How to Protect Yourself from Personal Loan Scams in Singapore

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Personal loan scams are common in Singapore because many financially inactive persons who wish to earn money by borrowing or lending have emerged. These loans are usually given at high-interest rates, and borrowers should be vigilant before committing to the deal.


Loan scamming has been prevalent in Singapore and was highlighted by several media reports earlier this year. At least S$200,000 of losses were reported by the Singapore Police Force between January and April 2021.

However, these numbers may be low as many victims are too embarrassed to file a report or do not know where to seek help when they have fallen prey to these scams. Many of them also do not realise that they have become the victim of loan scams in Singapore.

What are Loan Scams in Singapore?

In a loan scam, the borrower will have submitted false information to get a personal loan from lending companies. All borrowers must carefully read the terms and conditions they agree on when obtaining a personal or housing loan, as some unscrupulous individuals may take advantage of your lack of financial knowledge by borrowing large sums under false pretences. These include:

  • Offering an attractive interest rate
  • Stating that borrowing money will improve their chances of getting a job
  • Borrowing money for an investment or starting up a business which they claim has been very successful in the past
  • Pretending to be unemployed due to an expiring contract
  • Claiming that they are a freelancer or self-employed and have been unable to find a suitable job
  • Using false identification documents such as Identification Cards, passports and bank accounts

The borrowers may not even contact the banks again after receiving their personal loans. Some cases use another person’s identity to borrow money. This is called loan scamming via identity theft. Sometimes, an individual will even sell his identity details so anyone can use them for this purpose.

It is important to note that borrowing money under false pretences, as mentioned above, is illegal as it is considered obtaining property through deception.

In addition, those who partake in loan scams in Singapore must understand that they are not just harming the banks or lending companies but also co-signing for any losses and legal liabilities incurred due to such deals.

Signs of Personal Loan Scams in Singapore?

High-interest rates: Most personal loans come with interest rates that range from 2.20% to 4%. However, those who offer extremely high fees will attract your attention as well as suspicions, especially if you find it too good to be true.

If the borrower is borrowing money for investment purposes like stock trading, buying property or starting up a business, ask them how much they earn to see whether the amount they want to borrow makes sense against their earnings.

It is also suspicious when borrowers state that their regular income is so low that they cannot qualify for a standard loan and ask for extremely high-interest rates.

Borrowers state that borrowing money will help them get a job: Borrowing money to pay one’s home rental, settle credit card dues, or service loans is one thing. Borrowing money to finance interviews that may not materialise into jobs immediately is another.

If the borrower states that he needs to borrow money to improve his chances of getting a job, do not fall prey to such claims. One should also check with the bank whether there are any restrictions on using your personal loan money before committing yourself.

Some banks currently prohibit borrowers from engaging in speculative activities like stock trading with their funds. Thus, it is vital to determine if the borrower has checked with his bank on this before committing himself.

Borrowers state that they are unemployed due to expiring contracts: There are times when borrowers who have been working in a company for several years suddenly get laid off by their employers, resulting in them becoming unemployed.

However, only someone who has little knowledge of employment issues will say that he lost his job because his contract expires soon or there are no suitable jobs available.

Most banks currently check whether borrowers have any other existing loans when processing personal loan applications. Thus, anyone who has strong reasons to believe that he may find it challenging to obtain a new personal loan should approach the banks directly instead of borrowing money from a friend or relative.

Borrowing money for investment purposes: There have been cases where borrowers state they want to borrow money as they have found a lucrative investment opportunity. In such cases, you should determine how the borrower plans to repay the borrowed funds and the interest fees incurred before committing yourself.

This also applies if you think your borrower intends to use his personal loan money for speculative activities, especially those related to the stock market. Do not be afraid of asking too many questions, and always remember that these are personal loans rather than investments.

It would be best if you never committed yourself to any investment or financial scheme with your personal savings without doing thorough research beforehand. Loans that are through false pretences will place you in a very compromising position.

Borrowers state they need money to pay for legal fees: Borrowing money to pay your legal bills is one thing but borrowing money to finance lawsuits or arbitration proceedings is another.

If you suspect that the borrower may not be telling you the whole truth, do not take too much time and find out more information from your borrower before committing yourself. It can also be suspicious if borrowers claim no assets and continue to borrow vast sums of money despite having little means of repaying it.

Loans with unusual repayment periods: Another sign that something may be wrong about a personal loan transaction is when borrowers offer extremely short repayment periods and interest rates that run into the double digits.

Your borrower may claim that he needs to borrow money urgently because of some unexpected expense or incident, but you should always do your research before committing yourself.

Do not be afraid to ask questions, especially if the repayment period is very short, as it will give you a chance to ascertain what your money will be used for. Do not let anyone pressure you into making hasty decisions.

Loans with unusual repayment methods: If you notice any signs that may lead you to believe that something is wrong about personal loan transactions – such as borrowers asking for their loans in cash instead of cheques – be sure to enquire more information from them, including how they intend on repaying the amount borrowed.

Some people may accept large sums of money offers even if it means borrowing from a friend or relative without getting a written agreement in return. This is a sign that the borrower may have other intentions that do not involve repaying his debts.

Borrowers state they need money to pay school fees: Borrowing ample sums of money to finance your or your children’s overseas education is standard practice.

Though many banks require borrowers to show documentation such as original fee structures from schools and tuition centres before processing personal loan applications, some people still resort to borrowing from friends and relatives.

