For all the banks and legal money lenders that operate in Singapore, unlicensed money lending is not as uncommon as you might think. It’s important that you stay safe while you’re looking to take up a loan because unlicensed money lenders do have their ways to lure unsuspecting individuals in.
Here’s a handy guide to determine whether you’re dealing with a case of unlicensed money lending.
Difference between licensed and unlicensed money lending
Don’t let scammers stop you from taking up a loan. Once you get the basics right in terms of the requirements to operate a money lending business, it’s fairly straightforward to differentiate between a legal lender and one that conducts unlicensed money lending.
A licensed money lender in Singapore will have a registered physical outlet to run their business. The place of business should be registered under the Ministry of Law. Unlicensed money lenders tend to operate differently, with no apparent physical office.
What are some telltale signs of unlicensed money lending?
Here are three telltale signs of unlicensed money lending that you should be aware of:
1. Harassment via cold calls and unsolicited text messages
One obvious sign would be the way that unlicensed money lenders advertise their services. A business that’s conducting any form of unlicensed money lending will advertise via flyers, SMSes, and WhatsApp messages.
These forms of communication are not within the specified rules of advertising for legal money lenders such as:
- business or consumer directories (in print or online media);
- websites belonging to the moneylender; and
- advertisements placed within or on the exterior of the money lender’s business premises.
2. An online-only application process
Another indicator would be the money lender not having a legitimate and approved place of business where you can sign the loan contract. As a result, unlicensed money lenders will attempt to have an application and funds disbursal process that’s fully online or remote.
A licensed money lender in Singapore has to verify the identity and particulars of the borrower at its place of business before granting the loan. Do check the address of the legal money lender’s office on the Registry of Moneylenders’ website if you aren’t sure about a particular company.
3. Charging processing fees before the loan is approved or granted
A licensed money lender in Singapore will not ask you to make any form of payment before the approval of the loan or funds are being disbursed.
Any administrative fee should only be paid after the loan is approved and disbursed to you. This payment might also be deducted from the principal amount itself, but never before the loan is provided to you. Should a money lender request or demand for these fees to be paid ahead of loan approval and/or funds disbursal, it is most likely an unlicensed business.
How to know if you’re working with legal money lenders
Money lenders that conduct unlicensed money lending practices tend to avoid answering your queries directly, as opposed to legal money lenders. A licensed money lender will provide you with proper information regarding the terms and conditions of any loan contract before you commit to the loan and sign it.
If you find yourself in a situation where you are being forced to commit to a loan (even to a point where you feel threatened), then you might be dealing with an unlicensed money lender. Always check the Registry of Moneylenders for the company’s licence to operate legally in Singapore.
What to do if you’re dealing with unlicensed money lenders
In Singapore, there are options for you to turn to when you’re dealing with unlicensed money lenders such as loan sharks. Here’s a list of hotlines that you can call just in case you land yourself in a sticky situation with an unlicensed money lender.
- Credit Counselling Singapore: 6225-5227
- ComCare: 1800-222-0000
- National Crime Prevention Council’s X-Ah Long hotline: 1800-924-5664
You may also want to check out this comprehensive guide to dealing with loan sharks in Singapore.
Legitimate licensed money lenders in Singapore
If you’re looking for personal loans but are wary of your options, do know that there are plenty of licensed money lenders in Singapore you can consider. You simply need to make sure that the lender is registered and be aware of the telltale signs above.
Take Dio Credit for instance. We’re a reputable licensed money lender in Singapore that offers a variety of loan options. This includes debt consolidation plans that allow you to consolidate all your debt into a single plan for easier loan management.
Contact us and our experienced loan executives will reach out to you as soon as possible with a personalised quote and more information.