Living in a country where the cost of living is high can put significant financial pressure on anyone. If you reside in Singapore, you may find yourself in a difficult situation every now and then, even if you have stable employment and good income.
No matter how you feel about borrowing money, you might have no better choice but to take out a personal loan to cover your urgent needs. Although there are plenty of places to take out a fast cash loan here in Singapore, not all moneylenders are exactly reputable.
To be fair, the Ministry of Law has measures in place, like an extensive list of licensed moneylenders, to catch dishonest characters. However, some unscrupulous businesses still manage to operate under the radar and rip hapless borrowers off.
To protect yourself from personal loan scams in the Lion City, pay attention to some of the most pervasive ones.
5%+ Monthly Interest Rates
As unsecured financial products, personal loans are often associated with costly interest. Moneylenders reserve the right to charge high fees to mitigate the risk they have to absorb for loaning thousands of dollars without holding any collateral.
But then again, there is a limit to the interest licensed moneylenders can impose. Since Oct. 1, 2015, the maximum interest rate a moneylender in Singapore can charge per month is 4%. This cap applies across the board, so you should expect to shoulder no more than this amount regardless of your income.
Furthermore, the government restricts moneylenders from charging an additional amount exceeding the loan principal. If you borrowed $15,000, the maximum total extra charges your moneylender could impose would just be $15,000.
Do the math before signing off any personal loan contract. If your computation reveals that you are being charged more than what the government allows, the chances are that your prospective moneylender is a fraud.
Cold Emails and Outbound Calls
As a general rule, licensed moneylenders should not take the initiative to contact you. It should be you, the borrower, who should approach a lending institution. If it is the other way around, the moneylender who made the offer is likely not to be trusted.
Do not respond to any emails or calls you received from questionable moneylenders. What you should do is to report them to the authorities before someone would fall victim to such illegal sales tactics.
No law-abiding moneylender would ask for a down payment before granting your personal loan request. Even if you have bad credit, you are not required to pay anything upfront for whatever reason. If you do, you run the risk of never seeing your cash again.
Banking Account Requirements
Licensed moneylenders do not ask for borrower account information, nor do they need to keep personal identification documents like an NRIC card. If your prospective lending institution insists on acquiring such sensitive details, take your business elsewhere to protect your privacy and finances.
Applying for a personal loan in Singapore is risky enough, so exercise due diligence to avoid making it more dangerous. The more you are aware of the common scams deceitful moneylenders employ, the more you can keep your eyes open for pitfalls.