Loan sharks are quick to lend money to any business or individual looking to borrow money at a low interest rate, but they will hit you with extremely high interest rates or fees when you fail to pay on time.
Although these reported incidents are primarily related to lower loan sums and duration, they reflect the pervasiveness of this industry – with many more being unreported because of embarrassment or lack of information on what to do if this happens to you.
So if you indeed experience the misfortune of doing business with the dreaded ah longs, accidentally or not, read on to find out what you need to do to report and deal with loan shark harassment.
Filing a Complaint
The foremost way to deal with loan shark harassment is to report them to the authorities. You can either call the police or the X Ah-Long hotline.
You may also report illegal practices to the Registry of Moneylenders through their website. The Registry will keep your personal information confidential, but the process may require that you attend an interview about your financial involvement with the moneylender.
The Registry takes complaints seriously, and if a moneylender disregards your rights, you can try and take legal action through the Small Claims Tribunal or the Court under the Consumer Protection (Fair Trading) Act.
The Court also has the authority to void loan agreements deemed to be excessively costly or unfairly structured.
If you think someone may be attempting to take advantage of you or your family, you can contact the Registry at telephone number: 1800-2255-529 for further assistance:
- Police response can be obtained by calling their hotline 1800-255-000 or 999 in case of an emergency.
- Members of the public may also call the National Crime Prevention Council’s “X Ah-Long” hotline at 1800-924-5664 if they have information on loan sharks.
6 Red Flags to Know You are Dealing with Loan Sharks
Loan shark activities are easily spotted. If you are dealing with a loan, these illegal practices keep an eye out for knowing you are dealing with a loan shark.
- Easy loan approval
- Excessive interest rates
- Pre-loan fees
- No thorough loan term discussion
- Demanding personal information
Loan sharks advertise through SMS, flyers and e-mails
Are you offered a loan by a stranger on the phone or through an e-mailed solicitation? This is a red flag that should immediately raise your eyebrows. In general, loan sharks are out of compliance with statutory and contractual provisions that prohibit unfair, deceptive, or abusive acts and practices in their advertising.
Loan sharks advertise their loans through SMS, flyers, and emails, but licensed money lenders cannot do this by law to combat the concern that consumers were being coerced into taking out loans they couldn’t pay off.
To stop these lenders from soliciting via SMS, the Registry set a directive for licensed moneylenders in Singapore limiting their advertising channels:
- business and consumer directories (whether in print or online);
- the money lender’s website; and
- advertisements displayed on the outside of the moneylender’s business premises.
Licensed moneylenders are required to follow these rules; as such, those who do not are illegal lenders.
Loan sharks claim to approve as much money as you need
It is not always easy to distinguish between unlicensed and licensed moneylenders. As a borrower, it is important to recognize the details of the offers to verify their legitimacy.
The best way to identify potential loan sharks is by confirming the amount you can borrow.
Whenever you apply for a secured loan, you can request any amount you like. In contrast, unsecured loans offered by licensed moneylenders do not guarantee the loan amount.
On the other hand, loan sharks cheat their way by enticing borrowers with large loanable amounts, even if it is well above previous limits set by the government or any authorised regulatory institutions. This is another way loan sharks deceive borrowers into thinking that they are being treated special when they are being fleeced, especially those experiencing financial difficulties.
Normally, the personal loan amount is capped at 6 times the monthly income of the borrower. If the lender claims to offer more, look away immediately to not fall prey to loan sharks.
Loan sharks charge you exorbitant interest rates
The interest rates they charge are astronomical, and many of them lie about how low they charge at first when their real purpose is to get you into serious financial trouble so they can make more money off you.
It’s in a loan shark’s interest to over-promise and under-deliver, so they’ll threaten borrowers with exorbitant late fees and mountains of debt if they miss the repayment schedule. The problem is, most borrowers can’t afford these fees and, so they give in, lest they become trapped in a vicious cycle of never settling a single loan.
The borrower is then left with an unsatisfactory outcome and is at risk of defaulting or having their funds seized by creditors when they can’t make their payments.
To avoid getting into a situation where you have to pay more than what’s fair or reasonable, be aware of the interest rates you will have to pay over time.
Licensed money lenders cannot charge interest rates that exceed 4% per month. Furthermore, this also holds regardless of how much the borrower’s annual income is.
Loan sharks impose processing fees before approving the loan
Another warning sign to look out for is that loan sharks often employ aggressive tactics to pressure borrowers into paying off upfront costs before even approving the loan. Like processing fees, which are not permitted to be solicited until you get the loan approved.
