Experiencing financial difficulties recently? You are not alone in this struggle. This may have left you feeling overwhelmed and unsure where to turn for help. Whatever the reason may be, the stress of not having enough to get by can take a toll on your mental health.

Thankfully, there’s a solution.

Seeking financial assistance is a smart step in getting back control of your situation. Borrowing money is not inherently bad. When you manage it responsibly, debt can even give you access to opportunities and help you eliminate setbacks. The trick is understanding your options.

Two common sources of loans are licensed lenders and loan sharks also known as unlicensed money lenders or ‘Ah long’. While both may seem like great options, there are key differences between the two that you need to be aware of.

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What Is A Licensed Lender vs. Loan Shark in Singapore?

Licensed Money Lenders vs. Loan Sharks

Tempted to turn to the first lender that comes your way? That might be one of the worst decisions you’ll ever make. Remember that not all lenders are created equal.

Aside from banks, you’ll come across two main types of lenders in Singapore: licensed money lenders and loan sharks. Both operate in very different ways.

To put it simply, licensed money lenders are the good guys. These institutions play by the rules and are regulated by the Ministry of Law. When you borrow from these lenders, expect transparency and fair interest rates. You’ll also sign proper contracts.

On the other hand, loan shark in Singapore or ‘Ah long’ options are the ones you want to avoid at all times. Because they operate outside the law and are notorious for their shady practices, you may end up in trouble.

Aside from the obvious legalities, one of the biggest differences between the two lenders is the interest rates they charge to customers. Licensed lenders have a cap on how much interest they can pass on to borrowers, which is currently 4% per month. Loan sharks, unfortunately, don’t have any such limits so they can charge rates that can quickly trap you in a cycle of debt.

Another key difference of the two is advertising and reaching out to potential borrowers. Licensed money lenders have strict guidelines on advertising and they take this very seriously. They are not allowed to solicit loans through text messages, phone calls, or any social media platform since they may get penalised for it. Loan sharks can usually be found using these methods to fool desperate and unsuspecting borrowers.

Here’s a simple table that shows the differences between a loan shark in Singapore and a licensed lender.

Characteristics Loan Shark Licensed Lender
Legally allowed to operate
Regulated by the Ministry of Law
Adheres to interest rate caps
Transparent loan terms
Proper loan contracts
Follows advertising guidelines
Uses threats and violence
Requires collateral
Flexible repayment options
Easy to identify and verify

How to Verify A Licensed Lender

Follow this step-by-step guide on verifying a licensed money lender in Singapore to ensure you don’t get scammed.

Step 1: Visit the Ministry of Law’s website

This is where you can find the most up-to-date list of all the licensed money lenders in Singapore.

Step 2: Download the list of licensed money lenders

Once you’re on the website, look for the “List of Licensed Moneylenders in Singapore” link. Click on it to download the PDF format. This can be your handy guide in choosing a loan provider.

Step 3: Check if your money lender is on the list

Scroll through the names and see if the money lender you’re considering is on there. If yes, then that’s great! It means they operate legally.

Step 4: Verify the money lender’s details

Don’t just stop at the name. Recheck the business address and license number. If the details do not match, treat that as a red flag.

Step 5: Keep an eye out for details

Look out for any suspicious behaviour from a loan shark in Singapore. Is the money lender pressuring you to sign blank documents? Or maybe they are asking for your SingPass details? These are all signs that something fishy is going on and that they’re probably operating illegally.

Step 6: Report any suspicious activity

If you come across a money lender that seems shady, report them to the authorities immediately. You’ll end up saving someone else from falling victim.

What Loans Can You Apply for From A Licensed Lender?

Personal Loans

It’s amazing to know that there are loans out there to help you get back on your feet. Personal loans are like the jack-of-all-trades of financial products so if you need to pay bills or even improve your home, this can be a lifesaver.

Payday Loans

What if you’re in a tight spot and just need a small amount of cash to keep things afloat until payday? Then you can apply for a payday loan which is designed to be a short-term solution.

Business Loans

For entrepreneurs, business loans can be extremely useful since they give the funds you need to get your business off the ground or take it to the next level. You can use this to buy equipment, stocks, and many more.

Wedding Loans

If your big day is coming up, a wedding loan can help you have the celebration you’ve always dreamed of. This can be used to pay for the venue, honeymoon, wedding gown, and almost all expenses that come with this celebration of love.

Debt Consolidation Loans

Individuals who are feeling overwhelmed by multiple debts will appreciate a debt consolidation loan. This loan will combine all your debts into one manageable payment, usually with a lower interest rate, so it’s a huge help.

Want to Apply for a Loan?

Now that you know the difference between licensed and unlicensed money lending, you can finally be more confident to look for options.

Always remember: while loan sharks may seem like an easy solution, their illegal practices will do you no good. On the other hand, going with a licensed money lender will give you peace of mind that you’re borrowing from a trustworthy source.

If you are ready to apply for a loan, let Lender SG help. With our smart loan matching platform, you can save time looking for the ultimate option. Instead, we can narrow down your top choices based on your situation.

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