There are primarily two ways of borrowing money: banks vs private lenders. Even though bank loans are popular, many people prefer a private lender since the process is quick, easy and convenient and usually requires no collateral. However, if you live in Singapore, you must have heard news reports of illegal money lending activities. That is worrying because you never know when you might require a loan, but being duped in the process can be devastating, financially and mentally. One of the primary reasons behind the growth of such activities is trusting an unlicensed money lender who the government does not authorise to carry out such activities. How can you recognise them, and what safety measures should you take to ensure your safety?
How do unlicensed money lenders cheat people?
There are several ways in which unlicensed money lenders cheat people. One of those is sending SMS or Whatsapp messages to unsuspecting customers who think they are licensed. They might also create duplicate accounts of licensed websites with addresses and contact details to confuse and deceive the borrowers. Another fraudulent tactic is asking people to transfer monies on the pretext of paying processing fees or GST fees before approving a loan. You should be wary and alert against these scams and report them to the police if you are contacted by them immediately.
Is there a law in Singapore to deal with fraud lenders?
The Moneylenders Act in Singapore does not allow any individual to engage in the business of money lending, whether as a principal or agent unless they have a valid and updated license. The only exceptions to this are excluded and exempted lenders, who have to apply for it by paying a certain amount of fees and obtaining a certificate issued by the Minister. If anybody is found guilty of loan fraud the first time, they will be fined less than 50,000 SGD and not more than 500,000 SGD. However, if the fraudster repeats the offence, they will be fined an amount of not less than 30,000 SGD and not more than 300,000 SGD. They could also be imprisoned for four years, at the least.
How to know whether a money lender is trustworthy or not?
Check the list
One of the best ways of checking whether a money lender is licensed or not is to check the list released by the Ministry of Law in Singapore. The list is updated regularly, and at present, it has 156 licensed lenders from whom you can safely borrow money.
Check their contact details thoroughly
Besides browsing the list, other ways of identifying a licensed lender from an unlicensed one are to check details like their business address, landline number, website and license number. The law requires all money lending businesses to state these details clearly.
What type of advertising method do they use?
Another way of differentiating licensed from unlicensed lenders is paying attention to their advertising method. As per the law, people or businesses can only advertise through three channels: business or consumer directories, whether in online or print media, personal websites and boardings or banners on the business premises. You should never respond to flyers, emails, SMSes and other similar advertisements as the law prohibit these.
Where do they operate?
It is interesting to know that according to the money lending laws laid down by the Ministry of Singapore, licensed lenders must run their business from an office. The working hours are usually eight hours a day, five days a week. They are also prohibited from approving or granting a loan from a remote location. That is why you should keep close attention to the office’s address mentioned on the list and only go ahead if it has the required details, like the zip code.
Do they have the required documents?
All licensed lenders will have a set of documents to supply you when you borrow the money. One of these is the statement of account, which is sent to you via post or online communication to an email address. They should also provide you with a copy of any document related to the loan and the amount borrowed by you. At the time of the loan payment with cash, the lender is obliged to give you a receipt acknowledging the transaction, and it should include details like the amount and the date on which the lender made it.
Is there any harassment involved?
Although the law authorises lenders to recover their debts from you, any harassment is wholly prohibited. If you or your family members are stalked, sent unenclosed notices of demand, or find yourself disturbed through various means, you should immediately contact the police. However, it is advisable never to let the situation come to that by altogether avoiding an unlicensed lender.
Even though you might be in a hurry to borrow money, you should never do so from an unlicensed money lender. The information given above will enable you to recognize a reliable and trustworthy money lender from an unsafe one and ensure that the entire process is conducted safely and securely.