You will be able to spot an illegal loan offer and explain why borrowing from one is never a way out.
Two weeks after his search for a fast loan, Kumar started getting messages. A WhatsApp from an unknown number: "Hi boss, need cash? Low interest, fast approval, no need payslip." An SMS the next day with a different name and the same promise. A call during lunch from someone who already knew his first name. None of them came from a lender he had contacted. All of them came from people who guessed, correctly, that he might be desperate.
Lesson 8.1, How to check a moneylender is licensed, showed that licensed moneylenders are not allowed to market this way. This lesson is about who is behind these offers, what happens to people who reply, and what to do instead.
Licensed moneylenders in Singapore may advertise only through approved channels, such as their own websites, directories and their own premises. They may not send you an SMS or WhatsApp, approach you on social media, or cold-call you.
So you can treat any loan offer that reaches you unasked, by SMS, WhatsApp, a social media message or a phone call, as coming from an unlicensed lender, or from a scammer posing as one. You don't need to research the name or check the list. The way it reached you is enough. Phrases that sound helpful, such as no payslip needed, no credit check, bad record also can, are a further sign that whoever sent it is not following the rules a licensed lender has to follow.
Unlicensed moneylenders are often called loan sharks, or "ah longs" in Singapore. Some offers are not even loans. They are scams that ask for an upfront "processing fee" or "deposit" and then disappear.
Loan sharks charge rates no licensed moneylender is allowed to charge, with terms that can change after you have borrowed. A small loan can grow quickly through weekly interest, rollover fees and penalties, until the amount demanded bears no relation to what was borrowed. The contract, if there is one, does not protect you.
Collection is where the real harm happens. Loan sharks have been known to harass borrowers and the people around them: repeated calls and messages to family and colleagues, threats, and damage to the borrower's home or the homes of relatives, such as splashed paint or locks glued shut. Neighbours and family members who borrowed nothing get pulled in.
None of this is a way out of debt. It is a worse debt, with no limit on cost and no rules on collection. If you are in debt trouble serious enough that a loan shark looks tempting, it is serious enough for Credit Counselling Singapore, from lesson 7.3, When to call a credit counsellor, and what they can do.
Some unlicensed lenders and scammers ask for more than repayment. They ask for your bank card and PIN, your Singpass login, your internet banking details, or for you to open a new bank account and hand it over, sometimes in exchange for reducing your debt.
Never do it. A bank account controlled by someone else can be used to receive and move the proceeds of crime, including money from scam victims and from other loan shark borrowers. The person whose name is on the account is a money mule, and allowing your account to be used this way can expose you to criminal investigation, as well as losing control of your own money. Your Singpass gives access to government services, CPF and much more, so handing it over puts far more at risk than the loan.
A licensed lender has no reason to ask for your Singpass password, your PIN or control of a bank account. Anyone who asks for those is not a lender you should deal with.
When an offer like Kumar's arrives, the steps are straightforward. Don't reply, not even to say no, because a reply confirms the number is active. Don't click any link in the message. Keep the message, take screenshots that show the number and the content, and then block the number.
Report illegal moneylending to the Singapore Police Force. The police website and the ScamShield app explain the current ways to report, and if you are being threatened or harassed, or anyone is in danger, call the police straight away. Keep every message, call log and photo as evidence, with dates.
If you have already borrowed from a loan shark, the advice is the same: stop dealing with them, keep the evidence and go to the police. Then contact a credit counsellor about the debts that led you there.
Kumar reported the WhatsApp number and blocked it. He did the same with the SMS. When his mother received a similar message a week later, he showed her what to do.
Messages like these tend to arrive when people are already worried, and that is when clear thinking is hardest. It is easier to follow steps you have written down on a calm day than to work them out with the message open on your phone.
Write the steps you would take if a loan offer arrived on WhatsApp today, from not replying to reporting it.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).