Need a Personal Loan? Don’t Borrow Money from a Loan Shark


Ah longs are known for providing fast and easy loans, ideal for borrowers with bad credit. However, these loan sharks are also notorious for their exorbitant rates. So, if you’re looking for a low-interest loan in Singapore, it’s best to stay away from ah longs.

Ah longs charge an interest rate of more than 4 per cent, which is the maximum rate legal moneylenders can impose, according to the Ministry of Law.

Other than their unreasonably high interest, loan sharks follow more suspicious practices. These questionable actions make it difficult for you to repay what you owe, putting you in more debt.

Here are five reasons why you should never get a personal loan from an ah long.

They keep you in the dark about your repayment history

Loan sharks aren’t transparent with your repayments. Most of them also don’t provide you with a paper trail of your repayment history. This tactic gives them an advantage since they can easily deny your claims of payment.

If you aren’t keeping track of your repayments, loan sharks can keep insisting that you pay the loan amount plus the interest, even if you’ve already paid everything off.

They charge a processing fee before approving your loan

If a moneylender asks you for any upfront fee before your loan is approved, that’s a red flag. Ah longs usually reason that this fee is a mandatory initial payment, such as an admin fee or loan processing fee. Some even justify it by saying it’s collateral due to your bad credit.

All those reasons are lies. The Ministry of Law clarifies that Singapore moneylenders can only charge an admin fee after the loan is approved. Even then, the fee is capped at 10 per cent of your loan amount. Legal moneylenders deduct the admin fee from your principal amount, so it’s not supposed to be an additional charge.

They don’t draw up a loan contract

Not drawing up a loan contract aligns with loan sharks’ strategy of keeping you in the dark. The loan agreement is meant to explicitly state the amount you borrowed and the terms you’ve agreed upon.

If you don’t have a copy of the contract, the ah long can change terms suddenly so that the situation favours them. For instance, they can increase the interest rate without notice and make up a reason to justify the hike.

Some loan sharks do give you a loan contract, but they have hidden terms to force you to pay more. One common example is the early repayment penalty. This clause demands an extra sum if you paid off the loan earlier than the pre-planned date. It ensures that the ah long profits from your loan.

Although early repayment penalties are common with banks, the difference with loan sharks is that they don’t tell you about the additional charge.

They make you believe you have no other options

Borrowers who need money fast are the common victims of ah longs. Loan sharks often promise quick approvals and disbursements to tempt you into borrowing from them. They’ll reason by saying that banks and financial institutions will make you go through piles of paperwork, which is something loan sharks don’t have.

Don’t bite the bait. If you need quick cash, you can look for legitimate money lenders who process loan applications within 24 hours. If you have poor credit scores, there are also licensed lending companies that cater to this group of people.

They might harass you

Lastly, loan sharks resort to malicious ways to ask for repayments. Some of their common forms of harassment are splashing paint on your door and scrawling graffiti on the walls of your house. Some of them are not above damaging your property, putting chains on your gate or threatening bodily harm.

Even amid the COVID-19 pandemic, loan sharks have found a new way to harass borrowers. During the circuit breaker in Singapore, some ah longs used food delivery services to order large amounts of food. They’ll have it delivered to the debtors’ homes or even to their relatives, often late at night.

No matter how urgently you need cash, it’s in your best interest to borrow your personal loan in Singapore from a legal moneylender. Even if ah longs can approve your loan faster, it’s not worth the potential consequences you can experience. Licensed moneylenders offer reasonable loan terms, stay transparent about your repayment history and abide by the Ministry of Law’s rules.

If a loan shark is harassing you to get a loan from them, report them to the Registry of Moneylenders.

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