Needing money sometimes comes with a sense of urgency, especially when it comes to unexpected expenses. When borrowers exhaust all means of acquiring funds, some may turn to loan sharks. In Singapore, loan sharks operate illegally, and borrowers must be cautious about being lured into this kind of transaction. In this blog, we will discuss what is a loan shark, how they operate, the consequences that come with taking such loans, and how to avoid these kinds of situations.
What is a Loan Shark?
A loan shark is an unlicensed moneylender who provides quick loans, usually at high interest rates without formal loan documents, or under fraudulent terms. Loan sharks are illegal in Singapore, and dealing with them can lead to severe financial, physical, and emotional consequences.
How do Loan Sharks Operate?
Loan sharks usually approach potential borrowers informally through online classified ads, flyers, directly at stalls or public areas, or Unlicensed money lenders use SMS, WhatsApp, or other online channels to offer loans. They offer quick cash loans with no credit checks, making them a go-to solution for those who need cash fast. They charge exorbitant interest rates that sometimes go beyond the legal limit, the borrower makes late repayments or fails to pay on time an additional fee of over 4% per month and if borrowers cannot pay, they threaten them with physical harm or harassment.
What are the Consequences of Dealing with Loan Sharks?
The consequences of borrowing money from loan sharks are severe and far-reaching. The borrower, their family, and friends are at high risk of harm from both physical and harassment threats. Borrowers can also experience financial ruin, plunging them deeper into debt. They can also face legal action or prosecution as they are committing an offense by dealing with loan sharks. In extreme cases, loan sharks can take over their debtors' property, including homes and businesses.
How to Avoid Dealing with Loan Sharks?
The best way to avoid dealing with loan sharks is by borrowing from legal moneylenders, banks, or seeking assistance from the government. Legal moneylenders are accredited by the Ministry of Law and must adhere to strict regulations set in place to protect borrowers' interests and welfare. Moreover, the government also provides assistance to those who require financial aid through the various financial assistance schemes.
How to report loan sharks or unlicensed moneylenders
Report possible unlicensed moneylending activities to the Police hotline at 1800-255-0000 or submit the information online at www.police.gov.sg/iwitness. Members of the public may also call the National Crime Prevention Council’s X-Ah Long hotline at 1800-924-5664.
Source: https://rom.mlaw.gov.sg/information-for-borrowers/list-of-licensed-moneylenders-in-singapore/
In conclusion, loan sharks are not a legitimate means of obtaining quick cash in Singapore, and borrowers must avoid them at all costs. They operate illegally, charge exorbitant interest rates and their collection methods are often harmful.
Borrowers should explore credible lending options and seek advice from relevant authorities before making any borrowing decisions. With the right information, borrowers can protect themselves from being victimized by loan sharks and achieve financial stability without risking their safety.
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