If there is ever a time when you have financial difficulties and consider approaching loan sharks, we advise you to think again. No matter how desperate your situation may be, getting a loan from them is like digging your own grave. Most people in Singapore know that going to a loan shark is a bad idea, yet we know of people who still seek them for assistance. So, what are the problems that you will face after approaching them and what are the safe alternatives that you should look for instead?

Loan Sharks: A Great Customer Experience...Right?

You may need quick cash and want to avoid that any credit check is being taken. All the loan sharks ask for is a picture of your NRIC and information of where you work. They do not look at your past credit history and they promise that the loan can be processed online, but in all honesty, does it not sound too good to be true? And when it sounds too good to be true, it probably is.

Loan sharks can appear friendly to you at first but they will trap their victims into a vicious cycle of threats and violence. Let's go through the reasons why going to loan sharks is not a great idea at all.

1. Ridiculously High Interest

The loan sharks charge ridiculous interest rates, sometimes even up to 50% weekly. At times, when you struggle to pay, they will also add more interest to the amount you are supposed to pay. The loan that they have given to you may assist you for your previous issue but their interest may lead to a bigger financial commitment for you. banks and financial institutions have fixed per interest rates as per annum, regulated by the laws in Singapore.

By going to legitimate companies, such as banks and financial institutions, you will avoid paying huge amounts of money. The following table will showcase the interest rates and fees which banks and financial institutions are charging.


Licensed financial institutions

Interest Rates

Normally, interest rates up to 3.5% p.a.

Max. 4% per month, according to Ministry of Law

Processing Fee

Normally, none (certain banks may charge an annual fee)

Max. 10% of loan amount, according to Ministry of Law

2. Using Intimidation to Harass You & Your Family

Loan sharks use intimidation tactics to scare you when you do not pay on time. The older tactics that you may have heard of on the news are that they would spray “O$P$” along your HDB corridor and they would lock your house gates so that you could not leave. These days, the loan sharks tend to send to you multiple deliveries which are cash payments, send you a dead pig to your house and sometimes even harass you and your family at your workplace and schools.

Not only are you facing financial stress – by receiving such harassment, it disrupts your daily life routine and adds continuous stress.

3. A Never-ending Loan

Loan sharks are never 100% honest with you, and charge many hidden “fees” such as processing fees and late fees. At times, they may even claim that they did not receive your payment which will lead to a vicious cycle. When this happens, you would not be able to clear off your debt.

4. No Customer Support & No Official Contract Given

Loan sharks do not provide an official contract of your loan agreement – even if they did, they will never follow through. Loan sharks do not have customer service or support since you will only liaise with that one person. At times, they will also hold hostage of your property, such as your NRIC and credit cards, as collateral.

Identify a Loan Shark Early – Look out for Shady SMS / WhatsApp Advertisement

People are still getting into the trap of loan sharks due to misinformation or ignorance, but the signs are quite clear if you are approached by a loan shark. Loan sharks tend to advertise their ‘businesses’ via WhatsApp and SMS. Even if you are unsure whether you have received a message from a legitimate financial institution, you should just ignore it! Licensed financial institutions are not allowed to advertise their business according to the Ministry of Law. Hence, all of these advertisements are illegal and you can be sure that you have been approached by a loan shark – 100%.

Licensed financial institutions vs Loan Sharks

There are indeed safer and legal options, which will help you pull through your difficult financial situation, such as banks and financial institutions. However, people are still struggling to tell the difference between “Ah Longs” and licensed financial institutions. The following table will give you an overview:

Licensed financial institutions

Loan Sharks

  • Regulated under Ministry of Law

  • Loan approval done face-to-face in the lender’s office

  • Do not charge any fees before providing the loan (also, no hidden fees)

  • Do not charge interest rates higher than 4% monthly

  • Collect payments following government regulations

  • Illegal lending

  • Often done via WhatsApp

  • Require payments before approving the loan

  • Charge interest rates higher than 10%

  • Charge the payments through harassment

Alternatives to Illegal Lending

Now that we have shared the differences between the licensed financial institutions and the loan sharks, there are many legal alternatives that can be approached to assist your financial situation.

Lendela, a personal loan comparison platform, is one of them. Simply explained, Lendela is a matchmaker that makes the personal loan application easier and transparent for you. Since we are not the ones giving out the loans nor deciding the terms of the loans, we are not regulated by the Ministry of Law and are allowed to do marketing.

In order for you to ensure that the marketing that you have received is legitimate, you can look out for certain information on the advertiser’s website, such as the UEN license number, as well as proper links in the advertisement that you have received. Legit companies will also give clear and proper information about their services and include their contact details.

In addition, do note that only banks are allowed to process online disbursements. If there is anyone who approaches you and claims that they are a licensed financial institution and can disburse the loan online, it is illegal.

Get a Loan from Banks / Licensed financial institutions or Borrow from Friends and Family

It is definitely the safest to borrow from your family and friends since you would not have to pay any interest. You would also not have to worry about pressure when it comes to repaying your debt.

However, you may not like the idea of borrowing from family and friends. By borrowing from family and friends, it may create complications in your relationship and if you struggle to repay according to the plan that you agreed on, it may also ruin your reputation within your own social circle.

Therefore, if you wish to not bother your family and friends, banks and financial institutions are the best option. banks and financial institutions are legitimate and follow Singapore laws. Their interest rates do not go beyond the regulations and there are no hidden fees.

Apply with Lendela

If you are in a rush to get a loan or do not have the time to shop for the best rates yourself, rest assured that Lendela will be able to assist you. We help you search for personalised loan offers from both banks and financial institutions, and present them to you so that you can decide which one suits you the best. The service is completely free of charge and you do not have to worry about hidden fees.

All you have to do is to submit your application with Lendela and we will start looking for multiple offers for you based on your eligibility. Thereafter, you can compare your offers online and once you have found the best option, all you have to do is to accept it and we will book you an appointment at the lender’s office to sign the agreement and receive the cash on the spot!


Using the right services for your financial needs will save you a lot of trouble and worries! Avoid illegal lenders at all costs. Not only will the loan sharks add trouble to your daily life, they may also disturb your fellow neighbours, colleagues and loved ones.