Effective October 2015, licensed moneylenders are only allowed to charge the following:
- A late repayment fee not more than $60 for each month’s late repayment
- In return for granting a loan, an institution should charge an admin fee of no more than 10% of the principal as a fee
- The moneylender will be required to pay court costs if the claim for recovery is successful
Moreover, the total amount due on a loan, including the interest charged, administrative fees and late fees, cannot exceed the loan’s principal amount.
Loan sharks tend to charge processing or admin fees to make an even bigger profit. When the lender asks for unauthorized fees not mentioned in the list, they are likely an ah long.
The only way to avoid this problem is to read through all the loan agreement pages carefully–and pay attention to any fees or charges presented by a moneylender that seem unusual and run the minute you spot one.
A loan shark won’t discuss the terms and conditions of the contract
You may be unaware that there is such a thing as a blank contract, which is usually a term sheet that contains blank lines that permit the lender to move forward with the transaction without addressing the terms of the loan and the concerns of the loan borrower.
Something you should know before taking loans is that lenders should always be honest with you about their funding practices. In fact, they are even required by law to do so.
No one wants to be taken advantage of; that’s why it’s important never to sign a blank contract. If you are approached by someone offering a loan, it is your duty to request and read the necessary documents and determine whether the terms and conditions meet your needs.
If the lender asks for your SingPass user ID and/or password
The legal lending industry relies heavily on reputation and trust. When a lender is asking to retain your personal documents, you should be very wary. Loan sharks can use your private information to extort more money or make threats against you when they try to claim their losses through other means.
As a borrower, you have an equally important interest in protecting your rights. Your only responsibility is to give only the information that is necessary to complete loan applications.
Your personal data, including your SingPass user ID and/or passwords, are protected by legal confidentiality laws that vary by jurisdiction. This also prevents any licensed moneylender from retaining your personal ID and NRIC card.
Other documents money lenders are not entitled to retain:
- Driver’s license
- Work permit
- Employment pass
- ATM card
- bank account details
Criminal Offences for Loan Sharks and Loan Shark Harassment
According to the Moneylenders’ Act, two main offences are committed if one works for loan sharks in Singapore.
If you assist in the business of unlicensed lenders:
- $30,000 to $300,000 fine
- Up to four years in prison
- Caning of up to six strokes.
For acting on behalf of an unlicensed lender to commit harassment:
- $5,000 to $50,000 fine
- Up to four years in prison
- 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.
How to Deal with Loan Shark Harassment
If you find out you’ve been dealing with a loan shark all along, it’s best to follow these steps to fight and avoid further harassment.
Don’t make further payments
The first thing you should do is to stop making payments to the loan shark. This will rile them into making threats and increasing your repayments, but keep in mind that you are not legally obligated to pay illegal practices.
One of the many loan scams that a loan shark can resort to is claiming to not receive payments from you despite money being transferred between your bank accounts. Stopping payments can keep this from happening.
Protect your personal information
Immediately change and protect any information that you may have given to a loan shark. Loan sharks will use these as leverage to frighten borrowers into paying more. Some may even give your contacts and social media accounts to other loan sharks.
Report loan shark harassment
The next thing to do is to go directly to the authorities. Working with the police can help protect you from violent activities and further harassment from a loan shark.
Work with social service organisations
Lastly, if you have other loans to worry about, you should contact social service agencies that provide credit counselling and financial assistance, possibly even a debt consolidation loan.
One of these is Credit Counselling Singapore, a non-profit agency that provides one-on-one credit counselling and weekly webinars for general debt management.
Whichever you choose, it’s free. You won’t be spending money, and you will get help cutting down debt.
- Be wary of unreasonable terms and borrower incentives that may be offered.
- Find out how they operate. Do they have employees? Are they run by an independent owner-operator? Are they licensed and certified?
- Knowing your legal rights will help you deal with loan sharks who harass and take advantage of you or your family.
- If you go into any sort of debt arrangement, whether it’s with an online money lender or something more traditional, you should do your due diligence and be aware of what the result could be—and be able to prepare accordingly.
- Remain calm and don’t be afraid to contact the authorities to report any unlawful lending companies or individuals.
To summarise, the first thing to check is if they have a solid, legal business operation in Singapore before claiming to be a lender. You can find a list of registered, licensed moneylenders in the Ministry of Law’s registry here.
If you are looking for different financing options, work with Instant Loan. It is a loan comparison service that can give you a list of loans from the top licensed moneylenders in Singapore, all of which meet your specific needs.