If you urgently need money for an unexpected big expense or find yourself in a tight financial spot needing to pay off debts, it can be tempting to go for any money borrowing solution that will provide you with the funds you need, fast. This is why loan sharks are so dangerous - they usually tempt individuals with deceptively good terms, offering a loan contract that hides high interest rates, additional fees, and numerous other charges within the fine print. Read on to find out more about loan sharks in Singapore, how to deal with them, and some safe, alternative solutions for loans if you are in need of emergency funds.

What is a loan shark?

Loan sharks are unlicensed lenders that charge exorbitant interest rates. Unlike licensed loan providers, loan sharks are illegal and unregulated, putting any individual who engages with them at risk of malicious tactics and unreliable loan agreements. Many loan sharks operate by using harassment and intimidation techniques in order to recover their debts. Most importantly, under the Moneylenders Act in Singapore, loan sharks are not authorised by the government to lend money, and as such, it is an offence to borrow money from them.

Reasons why you shouldn't borrow from loan sharks

There are plenty of reasons why you should not consider borrowing money from a loan shark. Some of these reasons are outlined below.

Extremely high interest rates and hidden fees

Loan sharks are infamous for imposing exorbitant interest rates and hidden charges, as well as being very adept at collecting various admin fees that quickly add up to much beyond the initial debt amount. A licensed loan provider can only legally charge interest rates up to 4% per month, whilst unregulated loan sharks could potentially charge up to 20% per week! This could all result in severe financial distress for the borrower.

Fake processing charges

Licensed loan providers will only charge processing fees once the loan is officially approved. Loan sharks, on the other hand, commonly ask for a processing fee before even processing your supposed loan - meaning you essentially pay them for nothing.

No official contract

A big giveaway of a loan shark is not being given an official loan contract to sign. Reputable loan providers will always require you to provide your personal information and, as such, sign off on terms and conditions to make sure the agreement is clear in terms of interest rates, additional fees, loan tenure, and so on. Without a loan contract, there is no proof of what you have agreed, meaning the sharks can freely change terms as they please, such as upping interest rates or shortening the repayment schedule. It also means you have no legal protection should anything go amiss, and no proof that you were engaging with a loan shark in the first place.

Loan shark harassment

Loan sharks can be relentless in their pursuit, in some cases resorting to harassment in order to make borrowers satisfy their demands. This can range from anything such as threatening texts or calls to even showing up at your office demanding payment. This feeling of fear could make you fall victim to even more debt, as you feel the need to pay off these sharks in order to avoid harm.

How to deal with loan sharks in Singapore

To navigate the waters of suspicious loan shark activities without getting hurt, you must remain vigilant and not accept any loan terms from an illegal lender. Look out for suspicious individuals or organisations offering lending services that do not seem legitimate. If in doubt, always research the company to see if they have clear information listed online, such as a registered business address or license number.

If you have already run into loan sharks and are experiencing illegal or even criminal acts by them, you should immediately report loan shark harassment to the police, especially if any of these actions have threatened or involved violence or vandalism against you or your family members.

However, remember the best preventative measure you can take is not to engage with loan sharks at all, as the risks of illegal conduct are much too high.

Safe alternatives to loan sharks

There are numerous ways to safely take out a loan in Singapore rather than resorting to loan sharks. By taking out a personal loan from a trusted loan provider, you can enjoy peace of mind whilst saving on interest rates, processing fees, and other charges. View the table below to get an idea of why taking out a personal loan is a better, safer alternative.


Personal Loans

Loan Sharks


Legal and regulated by the Ministry of Law

Illegal and unregulated

Interest Rates

Fixed, up to 4% per month

Fluctuates, up to 20% per week

Processing Fees

Usually 1%-5% of loan amount

No official fees, but hidden fees may be charged

Repayment Terms

Between 1 to 7 years

Usually short-term, can be weekly or daily

Loan Amounts

Up to 4-6x monthly salary

Varies widely, but no guarantee of being paid back

Using a personal loan provider who is connected to a reputable range of financial institutions and banks provides a secure and efficient option for taking out a personal loan. This is where Lendela's services come in.

Find trusted personal loans with Lendela

Lendela is a reliable online loan comparison platform allowing you to find the perfect personal loan for your financial needs, with no hidden fees. We want to streamline the loan application process for you, making your experience easier, faster, and more transparent. With one application, you are connected to multiple banks and licensed financial institutions in Singapore that will provide you with various loan options that fit your profile and requirements, such as loan amount, loan tenure, and monthly income. Start your loan application with Lendela and start finding the best personal loan offers within minutes.

Key Takeaways

  • Loan sharks in Singapore are unlicensed lenders who engage in illegal activities in order to extort more money from borrowers.
  • These illegal activities might include charging very high interest rates and hidden fees, not providing an official loan contract, and harassment.
  • Borrowing money from a loan shark puts an individual at risk of falling into a never-ending debt cycle, whilst potentially experiencing paranoia and fear from threats and the illegal nature of conduct.
  • Personal loans from licensed loan providers, banks, and financial institutions are a safe alternative to borrowing money from loan sharks, as they require a legitimate application process and outline clear terms and conditions so the borrower is never in doubt.