There has been numerous media coverage on loan scams of late as the Covid-19 pandemic has enticed more and more cunning scammers to ‘upgrade’ the tricks under their sleeves to trap desperate individuals into getting a loan scam.
We are certain that most of you have heard stories of people being scammed and scratched your heads as you wondered how people could be deceived so easily.
The reality is that these scammers are persuasive as they are charismatic: a few words, dashing smiles, some strategic ego-brushing, and you’re under their spell.
Thankfully, there are ways for us to distinguish between legitimate loans and loan scams. So, before you decide to take out a personal loan from a bank, financial institution, or a legalised money lender in Singapore, look out for these tell-tale signs:
1. Upfront payment
If you are required to pay an upfront fee or deposit to take your personal loan application forward, it is likely a scammer trying to make off with your money.
Just ask any bank or licensed money lender and they will confirm that a legitimate lender will never ask you to make any payments before receiving the loan. The act is deemed illegal in Singapore.
Therefore, if you find yourself in the presence of a so-called loan agent or consultant explaining that the upfront payment is for mandatory processing fees, advance repayments, or collateral, you should say your goodbyes and walk away immediately.
2. Missing physical address
Scammers will do everything in their power to make it impossible for you to get hold of them in the future. How, exactly? By failing to provide a real, physical address, of course.
This is done intentionally. Without a physical address, it will be incredibly difficult for you to press charges, let alone for the authorities to pursue them.
Before you get swept away by the perks of applying for a personal loan, put the brakes on until you can confirm the existence of a physical address.
3. No state registration or licenses
One of the biggest tell-tale signs that you are getting scammed is that the business doesn’t come with any legal license or registration details. In Singapore, it is mandatory by law for every licensed money lender to be registered with the legal authorities.
If a sketchy individual approaches you with a personal loan plan that wows you, remember to ask for their license and registration number to prove their legitimacy. In Singapore, every legitimate and authorised money lending institution is registered with the Registry of Moneylenders. Remember, you are always free to cross-check the information you’ve gathered.
4. No credit check
Did you know that credit checks are important for banks, licensed money lenders, and financial institutions as it helps them determine how financially trustworthy you are?
On the contrary, scammers wouldn’t even spend five seconds doing a credit check as they intend to scam you out of your money.
While credit checks can be a hassle, it appears that the hassle is necessary to prevent us from getting scammed when we apply for personal loans.
If the lender is making guarantees that are too good to be true before even running your financial history, that is a clear indicator to keep your guard up and be cautious.
5. Incomplete loan offer
Most scammers will prepare a mock offer in black and white that passes the bare minimum for a loan offer for the sake of deceiving their victims’ eyes.
If you look closely, you’ll find many flaws in the document, such as blanks on where the agreed interest rates and processing fee should be. This is why it is incredibly important for us to always read the fine print before signing any personal loan documents — it’s just good sense and it makes things easier for us to pick up red flags that would demand us to walk away and never look back.
Bottom line
As enticing as it may be, you need to stay alert as there is no such thing as a flawless (or free) personal loan.
- Licensed money lenders will not apply pressure to push you to be agreeable
- Scammers have a habit of offering deals that are too good to be true, such as offering 0% interest rates or 100% approval
Also, take note that a licensed money lender, bank, or financial institution will never ask for your debit or credit card details.
Speaking of card details, it is always best to refrain from sharing your identification number, driver’s license, or any other personal information until you are 100% certain you are dealing with a legitimate loan agent or consultant.
Unfortunately, we live in a time where a handful of irresponsible individuals are taking advantage of the financial woes experienced by many to feed their pockets. While personal loans undoubtedly have many benefits that can help us improve our credit score, manage debts, and provide us with financial assistance at short notice, let us be more vigilant in ensuring we are dealing with the right people when taking out a personal loan in Singapore.
Reach out to LoanHere to get free loan quotes from the top licensed money lenders in Singapore now!
About the Author
Drawing on 3 years of proven knowledge and counting, LoanHere has grown to become one of the go-to platforms for consumers’ diverse loan needs. Besides ensuring borrowers get their loan quotes promptly from the best private loan providers in Singapore, we also make an effort to craft well-founded blog articles focusing on loans, finance, and lenders.
