In Singapore’s fast-paced society, financial pressure can sometimes lead individuals to seek urgent cash solutions. Unfortunately, this urgency often draws people toward unlicensed money lenders—commonly known as “Ah Longs” or loan sharks. These illegal operators may promise fast cash and minimal paperwork, but behind that convenience lies a trap of high interest, threats, and aggressive harassment.
Thankfully, loans in Singapore are governed by strict regulations to protect borrowers. A licensed moneylender is required to follow legal limits on interest rates, fees, and collection practices, offering borrowers a safe and transparent option. In contrast, loan sharks operate outside the law, with no accountability.
This article will help you recognise the red flags of unlicensed lenders, understand how to differentiate them from legitimate, licensed moneylenders, and know your rights as a borrower. Awareness and caution are key—protect yourself and your finances by choosing regulated lending channels.
1. They Contact You First
One of the most telling signs of an unlicensed money lender is that they make the first move. It is illegal in Singapore for licensed money lenders to solicit loans via text messages, phone calls, WhatsApp, email, flyers, or door-to-door visits. The Ministry of Law (MinLaw) allows licensed lenders to advertise only through these three channels:
- Business directories (both online and print)
- Their own official websites
- Advertisements placed within their own physical premises
If you receive a message or call from someone offering a loan out of the blue—it’s almost certainly an unlicensed lender.
2. No Face-to-Face Verification
All licensed money lenders in Singapore are required by law to meet borrowers in person at their registered business premises. During this meeting, they must:
- Verify your identity using your NRIC or other identification
- Explain the loan contract clearly
- Ensure you understand the terms and interest rates
If a lender insists on processing the loan entirely online—without any in-person meeting or video verification—it is likely a scam. Illegal lenders will often transfer funds to your bank account without proper documentation or identity checks, only to later impose exorbitant repayment demands.
3. They Don’t Provide a Loan Contract
Licensed money lenders are obliged to issue a written loan contract that clearly spells out:
- Loan amount
- Interest rate (not exceeding 4% per month)
- Late payment fees
- Repayment schedule
- Total cost of borrowing
This contract must be signed before any money is disbursed. Unlicensed lenders will typically avoid formal contracts altogether or present you with vague, unprofessional, or confusing documents—leaving you legally unprotected.
Some illegal lenders will even claim that a WhatsApp message or voice note constitutes a contract, which holds no legal standing under Singapore law.
4. Interest Rates Are Exorbitant or Unclear
Licensed money lenders must follow strict regulations:
- Interest is capped at 4% per month, regardless of income level
- Late fees are capped at S$60 per month
- The total cost of borrowing (including fees and interest) must not exceed 100% of the principal loan
Unlicensed lenders regularly violate these limits, charging extortionate interest rates—sometimes 20% to 40% per week—alongside vague or hidden charges. They may also demand upfront “processing fees” or “deposit payments” before disbursing the loan, which is another major red flag.
Always compare any quoted interest with the legal maximum and walk away if it seems excessive.
5. They Use Threats, Harassment, or Intimidation
Perhaps the most infamous trait of loan sharks in Singapore is their use of threats and violence to recover payments. Victims of illegal money lenders often report:
- Harassing calls or text messages at all hours
- Threats of physical harm
- Public shaming, including graffiti or posters outside their homes
- Property damage, such as pouring paint on doors or padlocking gates
- Threats to family members or employers
Licensed lenders are governed by ethical codes and strict enforcement rules. Any form of intimidation, abuse, or public embarrassment is strictly prohibited under Singapore law.
If you are being harassed, report the incident to the police or the Registry of Moneylenders immediately.
6. Their Business Is Not Listed in the Registry of Moneylenders
Before dealing with any lender, always check their legitimacy using the Registry of Moneylenders, maintained by the Ministry of Law. The list is publicly available on the MinLaw website and includes:
- Company name
- Licence number
- Contact details
- Office address
If the lender is not listed—do not proceed. Some unlicensed lenders may even use fake registration numbers or impersonate legitimate companies. Cross-reference contact details and physical addresses carefully.
7. They Ask for Your Singpass Login or ATM Card
Licensed money lenders are not allowed to demand access to your Singpass account, bank login credentials, or physical ATM card with PIN. Yet, many illegal lenders ask for these as a form of “collateral”, effectively gaining illegal control over your finances.
Handing over such information puts you at serious risk of identity theft, unauthorised withdrawals, and long-term financial ruin. This practice is not only unethical—it is criminal.
8. They Push for Quick Loan Approval Without Proper Assessment
In Singapore, all legal lenders are required to conduct a rigorous credit assessment before disbursing any loan. This includes checking your:
- Income level
- Employment status
- Existing debts
- Creditworthiness
Unlicensed lenders often skip these steps entirely. They offer instant approval with slogans like “no documents needed,” “bad credit welcome,” or “get cash in 10 minutes.” While tempting to those in a financial pinch, such offers are a hallmark of predatory lending practices.
9. You’re Pressured into Taking a Larger Loan Than You Requested
Illegal lenders may initially promise to lend a small, manageable amount. However, they later inflate the loan amount, claiming it includes processing fees, interest for the first month, or other “administrative” costs.
This tactic traps borrowers in a debt spiral, as they are forced to pay more than they ever intended to borrow. In contrast, licensed lenders must disburse the full loan amount upfront, minus a one-time administrative fee of no more than 10% of the principal.
If the amount received is significantly less than promised—you are likely dealing with an unlicensed lender.
10. They Have No Physical Office or Operate from Suspicious Premises
Every licensed money lender in Singapore must operate from a registered physical office. This address will appear in the Registry of Moneylenders and is the place where all loan processing must be done.
Illegal lenders often use:
- Unmarked or residential locations
- Temporary setups
- No physical office at all
They may insist on meeting in cafés, void decks, or your own home. Always insist on visiting the lender’s official office and verifying their business licence details.
What To Do If You Suspect an Unlicensed Money Lender
If you encounter any of the signs above or suspect you’ve been targeted by an illegal lender, take the following actions:
- Do not repay the loan. Money owed to an unlicensed lender is not legally enforceable in Singapore.
- Report the matter to the police. You can call 999 or lodge a report online.
- Inform the Registry of Moneylenders. Contact MinLaw via their website or hotline.
- Seek financial counselling. Contact social service agencies like Credit Counselling Singapore (CCS) for support and advice.
Conclusion
Unlicensed money lenders are a dangerous presence in Singapore’s financial ecosystem. They operate outside the law, exploit borrowers’ desperation, and can cause long-term emotional and financial trauma. Fortunately, spotting them is not difficult—their tactics often reveal their illegitimacy.
By understanding the top signs of an unlicensed lender, you empower yourself and others to stay safe, make informed financial decisions, and avoid the debt traps laid by unscrupulous operators.
Always remember: a fast loan is not worth the long-term cost of dealing with an illegal lender. Use only licensed money lenders, and when in doubt—verify, question, and walk away.