Getting a loan is very common, not just in Singapore, but also in different parts of the world. But getting thrown into deep trouble because of borrowing from the wrong people are also a sad reality. We here may stories of people on the edge of desperation and get money from loan sharks and get charged exorbitant interests.
The result: They default on payment, and they are not able to pay it back, or settle them by paying a lot more than what they bargained for. No one wants to be a victim of such unfortunate circumstance. Therefore, it pays to be an educated borrower by knowing how to distinguish a legal money lender here in Singapore from a loan shark.
Evaluating the legitimacy of a money lender
It is important to understand the term ‘money lender’. In order to know who you are dealing with, it is first important to understand what kind of people you are looking for. Money-lenders are different from banks in a manner that they follow different lending terms and regulations.
They are usually licensed private practices that lend money from their own pockets. Loan sharks are also not operating banks, but they are different from legal money lenders in such a way that they are not licensed and regulated by the government.
Do a background check
Once you have a list of possible lenders to borrow from, doing a background check is very important. A legitimate lender should be included in the Ministry of Law’s list of accredited lenders. If the name is not on the list, then they are not legitimate.
Governments regulate the lending business, and Singapore is one of those states that protect people, not just its citizens, from unconscionable loan interest rates.
Know what to expect as a borrower
One way of knowing if you are working with a legal money lender is it allows you to practice your rights as a borrower. Rights such as waived fees, loan caps and maximum interest rates should be observed by the lender.
If any of these are not on paper, run in the opposite direction. It is a big red flag. It’s a loud warning that the person offering you money is a loan shark, and you are the fish. More common than not, a legitimate money lender will have a loan contract where you can read your rights as a borrower.
Remember, even if you are in need of money, the law protects you from exorbitant interests and fees.
Observe their actions
Professionalism is expected from legal money lenders. They should act based on the rules laid down and offer the services expected from them. Anything beyond that could mean they are illegitimate or is violating government rules.
Distinguishing a legal lender from a loan shark can be overwhelming, especially if this is your first time. But the more you know about the difference between the two, the easier it would be for you to distinguish which one to work with. After all, it is not right for people to take advantage of someone in need, especially if that need is legitimate.
