No matter how hard we try to save up for a big purchase, we’ll often eventually borrow money to pay it off.
Whatever the purpose, be it for a startup company or a new car, you may feel tempted or forced by financial difficulties to approach unlicensed moneylenders or loan sharks offering to lend money at too-good-to-be-true terms.
More often than not when you do so, you’ll probably experience harassment from the loan shark, especially if you can’t pay off the loan in time.
But why do many people still fall victim to them? When there aren’t too many options available, and we find ourselves in financially difficult times, the allure of lending from loan sharks becomes all the more tempting.
But we’re here to help. If you’ve unknowingly borrowed money from a loan shark and find yourself in hot water, legal remedies are available.
This guide discusses loan shark harassment and what you can do to protect yourself.
1. What Are Loan Sharks?
A loan shark in Singapore refers to an unlicensed money lender who operates illegally without registration under the Ministry of Law’s Registry of Moneylenders.
The Ministry of Law’s Registry of Licensed Money Lenders oversees the activities of these moneylenders, ensuring transparency and fairness in their lending operations.
These illegal money lenders prey on vulnerable individuals, promising easy access to funds but trapping them with exorbitant interest rates and unreasonable fees.
Just like their namesake, loan sharks use predatory tactics to lure borrowers in. While it may seem like a quick solution for those in financial difficulty, borrowers often find themselves unable to repay the loans due to the exorbitant interest and hidden charges.
Unlicensed moneylenders, commonly known as “Ah Longs,” often disguise themselves as licensed moneylenders to deceive innocent Singaporeans, permanent residents, or foreigners.
These loan sharks will charge exorbitant interest rates far beyond what is legally allowed and threaten borrowers with harassment if they fail to repay their debts.
Dealing with a loan shark can quickly become a nightmare. Many borrowers may feel trapped, especially after falling into their web of manipulation.
Whether you knowingly or unknowingly borrowed from an “Ah Long,” escaping their harassment can seem impossible. They may even compel you to take out additional loans just to repay existing debts, further deepening the financial burden.
2. Difference Between Licensed And Unlicensed Money Lenders
According to the Moneylenders Act — which regulates all activities related to money lending — a licensed money lender is someone who can legally lend money through a licence.
Licensed money lenders can also be excluded or exempt lenders under the law. A pawnbroker is an example of an excluded moneylender licensed under the Pawnbrokers Act.
Meanwhile, exempt money lenders have been exempted from the law, as per the Singapore Government’s discretion.
Those without a licence or who do not fall under such definitions may be loan sharks. You do not want to deal with or engage with them at all costs, no matter how hard they try to appeal to your emotions.
3. What Are Some Signs You’re Dealing With Loan Sharks?
The Singapore Police Force continually cracks down on illegal money-lending activities in the city. In June 2022 alone, they charged 36 people for their involvement in illegal lending.
Many of them were captured in different locations around Singapore, such as Bukit Batok, Bishan, and Tampines.
Meanwhile, almost 200 people are still under police investigation for offering loan shark assistance by conducting ATM money transfers.
Fortunately, spotting a loan shark isn’t as difficult as it seems. They operate very specifically in apparent means.
Here are some tell-tale signs of a loan shark so you won’t have to borrow money from any of these people:
They Provide Very Limited Details of Their Identities In Their Ads Through Flyers, Email, And SMS
You’ll know you’re dealing with a licensed money lender if you discover their services through the following ways and yet cannot find much if any information of their company name, registered business address or money lending licence number:
- Business or consumer directories, either print or online
- Websites which belong to the licensed money lender
- Advertisements plastered within or outside the approved establishment. For example, a licensed money lender may place their ad on a glass door or inside their building.
However, if someone attempts to offer a loan through flyers scattered in different areas such as text messaging, and unsolicited email and there’s very little or no information allowing you to identify their actual identity, name, business address or registration number, there’s a likelihood they’re a loan shark.
They may be trying to attract and trick unsuspecting people into borrowing money from them.
The Moneylenders Act specifically prohibits them from badgering and soliciting unsuspecting victims, and as such, you must not deal with them.
They Will Offer Any Loan Amount
If you take out a loan from licensed creditors, you will usually be offered a specific loan amount, which you will need to pay off through monthly repayments.
As proof of your (the debtor’s) capacity to pay off the loan, the creditor will secure documents such as income tax returns, payslips, etc.
On the other hand, loan sharks won’t usually ask for these documents from you.
