It is common nowadays to hear news about people being victimized by loan sharks to the point their lives are at stake. Some of them would say that the lenders harassed not just them but their family and friends, and others even lost more than what they borrowed.
It is likely that these people ended up having to ask for a personal loan through these illegal moneylenders because they really need cash but unable to get through legitimate means because of their bad credit rating. Another reason is due to them being the guarantor of a family member or a friend.
No matter what reason it may be, these loan sharks are tricky to handle and when you do end up in their grasp, it is important you know what to do.
Why Do People End Up Dealing With Loan Sharks?
There are many reasons why people end up with loan sharks even if there are ways to determine if they are legitimate or not.
Here are some of the reasons why:
- Illegal moneylenders tend to advertise their services online or through SMS and calls. Since they do not have a physical address where you can visit, you are left uncertain as to who you are talking to.
- Some people recommend these illegal moneylenders when they have good experiences with them. Even the people you just meet may recommend these moneylenders and their recommendations can be convincing.
- For people with bad or low credit history and those with a lot of debt, they will go to these moneylenders because they are their only hope to get money.
- Foreigners tend to flock these illegal moneylenders because licensed moneylenders have strict requirements on foreign loans.
How to Spot Illegal Moneylenders?
When you need funds for any reason, don’t immediately agree with anyone willing to lend you money, especially if they don’t have the paperwork to prove they can be trustworthy.
Here are some of the things you can look into to spot illegal moneylenders:
- Illegal moneylenders advertise and market their products through text, calls, social media and online ads. Licensed moneylenders are not allowed to advertise in these mediums.
- All licensed moneylenders are registered to the government and the full list of their details can be checked with the Singaporean Ministry of Law. You should double check the license numbers posted on the moneylenders first since some illegal moneylenders tend to copy-paste other licenses to make themselves look legitimate.
- Illegal moneylenders do not ask for your paperwork or even provide a paper contract that details their loan terms. They will just transfer the money to you and leave the repayments the same way. Licensed moneylenders do not do this and will provide you a contract that details everything you need to know about the loan and you will need to visit their branches to get the money you borrowed.
- Illegal moneylenders will ask for sensitive information like your SingPass details or your NRIC documents. Licensed moneylenders will only check your SingPass details when you visit them online and they will also return your documents. Aside from NRIC documents, they may even seek out collateral for your loans even if you did not seek a secured loan.
- They will also increase or seek extra fees without even telling you about it. Illegal moneylenders try their best to ensure you cannot finish paying your debts.
How to Deal with Loan Sharks
If you have indeed loaned from an illegal moneylender, here are the ways that will help you deal with them appropriately:
- Report to the Police and Related Authorities
Illegal moneylenders are prohibited by law to conduct operations so it is logical to report them. Make sure you tell the police or related authorities about the operations of the lender and every transaction you made with them so they can investigate accordingly.
- Stay Calm
If you found out that you are dealing with an illegal moneylender, stay calm and do not panic. This will tip off the moneylender that you know who they are, especially when they are already planning to victimize you further.
- Confirm their details
It is a common mistake for many to engage with a moneylender without checking if they are accredited by the government or what. To them, the moneylender looks like they have legitimate details and they have recommendations that support their offers. However, this mistake must be avoided because illegal moneylenders often disguise their operations with a fake front.
Take some time to check their credentials with the government to ensure you are dealing with the right people. If you have already borrowed with them, stay calm, report them and wait for the authorities to deal with them.
- Stop Paying
When you report your situation with the authorities, you can stop paying the loans and let the authorities take over. Since they are not allowed to operate, these illegal moneylenders are not allowed to lend people money and they shouldn’t get repayments from those who borrowed money. Check up on the laws that would protect you from harassment and don’t give in to their demands.
- Report When They Threaten You
If the illegal moneylender resorts to force, threats and other dangerous tactics, immediately report them to the police as further evidence of their crimes. Do not also give in to the illegal moneylender when they start forcing you to pay.
- Talk to an expert
When you need funds and do not know where to go, speak to a financial adviser. They will be able to guide you to as to where you can borrow funds and how to escape from loan sharks.
Illegal moneylenders or loan sharks will do everything just to make a profit and when you fail to pay them, they will stop at nothing to get you to pay even if they resort to force. Before you borrow, make sure you double check their details and apply only with licensed moneylenders. When you file for a personal loan with licensed moneylenders, you will be able to borrow safely without worries.