How To Avoid Borrowing From Loan Sharks
The loan shark is the most common type of moneylender in Singapore. They charge interest rates much higher than the legal rate. Many loan sharks use intimidating tactics, such as spraying red paint on your home or car.
They can be difficult to spot but hard to avoid if you require cash. In Singapore, there are thousands of loan sharks. This article explains how to avoid being a victim of loan sharks and other financial scams.
Loan sharks have dominated the money lending industry. Loan sharks are also known as unlicensed money lenders who charge very high-interest rates. They offer money quickly and do not require a credit check when giving out loans.
These businesses and individuals target vulnerable people in desperate need of cash by providing high-cost loans that trick people into a cycle of debt and misery. Sometimes they use threats and violence the intimidate those who cannot repay the loan. Unfortunately, loan sharks rarely turn down borrowers and are very persuasive in asking to convince one to take a loan. Below are the tips to help you avoid borrowing from loan sharks.
Save Money Regularly
Although it can be difficult, saving a small portion of your earnings is advisable. Regularly saving money will help you cope with unplanned expenses or changing circumstances. If you can, save your money where you can earn interest. By doing this, you will hardly fall prey to loan sharks.
Get Other Alternatives for Borrowing
Always get a personal loan from a licensed lender. Some reputable lenders will lend you even though your income is low and your credit ratings are poor. Although you will have to pay high rates, the Consumer Credit Act will cover you. Look into borrowing from a credit union if you are a low-income earner. Credit unions encourage you to save and only borrow what you can afford to pay.
Track Your Expenses
Track your expenditures in a sheet that you can update every month. If you have numerous accounts and cards, you can confirm that you make payments entirely on all of them at a suitable time. Money Manager can help you get a clear picture of your finances, accounts, credit cards, loans, and investment accounts.
Tracking your expenses will prevent you from overspending to the extent required. Therefore, keeping track will prevent you from landing in the jaws of loan sharks who will entice you to get a fast cash loan to solve your issues.
Budget Your Income
Budgeting out your monthly costs can help you track where your money is going and how you can afford to use it. Every month, portion out how much to put in investments and how much extra you have left to cater for other necessities.
Then, if you need to cut down on your expenses, you will know what to cut. Handy online tools such as a money manager can assist you with an automated budget and perform some budgeting processes. Through budgeting, you avoid loans generally from loan sharks or licensed money leaders.
Beware of Loan Adverts with no Credit Check
While it is possible to find legitimate lenders who offer loans without credit checks, beware of loans advertised with no credit check. These advertisements are usually a sign of a scam. Some lenders may not report their activity to the credit bureaus if you have bad credit.
This means you can’t use these loans to repair your bad score. Moreover, borrowers with bad credits may be targeted by illegitimate companies and scammers who try to exploit their desperation.
Beware of Any Requests for Personal Details
Loan sharks may ask for copies of your passport address details such as house number and street. Avoid sending such information in the name of borrowing a loan. Instead, call a stop loan sharks helpline near you if you have been affected.
It is advisable to opt for credit unions if you want a loan. Evade any offer that may seem enticing and friendly, and write down all your agreements with any money lender.
Undocumented Repayment Method
Unlicensed money lenders use extreme measures like blackmail and threats when collecting the amount loaned in case of delays such as blackmail and threats. They go to the extent of adding penalties that were not part of the initial contract. In addition, some loan sharks access your phone contacts and contact your family and friends to intimidate you into repaying the loan.
Documentation is vital in any monetary transaction, especially in loans. Because it acts as evidence if legal action is taken against any party that has not met the agreed terms.
Fast Approval Loans
Don’t be fooled by the fast approval of a loan from a loan shark if you have bad credit. These people are not legitimate and may offer loans to people with bad credit. If you’re looking for a loan in Singapore, you should check the state’s regulations on moneylending. The government has set limits on how much money a licensed moneylender can lend, so it’s worth the time to be cautious.
Conclusion
Although they seem friendly, people should avoid borrowing money from loan sharks. There are several risks attached to loan sharks that one can avoid by getting a loan from a licensed moneylender. Such as credit unions, which have favorable interest rates.
Loan sharks operate in many ways, from moving door to door to meeting strangers on the road, and persuading them to take loans without any paperwork. What’s more, these unlicensed money lenders threaten and harass people who default on payments. Most deals linked with loan sharks turn out to be nasty. Therefore, use the tips highlighted in this article to avoid falling prey to loan sharks.
Additional:
