- November 23, 2021
- |Legal Moneylender
- 0
People take loans when they are already in a financial pinch, and falling for scams during such times only worsens the situation. Does that mean you have to push through with little money and not take a loan since you might be scammed? Not really. All we ask you to do is be smart while taking a loan and back out of any transactions that seem suspicious. And here’s how you can do that to avoid falling prey to loan scams.
Check Their License
The government mandates that every lender in the country must have a lending license. So, when approaching money lenders, your first step must be to check their licenses. You can often find their license number on their website, and if it’s not there, you can simply call to ask them. Once you have their license number, you should then cross-check the number on the Registry of Moneylenders website.
Beware of Lax Credit Checks
Money lenders naturally focus on your credit score and performance to gauge your financial maturity and just how likely you are to repay the loan. However, loan scammers don’t usually focus on your credit score since they typically don’t disburse money to you. So, if you get an email that says you can get an instant loan without a credit check, or if the money lender does not check your credit, it’s a red flag that you must not ignore.
Verify Their Address
Money lenders have concrete contact details and a physical location where their office is based. This information is readily available on their website and other online loan portals. On the contrary, scammers will never divulge their actual physical address to evade legal action from you. However, there have been cases of scammers that provide the addresses of legitimate lenders. The only way to be sure is to show up at the physical office of the licensed money lender in order to do loan processing.
Be Wary of Urgent Offers
While many companies use urgency in their offers to get business from you, financial institutions do not. Thus, if you get an email that says you have to apply for a loan immediately to get the best interest rate or more money, you need to be wary. Legitimate money lenders have standard rates that hardly change for anyone, and they disburse money based on your creditworthiness and personal income. The urgency, in such cases, is merely a tactic to push you to apply for the loan without thinking.
Look Out for High Processing Fees
Did you know that money lenders in Singapore never ask you to pay a single penny before the actual loan amount has reached your bank? So, if any supposed money lender approaches you and asks you to pay processing fees before the loan is approved, it is most likely a scam where they are looking to make a quick buck.
Remember, legitimate money lenders will never ask you to pay any money before the loan is approved, and even if they do charge a processing fee, it is never more than 10% of the loan amount. There should be no additional legal fees or contract fees.
Look Out for HTTPS and SSL
Don’t worry, although this step sounds complicated, you don’t have to do anything. Google does this for you. Whenever you visit a money lender’s website, look for a green padlock on the left side of the URL search bar. The green padlock signifies that the website is running HTTPS and SSL, which means that the website is encrypted and secured in layman’s words. If the website does not have a green padlock or lacks HTTPS or SSL certificates, do not divulge sensitive information.
Do Not Believe in Automatic Approvals
When people are suffering a cash crunch, they are looking for instant loans, and the scammers know this. So, they use this information to prey on people by promising immediate or automatic loan approval, but this is not possible for legitimate money lenders. Money lenders in Singapore always check your credit performance and income before disbursing loans, and they never promise any loans; only scammers do.
Yes, there are many instant loan lenders in Singapore. Still, even these lenders take at least 45 minutes to approve your loan, and they, too, check your creditworthiness and financial history before disbursing the loan amount.
Know What Money Lenders Are Allowed to Do in Singapore
While the tips mentioned above can come in handy, the best way to avoid scams is to know the law of the land, i.e., what legitimate money lenders are allowed and not allowed to do. Knowing these simple rules can help you spot fake lenders from the real. So, next time you are applying for a loan, look out for these things:
- The money lenders are legally obligated to produce a contract during the loan approval process.
- It is illegal for licensed money lenders to advertise their loans or spam you will unsolicited calls, emails, or messages.
- The government also regulates money lenders in Singapore to restrict the total loan amount to six times your monthly income.
- Legitimate money lenders cannot charge you any fees except the processing fee, legal fees, and late payment fees.
- And they can’t charge any more than S$60 on late payment fees.
According to the police advisory (2019), 1,700 cases of loan scams were reported in Singapore in 2019, which cost the victims S$6.8 million combined, and the COVID-19 pandemic has most likely made these numbers worse. And while the Singaporean government is working hard to eliminate loan scams from the country, there’s still some way to go before reaching that stage. Until then, you need to be wary when applying for loans, so you don’t end up being a number in next year’s police advisory.