Instead, they will offer to lend any amount, no matter how high the value is. There is no limit to how much you can borrow, which strictly defies the limits outlined by the Ministry of Law.
For example, if you’re a Singapore citizen or PR (Permanent Resident) earning an annual income below $10,000, you can only borrow $3000. If you’re a foreigner, you’re only entitled to $500.
Meanwhile, a loan shark or an ah long won’t care about your monthly income. They will likely target low-income earners who obviously won’t be financially capable of paying off what they’ve borrowed.
They Will Charge You Sky High-Interest Rates
When dealing with a loan shark in Singapore, you’ll often find their loan offers seem too good to be true. However, this comes with significant risks.
Loan sharks are known to charge exorbitant interest rates and demand repayment at any time, leaving their victims in severe financial distress. These unlicensed money lenders do not adhere to the legal limits set by the government, making their loans unpredictable and dangerous.
Licensed money lenders in Singapore are regulated and can only charge a maximum interest rate of 4% per month on the loan principal, including late payment fees.
Late fees are capped at $60 per month, and any additional charges beyond this amount are illegal. Additionally, licensed money lenders cannot demand further payments for debts that are not yet due.
In contrast, loan sharks often charge exorbitant interest rates far beyond the legal cap, leading to spiralling debt that is nearly impossible to repay. If a money lender charges above the 4% maximum interest rate, they are operating illegally as a loan shark.
Moreover, there is a cap on the amount individuals can borrow for unsecured loans, especially for permanent residents and foreigners living in Singapore. This regulatory limit exists to protect borrowers from excessive debt.
If you encounter a lender who violates these rules, it is best to assume you’re dealing with a loan shark and take immediate steps to avoid further entanglement.
They Didn’t Let You Sign A Loan Contract
One of the major red flags when dealing with a loan shark is the absence of a proper loan contract. Legitimate, licensed moneylenders are required by law to provide a contract that outlines all key terms and conditions of the loan. This protects both the borrower and the lender, ensuring transparency and fairness.
A legitimate loan contract will include:
- The loan amount
- The interest rate
- Loan tenure and repayment schedule (whether weekly, fortnightly, or monthly)
- Fees, charges, and all relevant terms
If a money lender does not provide you with a proper contract or gives you an incomplete one to sign, they are likely an unlicensed money lender. Be cautious, as loan sharks typically avoid formal documentation, leaving borrowers vulnerable.
Some loan sharks might offer vague or blank contracts and later fill in the details as they see fit, putting you in an extremely precarious situation where they can adjust the repayment schedule at will.
Additionally, loan sharks will often use aggressive tactics to collect debts, including loan shark harassment, which can involve threats, vandalism of your business premises, or even physical intimidation.
To avoid these dangers, thoroughly read and understand the loan contract before signing with any licensed lender. This contract will outline your obligations and protect you from unexpected changes or demands from the lender.
If you find yourself in a situation where you are dealing with a loan shark and have not signed a proper contract, seek legal help immediately to solve loan shark problems.
Do not continue making payments without understanding your rights, and always be cautious when dealing with unlicensed money lenders.
They Will Charge You Hidden Admin Or Processing Fees
Remember that licensed moneylenders won’t charge you any fee until after they approve your loan or deposit the agreed amount to your account.
But if the “lender” is already asking for processing or admin fees before approving or processing your loan, there’s a 100% chance they’re a loan shark.
You must also understand that moneylenders can only charge a maximum of 10% in admin fees, but this only applies after approving the loan. The 10% will be deducted from the principal loan amount.
Loan sharks will mislead you to borrow money in high amounts through these hidden charges. Be keen on spotting such discrepancies to avoid falling prey to the hands of loan sharks.
4. How Do Loan Sharks Harass You?
Learning how to spot a loan shark from a legal creditor from the get-go is the best preventative measure you can take. Loan sharks will do every possible and illegal thing to force you to repay the loan.
Here are some ways loan sharks illegally get back money from their victims through force, coercion, physical violence, harassment, etc.
Physical Assault
Physical assault is one of the most common methods loan sharks do to claim the money.
Just recently, in August 2022, Singapore Police were alerted of an assault case involving three men involved with loan shark activities.
Loan sharks often hire goons to incite physical violence against people who lent money from them. They may punch, kick, or render the debtor unconscious. They may even use firearms to threaten the victim.
If any of these occasions cause severe injuries and bodily harm to the debtor, it can be considered a criminal offence under the Penal Code. The suspected perpetrator can be fined up to $50,000 or be imprisoned for up to 10 years.
