Moneylenders: Do’s and Don’ts When Collecting Debts in Singapore

In challenging financial times, Singaporeans often turn to family, friends, or banks for help. However, some individuals fall prey to loan sharks, who are notorious for exorbitant interest rates, unfair penalties, and intimidation. For instance, a recent report highlighted a flat in Jalan Tenteram sealed with a bicycle lock and covered in loan shark graffiti, showcasing the severe harassment associated with unlicensed lenders. Have a look at moneylender in Singapore

Licensed Moneylenders vs. Loan Sharks

When seeking urgent funds, licensed moneylenders present a legitimate alternative to traditional banks. However, loan sharks frequently pose as licensed lenders to deceive unsuspecting borrowers. Here’s how to distinguish between a licensed moneylender and a loan shark:

1. Verify Registration
   The Ministry of Law has registered legal moneylenders. The registration status can be checked in the Ministry’s website.
2. Understand Loan Terms
   Licensed moneylenders must explain the loan terms clearly and in a language you understand, including the loan amount, repayment terms, and late fees. Loan sharks often avoid clear explanations.
3. Get a Loan Contract
   A licensed moneylender provides a detailed loan contract with all necessary information. Loan sharks might not provide a contract or may require you to sign a blank one.
4. Face-to-Face Verification
   Licensed moneylenders conduct face-to-face meetings to verify your identity before approving loans. Loan sharks may approve loans remotely without proper documentation.
5. Fees and Charges
   Licensed moneylenders are capped at 4% interest per month and can only charge specific fees: late repayment up to S$60, an administrative fee up to 10% of the loan amount, and legal fees. Loan sharks often impose high upfront fees and unregulated charges.

Red Flags of Loan Sharks

Beware of these signs:

• Claiming to be licensed but not listed on the Ministry’s registry
• Sending unsolicited spam
• Charging excessively high-interest rates and fees
• Lacking a business address and engaging in harassment
• Withholding personal identification or not providing a contract
• Approving loans without a face-to-face meeting

What Licensed Moneylenders Can and Cannot Do

Licensed moneylenders must follow the Moneylenders Act, ensuring confidentiality and ethical practices. They can:

• Contact your family or friends
• Negotiate repayment terms

They cannot:

1. Harass or intimidate
2. Stalk or monitor movements
3. Cause physical harm or vandalize property
4. Seize assets without a court order
5. Engage in unlawful assembly

Seeking Help

If you face harassment or intimidation, consider:

1. Alerting Authorities: Contact the police for protection and advice.
2. Filing a CCAS Complaint: If the lender is a CCAS member, they can mediate disputes.
3. Negotiating Repayment: Discuss a feasible repayment plan with your lender or through mediation.
4. Contacting the Registry: File complaints against unfair practices or seek resolution through the Small Claims Tribunal or Court.

For debt relief, options include:

• Filing for Bankruptcy: For debts over S$15,000.
• Debt Repayment Scheme (DRS): For debts up to S$100,000, with a repayment plan over five years.

Seek guidance from Credit Counselling Singapore or other agencies to manage your debt effectively and avoid loan sharks.