While Singapore is generally law-abiding, illegal moneylending unfortunately still persists. Unlicensed money lenders —also known as loan sharks or ah longs— are notorious for imposing unreasonably high interest rates that make clearing your debt extremely difficult, if not impossible, trapping you in a never-ending cycle of debt.
And should you become unable to pay, loan sharks in Singapore will not hesitate to carry out harassment and intimidation tactics against you and your family. Loan shark harassment in Singapore is a very real issue even in today’s day and age.
Hence, before taking a loan, it is important to know how to differentiate between a legitimate money lender and a loan shark so you can avoid borrowing from loan sharks by mistake. Reporting a loan shark shouldn’t be intimidating at all — learn how to safely do it if and when you encounter loan shark cases in Singapore.
6 key differences between licensed money lenders and loan sharks
1. Loan amount
How much you can legally borrow from a licensed lender depends on your income level. There are also different loan limits depending on your citizenship. See the following table.
| Annual income | Maximum money lender loan |
| Less than S$10,000 | Singaporean and PR: Up to S$3,000
Foreigner: Up to S$500 |
| S$10,000 or more but less than S$20,000 | All borrowers: Up to S$3,000 |
| S$20,000 or more | All borrowers: Up to 6 times monthly income |
As all money lenders are required to abide by these loan limits, this is one of the key differences that help you spot a loan shark.
Anyone that promises to lend you a loan that exceeds these limits is doing so unlawfully. Hence, you should be wary of taking up such offers — you are very likely dealing with a loan shark.
2. Interest rates and fees
Here’s another set of numbers to familiarise yourself with to better steer clear of loan sharks and ah longs in Singapore.
The Ministry of Law has clearly defined limits regarding how much licensed money lenders can charge for their services. This includes private money lenders’ interest rates, admin fees, and other charges. The stipulated limits are:
- Loan interest rate: up to 4% per month
- Admin or processing fee: up to 10% of loan principal
- Late payment fee: up to S$60 per month
- Late interest rate: up to 4% per month of the overdue amount
- Total interest and fees: up to 100% of loan principal
- Legal costs associated with a victorious claim for loan recovery by the lender: as ordered by the court
Illegal loan sharks and ah longs are likely to ignore these limits and offer you loan packages with interest and fees that are much higher than what’s legally allowed for authorised lenders.
Therefore, if you come across loans with interest rates that exceed 4% per month, or admin fees that are more than 10% of the loan amount, do not proceed further — these are key signs you may be dealing with a loan shark.
Additionally, loan sharks may attempt to hide their high interest rates by offering unconventional terms (such as paying X amount every Y days) or by including extra charges or hidden fees. If you are unable to clearly understand your loan’s interest rate or any other terms, do not proceed.
3. Loan contract and documentation
Licensed lenders are required to provide you with proper documentation as an official record of your loan.
One crucial document is the loan contract, which spells out the terms of your loan package — especially important details like the loan amount, loan tenure, interest rate, and fees and charges.
The legal lender should go through and explain the loan contract with you in person, and clarify any questions you may have, whether it’s how to apply for a loan, the documents required or the loan contract terms. Both parties should also sign off on it before the loan is disbursed.
If you do not receive a proper loan contract, or the document is vague and missing important terms, be wary that the other party may be a loan shark.
4. Official registration and place of business
All money lenders in Singapore are required to register with the Ministry of Law and abide by its laws and regulations before they can legally carry out moneylending activities.
The Ministry’s Registry of Moneylenders oversees and maintains a list of all licensed lenders in Singapore, which acts as a valuable resource for borrowers to help avoid falling prey to loan sharks.
You should check the official list of money lenders to see if your money lender’s licence and company name appears on it — if not, that is a clear warning sign the money lender is operating illegally as a loan shark.
Another check you can do is to see if there is a registered office address, which is a standard requirement for any business in Singapore. Loan sharks or unregistered money lenders are unlikely to have a registered business address.
5. Advertisement channels
The channel through which a money lender advertises itself to you can also help you determine whether you’re dealing with a registered lender or a loan shark.
Under the law, registered lenders are only allowed to advertise through these three ways:
- Their website(s)
- Consumer directories or business directories, in print or digital format
- Advertisements placed within or on the exteriors of their registered business premises
This rule makes it easy to filter out loan offers from shady money lenders, scammers, loan sharks and ah longs. If you receive unprompted loan ads from social media, messaging apps, SMSes, phone calls, or flyers —or anything outside of the three permitted channels— they are likely to be from a loan shark hence are best ignored.
6. Level of professionalism
Last but not least, the level of professionalism you receive can also clue you in on the legality of your money lender.
Besides strict rules and regulations, registered lenders are also held to high levels of professionalism when dealing with customers. All money lenders are expected to follow the guidelines laid down in the official professional service handbook and must uphold high service standards at all times.
And it’s not just for show either. Failure to maintain professionalism can cause the money lender to be suspended or blacklisted, especially if there has been a severe lapse in service.
This is another key differentiator between a registered lender and one operating illegally. You should be encountering professionalism and top-notch service standards at all times.
But, if you are experiencing the opposite instead —such as abusive language, threatening behaviours, rude service, having your calls or questions ignored, etc— you could very well be dealing with an illegal money lender or loan shark.
Reporting a loan shark: How to do it and stay safe
Loan shark cases in Singapore are real. Reporting a loan shark should never be frowned upon or avoided, especially if you have first-hand experiences with them that cause destruction to your life (e.g. persistent loan shark harassment, persistent pressure from them to take up a loan, etc).
Before reporting a loan shark, make sure to cut off all contact with them as soon as you possibly can! Ensure you’ve documented your encounter(s) in detail so the information can come in handy when you eventually make the report.
Here are the various ways on reporting a loan shark:
- Report the lender to the police via 999
- Furnish the authorities with relevant details via the X-Ah Long hotline at 1800-924-5664
- Submit an anonymous report to the police via I-Witness to get the authorities to investigate or uncover unreported crimes
Only borrow from authorised lenders, not loan sharks or ah longs
No matter how desperate you may be for a loan, do not borrow from loan sharks.
Don’t waste your time on illegal lenders or worse — risk getting into trouble with loan sharks and dealing with the repercussions of loan shark harassment. To keep yourself safe even in the event that you need a loan to tide over unforeseen circumstances, only borrow from authorised lenders that are 100% legal.
Synergy Credit is a leading loan company in Singapore that offers quick loans at competitive interest rates. Apply now or contact us to discuss your loan needs today!
About the Author
Formed in 2009, Synergy Credit is your trusted financial partner that delivers customised loan packages and well-researched blog content for anyone and everyone, seasoned borrowers and greenhorns alike.
