The Dangers of Loan Sharks in Singapore: Understand the Risks and Safer Borrowing Options

By Wally Wong The Dangers of Loan Sharks in Singapore: Understand the Risks and Safer Borrowing Options | Updated 21 May 2024 4 Minutes


At a glance

Unanticipated emergencies can push individuals towards loan sharks. Who are these unlicensed moneylenders, and why should one avoid them? Read on to find out how to avoid a loan shark and where to find safer loan options in the marketplace.

Current Money Lender Rates

Today’s money lender interest rate trends – As of Tuesday, May 21st, 2024, the highest monthly interest rate licensed money lenders which are regulated by the Registry of Moneylenders – Ministry is 4% per month. The maximum loan amount borrowers can take from licensed moneylenders is up to 6x of their monthly salary.

What Are Loan Sharks?

Unexpected expenses can hit us when we least expect them. When these crises strike, the appeal of quick cash solutions can be very alluring. This temptation to get your hands on cash fast is what makes loan sharks so problematic. Promising rapid relief, these unlicensed moneylenders ensnare borrowers by tempting them with attractive terms, only to reveal a huge barrage of hidden costs later. Sky-high interest rates, harassment, and intimidation are tactics these groups use to get their loans back. Because they operate outside the law, borrowers are vulnerable to such strong-arm practices.


Important Info

The Moneylenders Act law in Singapore states that loan sharks are not unauthorised to lend money. By engaging with loan sharks, the borrower is committing an offense. Therefore, the act is not only risky but unlawful!

Why Should You Steer Clear of Loan Sharks?

Here are four reasons why, even in a tight pinch, you must steer clear of loan sharks:

  1. Outrageous interest rates and hidden costs: Loan sharks are notorious for their inflated interest rates and hidden charges. For context, while a legitimate lender caps their interest at 4% monthly, a loan shark might charge an astonishing 20% weekly. The stress this high-interest rate exerts on the borrower is not worth it!
  2. Deceptive charges: Genuine lenders levy processing fees post-loan approval. On the other hand, loan sharks might demand a ‘processing fee’ upfront without starting the loan process. Basically, it’s money thrown down the drain before you even obtain the loan.
  3. No formal contracts: Legitimate lenders will always provide a clear agreement with all the terms and conditions stated. But loan sharks will bypass this important step, leaving lenders vulnerable to fluctuating terms. Besides, without a formal contract, you are also devoid of any legal protection, which puts you at even further risk.
  4. Relentless harassment: They will use aggressive tactics to reclaim the amount due to them. From intimidating messages left at your home and workplace to public confrontations, loan sharks will harass you non-stop for payment. Such fear and stress can cause lenders to borrow money for repayment, which causes them to become trapped in a cycle of debt.

What Happens If You Engage With a Loan Shark in Singapore?

If you suspect a lender’s legitimacy, you must remain alert and scan for important details. Look for a registered business address or license number stated anywhere on the website or name card.

However, if you have already dealt with a loan shark and face harassment or threats, you must contact the police immediately. Loan sharks may even threaten your innocent family, so you must act quickly. Ultimately, the best prevention method is to not even deal with them. Steer clear of such rogue lenders and choose legitimate lenders.

What Are My Safer Alternatives to Loan Sharks?

Why swim with loan sharks when safer shores exist? Choosing a legitimate loan provider means you don’t have to worry about illegal harassment acts or high-interest rates. You can repay with clear terms at a reasonable rate. Take a look at the table below to see why using licensed moneylenders is the better choice:

Details Loan Sharks Money Lenders
Loan Amount Varies, no official stats Up to 6x of their monthly salary
Interest Rate Anywhere between 5% to 20% per month Between 2% to 4% per month
Processing Fee Hidden fees may be charged Between 1% to 4% of loan amount
Repayment Terms Short-term, daily, weekly or monthly Between 1 to 7 years
Governance Unregulated and illegal Regulated by the Registry of Moneylenders - Ministry

Looking at the above table, it’s best to choose licensed moneylenders. You’ll be able to secure financial terms to help you tide over your crisis, and repayment will be less of a strain. For a transparent and trustworthy loan experience, consider lending platforms

Singapore’s 1st Loan Marketplace

ROSHI”s lending platform connects borrowers with multiple banks and moneylenders through their loan marketplace. This allows borrowers to receive customized loan offers without needing to formally apply or undergo credit checks that could negatively impact their credit score. The marketplace model gives borrowers access to more options from different lenders so they can compare and select the loan that best matches their needs.

Singapore’s 1st
Loan Marketplace

Apply Now

ROSHI’s AI-powered loan marketplace platform puts the power of choice directly in the hands of borrowers. In just seconds, borrowers can use their mobile device or computer to access multiple loan offers that have been automatically screened and matched to their profile. The smart software screens loan options from various banks and moneylenders, identifying and adding qualifying offers to the borrower’s personal dashboard in real-time. This convenient and quick process allows borrowers to easily compare loan options.


Using a lending platform such as ROSHI’s loan marketplace significantly increases the likelihood of securing financing with lower interest rates compared to applying directly with lenders. Borrowers can review and compare customized loan offers matched to their profile to identify the best option for their financial needs and circumstances. ROSHI was designed to give borrowers a comprehensive view of available financing options while protecting their privacy.

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