5 Tips to Spot Illegal Money Lenders, Loan Sharks in Singapore

Woman Receiving Money

No matter how desperate you are for money in Singapore, avoid ah longs at all costs.

Ah longs, loan sharks, or unlicensed moneylenders continue to prey on many Singaporeans. Once you’ve engaged with them, there’s no turning back. They are usually members of crime syndicates, so there’s no guarantee that they’ll stop collecting money from victims even if they have paid their debt.

In this article, we’ll give you five tips to spot illegal money lenders and how to deal with them.

Legal Money Lenders Don’t:

1. Offer Loans Via SMS, WhatsApp, Flyers, And Emails

With the rise of newer technologies, loan sharks in Singapore have also expanded how they lure unsuspecting individuals to become their borrowers.

Turn down any attempts by alleged money lenders offering a loan through SMS, WhatsApp, cold calls, flyers, and e-mails. These modes of communication are not permitted under current advertising rules.

The Ministry of Law regulates moneylending activities in Singapore and has only allowed moneylenders to advertise their business through the following channels:

  • Business or consumer directories in print or online media
  • Internet websites belonging to the money lender
  • Advertisements placed within or on the exterior of the approved place of business

If you encounter a loan shark or a licensed moneylender using advertising tactics besides the three means enumerated, report them to the Registry of Moneylenders.

2. Charge Higher Than 4% Interest Rate Per Month

Loan sharks offer promising amounts of money to potential borrowers without disclosing their exorbitant interest rates. Borrowers are trapped into paying even more debt and become unfortunate victims of threats and violence.

The maximum interest rate that a moneylender in Singapore may charge is 4% per month. The same cap applies to the rate that a money lender can charge on late payments.

3. Ask For A Loan Processing Fee Before Approving Your Loan

When dealing with a moneylender, a huge red flag is when it asks you for a loan processing fee before it approves your loan.

This is a common tactic that loan sharks employ under the guise of a legitimate collateral or admin fee that all money lenders in Singapore ask for.

However, under the law, licensed moneylenders in Singapore can only charge the following fees:

  • An upfront loan approval fee of up to 10% of the principal amount, which must be deducted and charged only after the loan is granted
  • A late payment fee not exceeding $60 for each month of late repayment
  • Legal costs in the event of a court judgment relating to the recovery of a loan

4. Grant Your Loan Online

Moneylenders in Singapore are permitted to have a presence online through their respective websites, where you can access information about their loans and even start the application process by filling in their loan application form.

However, this does not mean that a licensed moneylender can grant loans online, such as through email or Whatsapp. Loan sharks will entice you to borrow with them because of this convenient feature and even send you money remotely.

Money lenders must still process your documents and follow the prescribed procedure by the Ministry of Law. They must verify your identity in person and explain the loan contract’s terms and conditions before you can sign your papers and secure your loan.

5. Grant You A Loan Without Considering Your Income

Money lenders in Singapore may have more lenient requirements than other financial institutions, but this doesn’t mean that they will give out money to any person who asks for help.

Although credit scores will have little bearing on whether you can secure a loan from money lenders, you won’t be qualified to receive a loan in the first place if your monthly income doesn’t meet the minimum required. This can only be established through the documents you submit that they will process and verify to ensure your ability to repay the loan.

How to Deal With Loan Sharks?

Avoid dealing with unlicensed moneylenders by refusing to engage with them in the first instance. Please take note of our five tips and other red flags reported by the media and authorities.

If you’re unfortunately stuck in a situation with a loan shark already, remember to keep calm to prevent making any rash decisions that can hurt you even more financially. Don’t cave into their demands to make further payments.

Call the police at 999 or through its X-Ah Long hotline at 1800-924-5664, especially if your life and property are being threatened or attacked.

You should also file an online complaint with the Registry of Moneylenders or call 1800-CALL-LAW (1800-2255-529).

Why Take a Loan from Licensed Moneylenders

They are governed by the law.

The Ministry of Law thoroughly vets licensed moneylenders before they are granted the license to operate and offer their services to the public. This will ensure that your loan transaction and any form of recovery will be legal.

Interest is calculated using the remaining balance, not the original principal.

With money lenders, your interest payments will decrease as you approach the end of your loan term.

Under current regulations, the amount of interest to be paid during each instalment is calculated by multiplying the interest rate with the amount of principal remaining after deducting the total payments made so far.

For example, if you secure a loan valued at $10,000 and have paid $6,000, the interest payment will be computed by multiplying the rate stated in the contract to $4,000, which is the remaining balance.

Approval procedures are quick.

It can take days before banks can finish processing and approving loan applications. Due to more relaxed requirements, money lenders in Singapore can approve and release loans within 30 minutes. This feature can be advantageous when you’re dealing with an emergency.

Lawful collection procedures

There have been too many media reports of unruly methods used by loan sharks to demand payment. They resort to violence and harassment tactics against delinquent debtors, their families, and even the people who live in the same neighbourhood.

For many, the most important reason to avoid loan sharks is safety and peace of mind. A licensed moneylender will follow legal methods and processes to demand payment. Borrowing from the top trusted lenders in Singapore guarantees that you won’t have to fear for your life and your loved ones.


Times have been tough for everyone during the past year, but it is no reason to seek money from a loan shark and risk losing even more stability and security.

If you need any financial help, there is no shortage of legal and safe lenders in the market.

A1 Credit, one of the most trusted licensed moneylender in Singapore, will offer you the right loan according to your needs. We aim to provide the most competitive interest rates and flexible repayment schemes to grant you the financial security you need.

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