Loan sharks in Singapore, as well as worldwide, have kept up with scammy tactics when dealing with borrowers. For those who are in need of quick cash, watch out for some of these trick tactics they are employing today. Technology changes and improvement also means more ways criminals can get to your finances. With unlicensed lenders running rampant, there are some things to watch out for when you are in need of cash. Consider some of these tactics, so you don’t get suckered in as well.

1. Phone Lines (they are used as a trick tactic)

Dispensing small loans ranging from $1k to $3k is a common practice loan sharks are employing today. Since these amounts are too small for loan sharks to chase down, their end move is to use the phone companies to go after you instead. Providing you with a small amount to pay for your phone line and handset, the loan shark uses this method and inform you to go to M1, Singlet, or Telco and pay for a 2 year deal. With certain plans you receive a low price or free handset with these deals.

Loan sharks give you anywhere from $1,000 to $1300 for these phones. If you need $4000, they might send you to four individual companies so you sign up for 4 plans and receive that loan amount. The loan shark then disappears. You have the money for the handset, and they turn around and resell at mass profits. And you get stuck with the bill, and loan sharks really aren’t worried about if or how you pay for those lines.

Smartphone “lease & buy back” is a name many sharks give this tactic or something like “make cash now,” in order to lure you in. As a borrower you think you are dealing with a reputable business, when in fact you are dealing with a loan shark who has no regard for your loss.

2. The gift cash is offered as an advance

In this scheme repayments come in the form of gift cards (more often in Hong Kong and Taiwan, but still happens locally). A loan shark will give you $3K immediately and you buy 5 $100 gift cards from them. You do this 5 months for a year, meaning they get $6K for the value of a $3K loan. They either give a valid gift card or one purchased through another loan shark to resell. If this is the case, the cards are worthless, and you are really in trouble dealing with the loss. SMS or email “gift card” programme offers might be a method sharks use to lure you in.

It is a scam; this is the reason the gift cards are used to mask the loan. By using gift cards they can launder money without being tracked down by federal government agencies. Many borrowers are also tricked into believing they are dealing with a company offering gift card promos, and fall into the trap. Don’t let it happen to you!.

3. Financial institution masquerading is often a sign of shark tactics

Money lenders which are licensed must display their license number, but more and more sharks are getting smart with the times. Many are eloquent and can manipulate a fake license, to appear as real as what the licensed lenders present. Terms such as “flexible financing “are typically placed on licenses, and they do not explicitly state they are lending you money. Don’t fall for it; as is the case with most sharks, it is nearly impossible to pay them back. They continually hike up the amount you owe them, so you never get out of the trap they lay.

Some tie things up with scam seminars, diamonds, or even gold trees, in an effort to get potential borrowers to buy into it. They hang outside these events, presenting you information with “investment’ offers, but you can be rest assured these are scammers. If a loan is offered, always check for certification of some kind; if its not presented, you are likely dealing with a loan shark.

4. Sell it and buy it back

In the 1980s this practice was very common in Malaysia and has made a comeback. Millenial loan sharks rediscovered it and are putting their own spin on it today. Sharks will agree to buy an item from you at an inflated rate; the purchase price is equal to the loan you require. But, the trick comes in the contract you sign saying you will buy the item back for a higher rate at a later date.

The “sale,” is masked as a “buy back,” with ridiculous interest rates. Its still a loan you are taking out which legitimate lenders would not deal with. Be weary of these offers, as the exorbitant interest rates are truly not worth the immediate loan amount.

5. The hari-hari loan

This term is basically a Malay term which means daily. Loan sharks often use this “gentle” loan practice with borrowers to lure them in. For those who are paid daily, loan sharks extend this loan option; they basically show up daily (rather than monthly) to collect on the funds you borrow. Because they deal with you daily, they always get paid, and these sharks are a bit more amicable in dealing with. If required however, don’t be fooled, as they will still resort to harassing methods to get paid.

With these tactics, debtors can end up paying up to 10 times more for the loan, and for far much more time, than if they were to go through a licensed, reputable lender. Make sure you stick with legitimate lenders instead!

With banks, interest rates per annum float in at about 6 to 9%; loan shark rates are double, sometimes triple this, making it almost impossible to repay. Another benefit of banking lenders is that even in worst case scenario (you can’t pay them back), your life isn’t threatened and you won’t be physically injured. Loan sharks won’t say the same.

Even if they appear interesting or attractive up front, avoid the sharks, and avoid those foreign, “exotic” options, as more harm than good will come from them. Check out easycredit.com.sg to find interesting terms, and those you can avoid. Don’t put your life, finances, or family in danger. Deal with reputable, fully licensed money lenders instead.

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