If you suspect that something may be wrong with a personal loan transaction, never delay in enquiring about the borrower’s circumstances to find out what he intends to do with the borrowed funds.

If a private lender makes personal loans to his friends and family: Many people tend to borrow money from close ones, including relatives, friends, or someone they trust in their social network.

Though this type of loan transaction may be the best way for borrowers to obtain quick cash when in need, it can also backfire on them, especially if they cannot repay what they owe. Borrowers should never force themselves to take out large sums of money, even if it means asking for help from potentially untrustworthy parties.

Loans that seem too good to be true: The saying ‘If something seems too good to be true, then it probably is’ applies perfectly well for loans that come with low interest rates or an unusually short repayment period. You may receive offers of loans that are at very low-interest rates compared to others or ones that require only a few weeks to repay.

Loans without collateral: One of the most apparent signs of personal loan scams in Singapore is when borrowers claim they do not have any assets but continue to borrow large sums of money despite having little means of repaying it. Unless you deal with close friends or family members, never agree to give out loans without receiving collateral.

Many banks will not extend loan transactions if there are no tangible assets attached as security. Lenders should always request adequate protection before processing applications because if the borrower defaults on payments, the lender will have little to no chance of getting their money back.

Loans without paperwork: If you are suspicious about the legitimacy of personal loans in Singapore, never hesitate to contact them for more information.

A legitimate moneylender will provide borrowers with all relevant documents for their personal loan transaction, including a written agreement detailing the repayment period and the interest rate currently charged on the borrowed cash sum.

Loan requests via telephone calls or text messages: While some people may tend to receive unsolicited phone calls from telemarketers who offer them offers that seem too good to turn down, this may indicate that they may be the targets of fraudulent scam transactions.

Many companies operating outside of Singapore use telemarketing identity scams to dupe borrowers out of their cash. If you have been receiving unsolicited phone calls from individuals claiming to be licensed moneylenders, do not hesitate to hang up the phone and look for another source of financing.

Borrowers who can’t afford to repay their loans: Never extend loan transactions without background checks on the borrower’s assets, including bank accounts, salary etc. Many people tend to borrow large sums of money only because they feel it’ll be easier to repay if they receive a higher sum in return.

However, this is far from accurate as borrowers often find themselves unable to keep up with repayment plans, especially when emergencies require immediate attention.

Borrowers who cannot repay loans on time despite having good salaries: Many borrowers often find themselves in a position where they cannot keep up with repayment plans, even if they have good incomes that should be more than enough for them to service their debts.

This is an indication that the borrower may have spent all their salary. If you notice that the person borrowing money spends most of their monthly income on discretionary spending, then it is likely that personal loan scams in Singapore will soon follow suit.

Borrowers who don’t know how much interest rates add up each month: Don’t be fooled by offers of zero percent interest rate charges because many unlicensed moneylenders in Singapore often charge exorbitant monthly interest rates that can range between 3% to 8%.

If possible, request the borrowers to show you their credit scores and compare them with those listed on Credit Bureau Singapore. When they claim that their poor credit ratings are why they require loans, never give out cash without verifying it.

Borrowers who put all their cash into one transaction: Borrowing money is more common than buying a house or starting a business because people need capital before investing in something else.

When first-time borrowers place all of their savings into one loan transaction, never extend cash on hand until you learn more about the borrower’s financial status, including all assets like houses and cars too!

Remember to always keep in mind that when personal loan scams in Singapore occur, borrowers have to pay back the total sum of the borrowed amount with interest despite not returning it on time.

How to identify a Licensed Moneylender in Singapore?

To avoid falling victim to personal loan scams in Singapore, never extend cash on hand without verifying it because this may be your only means of getting money if an emergency occurs.

While many people use credit cards or overdrafts that charge high-interest rates because they do not know where else to turn, borrowing from a legitimately licensed moneylender will not come at an expensive price.

When asking for help from friends and family members is no longer an option, you can turn to licensed moneylenders in Singapore for assistance.

To identify a legitimate moneylender, you can ask them a few simple questions, including:

  • Do you have a Money Lenders’ License issued by the Ministry of Law?
  • Are your interest rates negotiable or standardised across all borrowers?
  • Can I see your list of fees before signing any documents?

By answering “yes” to all three questions, then you are likely dealing with an authorised moneylender who abides by the law. If they refuse to answer or avoid answering these simple questions, then the chances are that they may be unlicensed money lenders operating outside of the law.

How do loan scams happen in Singapore?

It is essential to understand that loan scams in Singapore do not happen out of thin air because they have a set of patterns and trends. Some may be new while others have been going on for some time, but regardless, they share a few common traits, including:

  • Borrowers who forge their employment letters or payslips
  • Borrowed funds being used for dubious investments
  • Lenders asking borrowers for cash instead of bank transfers


It is crucial to always verify the borrower’s credit score before extending personal loans to ensure that you are not held liable when things go wrong. However, if you notice any loopholes that do not add up, you should contact the police immediately! With the correct information and preparation, personal loan scams in Singapore do not need to feel like the end of the world anymore!

About Norman Anthony Balberan

I am a Bachelor of Science in Pharmacy graduate turned full-time web developer and designer. Although my professional background is in pharmacy and tech, I have a passion for writing and am excited to share my insights and thoughts through my blog. I write about various topics that I am knowledgeable and passionate about, and I hope to engage and connect with my readers through my writing.

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