Property Vandalism
Loan sharks may also vandalise your property with graffiti, subliminal messages, or by destroying parts of it. Similar to physical violence, vandalism is also penalised under the Vandalism Act.
For example, loan sharks may splash paint over your home or explicitly plaster a notice of collection. First-time offenders often receive a $2,000 fine, a three-year prison term, or even six strokes (caning).
Force Of Threat And Intimidation
Aside from vandalism and physical violence, loan sharks can claim their debtors’ dues through threats and intimidation.
Section 503 of the Penal Code states that criminal intimidation happens if someone “threatens another with any injury to his person, reputation, or property…”
Loan sharks may threaten you by sending you messages laden with profanities or verbally threatening you via phone calls.
Physical violence and threat/intimidation may also go together. For example, a loan shark’s intent to hurt you can be a threat. In this case, they may also be charged with harassment, as outlined in the Protection From Harassment Act.
Loan sharks can face a $5,000 or a six-month prison term for threatening their victims. Meanwhile, inciting fear or violence may also get loan sharks fined up to $5,000 and a 12-year prison term. The penalty may double for repeat offenders.
Stalking
Police can only charge loan sharks for stalking if the act repeatedly occurs over an extended period. Unlawful stalking usually happens in multiple instances.
It may also accompany other actions, such as harassment, violence, vandalism, etc.
For example, a loan shark may tail you everywhere you go or stake out your place of residence.
If charged, loan sharks can face a $5,000 fine, a one-year prison term, or both. Repeat offenders can be punished by a $10,000 fine, one-year imprisonment, or both.
5. How To Stop Loan Shark Harassment In Singapore?
If you are dealing with loan shark harassment in Singapore, it’s crucial to take immediate steps to protect yourself. Loan sharks often use intimidation, threats, and violence to force repayments, but there are practical steps you can take to stop the harassment and protect your safety.
How To Report Loan Sharks In Singapore?
If you are being harassed by a loan shark in Singapore, the first step is to report the matter to the authorities. You can file a police report or contact the National Crime Prevention Council’s X Ah-Long hotline. These authorities will take your complaint seriously and provide the necessary protection.
Here are the helplines to report loan shark harassment:
- X Ah-Long Hotline: 1800-924-5664
- Police Hotline: 1800-255-0000 or call 999 in emergencies
- Registry of Moneylenders (ROM): 1800-2255-529
If the harassment involves a licensed money lender, you can submit a complaint with the Registry of Moneylenders to report any misconduct. Licensed money lender harassment is illegal, and authorities will take appropriate action to resolve the issue.
It is crucial to report loan shark harassment immediately to seek protection. Don’t hesitate to contact the police or hotline if you suspect anyone is involved in illegal money lending activities.
Stop All Payments To The Loan Shark
Once you have confirmed that you are dealing with a loan shark, you should stop all payments immediately. Unlicensed lenders have no legal right to collect debts, as lending money without a licence is illegal. After reporting the case to the authorities, cease all contact with the loan shark.
Avoid responding to their phone calls, messages, or any attempts to reach you. Engaging with them puts you at further risk of harassment and intimidation. Deal with loan shark problems by cutting off all communication and refusing to make any more payments.
If you also receive unsolicited contact or marketing messages from a money lender, it’s important to report these to the ROM at 1800-2255-529. You have the right to be protected from these illegal activities.
Make An Application Under The Protection From Harassment Act
Another option is to apply under the Protection from Harassment Act (POHA). This law criminalises harassing and stalking behaviours and allows victims to apply for a Protection Order against their harasser. The act also provides victims with the opportunity to sue the harasser for compensation.
However, this can be challenging if the loan shark does not reveal their identity, as they often operate in secrecy to avoid being caught. On the other hand, reporting a licensed money lender is generally easier because their identities are registered online with the Ministry of Law, as required by law.
If you know the identity of the money lender, you can proceed with the application to stop the harassment and secure legal protection.
Don’t Give In To Their Abuse And Harassment
It’s understandable to feel scared or intimidated when faced with loan shark harassment, but it’s important not to give in to their threats or abusive behaviour.
Succumbing to their pressure will only make the situation worse. Loan sharks may try to manipulate you into using your ATM card or disclosing other personal details. However, doing so can get you into legal trouble for assisting in an illegal activity.
Remember, the more you yield to their demands, the more aggressive they can become. Stand firm and avoid engaging with them, as dealing with loan sharks directly is dangerous and could lead to further harassment. Instead, seek legal protection by reporting the harassment to the authorities.
