A loan shark is a person who offers loans at extremely high interest rates, has strict terms of collection upon failure, and operates outside off the street (outside of local authority). The term usually refers to illegal activity, but may also refer to predatory lending with extremely high interest rates such as payday or title loans.
By: Phoenix Lee/
An unintended consequence of poverty alleviation initiatives can be that loan sharks borrow from formal microfinance lenders and lend on to poor borrowers. Loan sharks sometimes enforce repayment by blackmail or threats of violence. Historically, many moneylenders skirted between legal and criminal activity. In the recent loan sharks have been a feature of the criminal underworld.
In Singapore, a loan shark is referred to as Ah Long. It is is a colloquial term for illegal loan sharks here. They lend money to people who are unable to obtain loans from banks or other legal sources, mostly targeting habitual gamblers. Often, they discreetly advertise by sticking notices, mostly on lamp posts and utility boxes around a neighbourhood, thus vandalising public property, as authorities must remove such advertisements. They charge high interest rates (generally about 40% per month/fortnight) according to Anti-Crime, Drug and Social Development Voluntary Organisation and frequently threaten violence (and administer it) towards those who fail to pay on time.
Ah Long tactics
When a person fails to pay on time, the Ah Long will set fire, spray paint, splash, or write threats in paint or markers on the walls of the property of that person as a threat of violence and to scare, and perhaps shame, the borrower into repaying the loan. A common use of painting includes the characters “O$P$” meaning “owe money, pay money”, as well as the debtors’ unit number. According to local police authorities, there have been cases where borrowers and their family members were beaten or had their property damaged or destroyed, and some victims have committed suicide.
The best advice to deal with a loan shark is to not deal with him at all.
- Never borrow from loansharks; any short term solution this seems to provide will be overshadowed by the unceasing harassments for payments, even after the full sum is paid;
- Never be a guarantor to any illegal loans;
- Do not lend your NRIC to another person;
- Do not gamble excessively & seek help if you are a compulsive gambler;
The Singapore police advises the public to urge their friends and relatives not to borrow from illegal lenders but seek help through legal means of financial assistance such as credit counselling helplines and financial management professionals.
Borrowing from a loan shark will result in dire consequences, some of which may include:
- Family/loved-ones suffering from the trauma and embarrassment caused by loanshark harassment;
- Never be a guarantor to any illegal loans; Indiscriminate borrowing and subsequent harassment may affect ties between family/love-ones;
- Innocent neighbours bearing the brunt of harassment;
- High exorbitant interest rates charged by the loansharks cause debtors to further spiral into debt and thus there is no way out for them, with many turning to a life of crime by working for the loansharks;
The Singapore Police Force said cases of harassment linked to activities of unlicensed moneylenders in Singapore went up by about 20 per cent to 4,619 cases last year. There was also a 33.5 per cent jump in harassment by electronic means such as on social media and SMS, with these instances forming the bulk of such cases reported last year.
The best advise anyone can get when faced with financial crunch is to cope with cash flow without borrowing. Before you are late on a rent, mortgage, or utility payment, speak with the creditor. For non-interest bills, such as utility or telephone bills, ask about making payment arrangements. Ask to delay payment until your pay arrives or set up a repayment schedule that stretches out payments.
Those in financial crunch may ask your friends or family to lend you money. Remember that a written agreement to repay the loan can help avoid family strife later. Licensed money lenders who charge no more than 4% interest per month on the amount you have borrowed, are another source for those under financial stress.
But before you approach a licensed money lender, consider other alternatives, such as the various financial assistance schemes offered by various Government agencies. As you are legally obliged to fulfil any loan contract you enter into with a licensed moneylender, consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations.
Borrow only what you need and are able to repay. Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family. The law requires moneylenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract. Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable.
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