Financial scams have become quite common in Singapore. With these scams, people can quickly lose hundreds and thousands of dollars or the entirety of their life savings if they are neither cautious nor careful. Based on a report by The Straits Times, the crime rate for fraudulent loans where victims were lured into making deposits for a ‘loan’ increased from 396 to 994 cases in 2018 alone.
For this reason, it is crucial for borrowers of easy cash loans to exercise more caution so as not to fall victim to loan fraud. The first step to avoiding loan scams is to be aware of the common methods used by loan con artists. There are several signs that can tell you when a money lender is not honest or legitimate. Read on to discover the common indications of a loan scam that every borrower should know.
1. Automatic approval
There are several legitimate loans with fast loan approval in Singapore. However, fast loan approval is different from automatic approval. If a money lender gives you a ‘guaranteed approval’ for your loan application, they will likely scam you. Reputable money lenders, even those that provide fast loan approvals, usually go through borrowers’ credit history and ask multiple questions before approving a loan application.
On the other hand, a typical loan scammer will immediately transfer you the money, even without your approval, to force you to get a loan from them at extremely high interest rates. As a borrower, it is imperative that you completely avoid money lenders who give a sure guarantee without going through some of your documents, such as your income statement.
2. Exorbitant processing fees
Loan scammers typically demand huge sums of money as ‘processing fees’ before supposedly providing you with the loan cash. They ask the borrowers to transfer a certain amount of money before they can ‘process’ the loan application. This amount can reach as high as thousands of dollars. To avoid getting victimised, it would be best to never comply with any demand to shell out considerable sums of money upfront.
3. Urgent response
Aside from demanding high processing fees, illegitimate money lenders often require urgent responses from prospective borrowers. They deceive the borrowers that if they do not apply for the loan right away, the chances of them getting a ‘favourable loan’ will be completely lost. This is commonly just a ploy to force you to immediately send money for the deposit. Legitimate money lenders are never in a hurry with money lending; they undergo all the necessary steps before approving a loan.
4. No loan contract
Loan scammers do not give loan contracts, as they do not want evidence proving their fraudulent schemes. If you ask a money lender for a contract and they tell you there is none, you should withdraw from further dealing with the loan scammer immediately. Legitimate money lenders will prepare the appropriate contracts that usually stipulate your loan amount, terms, and interest rates. They will also ensure you understand the whole contract before you sign it.
5. No physical office
Another indication that a money lender is a scammer is if they do not have a physical address. They only operate from mobile phones, and there is no way for their clients to find their physical location. The reasoning behind this is to prevent getting arrested – it is hard to apprehend them if they have no physical address. As such, when applying for a loan, always request to visit a money lender’s physical location; if it does not exist, it is best to look for another lender.
Loan scams are undoubtedly on the rise both inside and outside Singapore. If you are not careful enough, you can easily fall prey to these fraudulent loans that will only exhaust all your available resources and exacerbate your financial problems. To have more financial control in life, it is necessary that you avoid these loan scams at all costs, and the first step in doing so is to be aware of the common signs that indicate when a money lender is a sham.
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