Change Any Compromised Personal Information
If you suspect your personal information, such as phone numbers or addresses, has been compromised due to loan shark harassment, it’s important to act quickly.
Change any sensitive information, including account log-ins, to protect yourself. Additionally, if loan sharks are coming to your home to harass you, consider temporarily relocating to ensure your safety.
Taking swift action to change your compromised details will help minimise the risk of further harassment and give you peace of mind.
Seek Help From The Credit Collection Association Of Singapore
If you are dealing with a licensed money lender and struggling with repayments, you can seek assistance from the Credit Collection Association of Singapore (CCAS). CCAS can mediate the situation between you and the lender, helping you negotiate a new repayment plan to ease your financial burden.
However, it’s important to note that CCAS can only assist if the licensed money lender or debt collection agency is a member of the association. If you are dealing with a loan shark or unlicensed money lender, CCAS cannot provide help.
If you are facing financial difficulties or harassment from a money lender, don’t hesitate to reach out for help from these resources:
- Credit Counselling Singapore: 6225-5227 (www.ccs.org.sg)
- National Council on Problem Gambling: 1800-6-668-668 (www.ncpg.org.sg)
- ComCare: 1800-222-0000 (www.msf.gov.sg/comcare)
Seeking help early can prevent the situation from escalating further and provide the support you need to resolve the issue safely.
6. Punishment For Loan Sharks In Singapore
Loan sharks in Singapore face severe legal consequences for their illegal activities. The government takes a strict stance against illegal money lending to protect borrowers and prevent exploitation.
Loan shark harassment and other related crimes are punishable by law, and offenders can face hefty fines, imprisonment, and corporal punishment.
For first-time offenders found guilty of harassment linked to loan shark activities, the punishments include:
- A jail term of up to five years
- Three to six strokes of the cane
- Fines ranging between $5,000 and $50,000
The Singapore government is highly committed to cracking down on loan sharks to deter illegal money lending practices. Beyond the initial punishment, repeat offenders can expect even harsher penalties, including longer imprisonment terms, heavier fines, and more strokes of the cane.
It’s also important to note that borrowing from a loan shark is illegal. Assisting a loan shark in any capacity—such as using your personal details or ATM card for their transactions—can get you into legal trouble. First-time offenders who are caught helping loan sharks can face the same penalties:
- Up to five years in jail
- Three to six strokes of the cane
- A fine between $5,000 and $50,000
These strict penalties reflect the government’s zero-tolerance policy toward illegal moneylenders and those who support them. By imposing harsh punishments, Singapore aims to deter loan shark activities and protect the public from their harmful practices.
Conclusion About Loan Shark Harassment In Singapore
Many are still unaware that they’re dealing with a loan shark. But by understanding the systematic methods by which loan sharks operate and how they intimidate their victims, many individuals can avoid complications in the future. If you’re being harassed by loan sharks, it’s a good idea to get a criminal lawyer in Singapore.
If a loan shark has approached you and you need legal help, contact Tembusu Law. We’re a law firm in Singapore committed to providing our clients with tailor-fit legal services that meet their needs.
It is illegal and a good lawyer can help you understand your rights and options, as well as represent you in court if necessary. They can also help you negotiate a resolution to the situation and protect you from further harassment.
For family-related legal matters, including divorce, our divorce lawyers in Singapore are also available to assist with any related issues.
Hence it’s important to act quickly and take the necessary steps to protect yourself.
Get your free 30-minute consultation now and learn how we can assist you in your case.
Frequently Asked Questions About Loan Shark Harassment In Singapore
How Do I Stop Loan Shark Harassment In Singapore?
You can file a police report by dialling 999 or calling the X-Ah Long at 1800 924 5664. You may contact these numbers if you suspect anyone is involved with illegal money lenders or loan shark activities.
Is It A Crime To Borrow From A Loan Shark In Singapore?
If you borrow from a loan shark, you won’t get in trouble with the police. Remember you’re the victim in this situation, and you won’t be criminally liable.
What Happens If You Can’t Pay A Loan Shark In Singapore?
As a debtor or lender, you’re not legally bound to pay the loan shark. Instead, you can take legal action against them with the help of a lawyer.
How Do I Report Loan Shark Harassment?
If you suspect you’re dealing with a loan shark and they have begun making threats to your life, the best course of action is to call the police. You may also report suspected loan sharks to the Registry of Moneylenders at 1800 2255 529.