members, co-workers, friends, and even neighbors
- Shaming you publicly about your debt on the internet or in public
- Destructive attempts on your property like locking your gates or pouring adhesive on them
- Having people lurk around your area
- Having expensive food delivered to your house
- Threatening or instigating violence
- Vandalizing your house with tags like “O$P$” or the amount you owe
The best you can do is install surveillance equipment like security cameras to monitor your area and possibly even assist the police investigation.
It may also be best to move out of your house and stay somewhere else in the meantime, and cooperate with authorities as much as possible to protect you and your family.
Loan sharks in Singapore are conducting illegal activities, so it is best to keep in mind that because of that, you would not owe them repayment.
According to the Moneylenders’ Act, two main offenses are committed if one works for loan sharks in Singapore.
- $30,000 to $300,000 fine
- Up to four years of imprisonment
- Caning of up to six strokes. (for males)
These activities include using your bank account or ATM card to facilitate the business of unlicensed moneylending done by loan sharks.
- $5,000 to $50,000 fine, and even higher if it is a corporate body
- Up to four years of imprisonment
- Caning of up to twelve strokes. (for males)
Hold out and avoid contact with the ah long as much as you can until the authorities solve loan shark problems that plague you.
Dealing With Other Debts
It’s possible that even after you’ve done what you can to avoid loan shark harassment in Singapore, you might still need further assistance with existing debt.
Luckily, there are ways to fix your finances without dealing with loan sharks.
You can contact assistive programs and social service agencies that help people with credit counselling and possibly get a debt consolidation loan plan.
One of these is Credit Counselling Singapore, a non-profit agency with experts helping people address their fiscal woes.
You can get direct assistance through one-on-one credit counselling, or tune into their weekly webinars for general debt management courses.
Whichever you choose, it’s free. You won’t be spending money, and you will get help cutting down debt.
How Do I Avoid Loan Sharks and Illegal Lenders in the First Place?
The best way to avoid loan sharks is to go directly to trusted licensed moneylenders for your personal loan needs.
However, there are signs that you can look out for to make sure you won’t fall prey to the dreaded acts of ah longs:
No physical address
Licensed moneylenders are required by law to have a physical place of business, as a loan contract must be verified by the borrower in person.
A licensed business will normally have a legitimate website, pages, and contact numbers outside of a mobile number and email address, so be sure to check the internet and verify a lender before proceeding with borrowing.
Singapore is strict on avoiding financial ruin for its citizens. As such, certain requirements have to be checked before loan approval.
Some of these may include checking your credit score, measuring your monthly income or annual income, factoring in TDSR and LTV ratios, and many more.
A loan approved without sufficient checking might seem like a blessing, but you could be dealing with loan sharks.
Licensed moneylenders are limited in their marketing methods. They are required by the Ministry of Law to only advertise through:
- Ads placed on the exterior or within the lender’s physical place of business.
- Business or consumer directories in print media.
- Websites belonging to the lender.
In contrast, loan sharks advertise through the use of other methods not listed above. Commonly, they will solicit through SMS and calls, possibly even through emails and social media.
As mentioned earlier, a licensed lender cannot exceed an interest rate of 4% of the loan amount. In addition to that, the fees that they can charge are only limited to:
- An administrative fee of no more than 10% of the principal (deducted only after a loan extension)
- $60 maximum for a late repayment fee for each month
- Court-ordered costs for a successful claim for loan recovery.
In contrast, loan sharks impose processing or admin fees, pre-loan fees, other fees outside of those listed above to gain extra profit outside of their usual extremely high interest rates.
Again, licensed moneylenders are not allowed to retain your NRIC nor other personal identification documents. They may not demand your SingPass during loan application.
Incomplete loan contract
Licensed moneylenders are required to explain to you the terms of the loan in a language that you can understand. If they fail to do so or provide a blank document, you may contact a loan shark.
Lenders may also not withhold a part of the principal loan amount from you for any reason.
The best way to deal with loan sharks in Singapore is to go directly to registered, licensed moneylenders. Luckily, the Ministry of Law has a list of licensed moneylenders recognized by the Singapore authority found here.
You also have the choice of going for banks or even government-assisted programs to get a loan. Be sure to explore their different unsecured loans thoroughly.
First and foremost, before you borrow money from a licensed money lender, take a look at other alternatives, such as the various financial assistance schemes from the government.
You are legally obliged to fulfill any loan contract you enter into with a lender unless you’ve signed with abusive loan sharks.
Keep in mind your ability to abide by the loan terms, including your income and financial obligations. Borrow only what you need and can repay, as being unable to follow the repayment schedule can lead to extra fees.
While moneylenders are required to explain the terms to you until you understand them, it’s important to do your due diligence and review the terms as best you can.
Don’t make the mistake of jumping into the first deal you find. Shop around different moneylenders for the most favorable terms. Do not commit yourself to a loan until you are completely satisfied with the terms and conditions.
When you want to consider different financing options, work with Instant Loan. Instant Loan is a loan comparison service that can give you a list of loans from the top licensed lenders in Singapore.
The options will specifically be tailored to your financial situation and, best of all, are completely legal.