Unauthorized moneylenders are always looking for people who are in a crunch for cash. It seems they are even on Whatsapp pretending to be licensed moneylenders, ready to give you a loan when you need it to pay your bills. Given that they can charge exorbitant interest rates and abuse the borrowers into repaying their funds, it’s no surprise they are so eager to find their next victims.

However, it is when you are the most desperate for money that you should exercise the most caution. Taking a loan from an unauthorized moneylender can be a deal with the devil that can ruin your life in many different ways. Here, we discuss a few pieces of evidence on why unauthorized lenders are still real threats to consumers in Singapore, and what alternatives they can use when they really need cash quickly.

Yes, unlicensed moneylenders will still harass you

The Singaporean government and its police force have done an amazing job reducing the activities of UMLs in recent years. After hitting its peak in 2009, UML related harassment cases have dropped by 80% to 3,375 per year in 2016, thanks to the law enforcement’s heavy crackdown. However, the recent arrests of loan sharks in Bedok and Balestier, shaming of borrowers on social media and even setting fire to borrower’s homes are sober reminders of how real loan sharks still are in Singapore today. If there still are thousands of harassment cases that are being reported, then there must be thousands more that are occurring without public’s knowledge.


If anything, this is one of the most important reasons why you need to stay away from unlicensed moneylenders no matter what. If you borrow from them, you likely will be putting yourself and your loved ones at risk.

You will likely never pay your loan back

As if that’s not enough, loan sharks charge such a high interest that you may never be able to fully escape your debt. There’s a story of a woman whose loan skyrocketed from S$250 to S$400 in just a week. Such a case would imply that her lender was charging a weekly interest of 60%, which would translate to a daily rate of 8.6%. If we compound that on a daily basis for a month, that would represent a monthly rate of almost 1,000%! If she waits two months before repaying her loan, her balance would’ve ballooned to over S$30,000. How will anyone repay such a loan ever, especially if you borrow more than a few thousand dollars? Worse, as your balance grows exponentially and you don’t have enough cash to pay them back, they could come claim your belongings and leave you without any possession left. If they are willing to set fire to your building, what wouldn’t they try?

There are realistic alternatives for quick cash

The good news is that there are legitimately better alternatives for people who need to get money quickly. The cheapest option, of course, is to borrow some from your friends and family, who are unlikely to charge you any interest. If that’s not an option, a personal loan from a bank is a perfectly reasonable alternative as well. For example, HSBC has one of the best personal loan offerings available in Singapore with a monthly interest rate lower than 1% and can provide a loan to you within 24 hours.


If you don’t make S$24,000 to S$30,000 per year, however, a bank may not be willing to lend to you. In those cases, you can still access loans from pawnshops at decently low rates. If you don’t have anything valuable to pawn, even licensed moneylenders and credit cards to have much lower interest rates than a loan shark.

Always check the legitimacy of your lender

If you’ve considered all your options and going to a moneylender is your only option left, you should still proceed cautiously. Simply asking someone if they are a licensed lender is just not enough.

Personal loan lenders are in business to make money on the interest they charge borrowers. Therefore, both licensed and unlicensed lenders will be willing to say almost anything to get you to borrow from them. However, it should always ring an alarm in your mind if a lender rushes and pressures you to take out a loan. High-pressure tactics are a hallmark of personal loan scams. If you’re being pressured into signing a loan application or handing over your personal information, it might be time to seek out a different lender.

Instead, you should always be sure to check if the dealer you are speaking with is one of the licensed lenders designated by the government. There are only about 160 licensed moneylenders in Singapore, and a list of them is easily available here.

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ValuePenguin is personal finance company based in New York. DJ is responsible for building ValuePenguin's presence in Asia, from researching personal finance topics in the region to building relationships with financial and media institutions. He previously worked as an investment analyst at leading hedge funds in New York including Cadian Capital and Tiger Asia. His expertise is in the global technology, consumer and financial industries. He graduated from Yale University with a degree in Economics, and speaks Korean, English and Mandarin Chinese.
SVP @ ValuePenguin
ValuePenguin.com is a personal finance website that conducts in-depth research and analysis on a variety of topics from credit cards, loans, insurance, budgeting to investing.


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