Scam or Legit? No-collateral Loans from Moneylenders

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Scam or Legit? No-collateral Loans from Moneylenders

Loan application form with the word ‘Approved’ stamped on it
Loan application form with the word ‘Approved’ stamped on it

A no-collateral loan is another name for an unsecured loan, where the borrower does not need any assets to apply for a loan. If you are thinking of applying for a personal loan, a licensed moneylender in Singapore is a good place to get it from.

But some people believe that no-collateral loans are too good to be true, so here we take a closer look at this phenomenon and find out if no-collateral loans are a scam or if they are legit.

Debunking the myth

One of the reasons that no-collateral loans are regarded with suspicion is their association with illegal moneylending. Banks and other major lending institutions ordinarily do not extend loans to anyone with a less-than-perfect financial record. If they do, they ask for assets as collateral to protect themselves.

Ah longs’ or illegal loan sharks, on the other hand, have a reputation for extending loans to people in need without asking any questions. It is part of their modus operandi to entrap as many unsuspecting victims as possible.

As a result, most people cannot imagine that a legal moneylender in Singapore would not do the same. Fortunately, the formal regulation of the local moneylending industry has created a happy medium.

Legal moneylenders in Singapore offer almost the same convenience as advertised by the scammers but within the government’s tightly regulated framework. Borrowers can get fast loans in Singapore with no collateral, and without giving up any of their consumer protections, either.

The need to tread carefully

We have established that it is indeed possible to get some of the lowest interest rate personal loans in Singapore legally. That does not mean every lender who promises the best personal loan in Singapore is licensed or legal.

For all the fast loans Singapore lenders offer, there are also many scams. Anyone looking for a no-collateral loan should take the necessary precautions to avoid falling into that trap. Here are four things you should be aware of:

1. Advertising is strictly regulated for legal lenders.

Moneylenders are only allowed to advertise their services on their websites, at their registered office, and in business directories such as the Yellow Pages.

Many of us may have received messages on social media and chat sites advertising loans and similar services. Almost all of these are from unlicensed and illegal lenders. There is unfortunately a small minority of legal lenders who engage in this practice as well.

But if they are willing to compromise on such basic guidelines, it does not speak well about their integrity or trustworthiness. So it is best to avoid any company that sends you such unsolicited loan offers.

2. Legal lenders must operate a registered office.

When you are looking for the best personal loan in Singapore, it can seem like there are lenders everywhere. However, Singapore law requires every legal moneylender to have an actual office.

Many lenders that offer no-collateral fast loans in Singapore allow you to make an application through their website. This is a convenience designed to save time, but the formal validation and approval process has to be performed face-to-face at their registered office.

If the company seems to have no office, or if the lender insists on meeting you in public places such as coffee shops, you should regard it as a red flag.

3. No collateral is legal, but no face-to-face verification is not.

As mentioned above, many of the best personal loans in Singapore come with the convenience of provisional online approval, but this must be followed up with a formal in-person process.

Part of that process is a credit check as well as an identity verification procedure. The applicant will need to provide a basic ID such as NRIC, FIN card, and/or passport. Financial documents such as an employment letter, bank records, CPF contributions, and tax statements will also be required.

These steps protect the public against identity theft and other scams. Any company that skips them may not have your best interests in mind.

4. Some deals are too good to be true.

Just because a company advertises the lowest interest rate personal loan in Singapore, does not mean it is true. Look closely before you decide.

Legal lenders in Singapore are limited to charging a maximum of 4% interest per month, regardless of the type of loan. They may lower that rate for repeat customers or during special promotions, but not significantly.

If you come across ads for no-collateral loans that seem extraordinarily low, read the fine print before you sign on the dotted line.

In summary, here are the 4 things to keep in mind:

  1. Advertising is strictly regulated for legal lenders.
  2. Legal lenders must operate a registered office.
  3. No collateral is legal, but no face-to-face verification is not.
  4. Some deals are too good to be true.

No-collateral loans – legal and convenient

It is certainly possible to get a legal no-collateral loan from a licensed moneylender in Singapore. As long as you know the warning signs to look out for, you can tell when an offer is a scam or legit. Before you apply for a personal loan, find out all the other information you need to know.

At R2D Credit, we can provide quick, hassle-free, and 100% legit personal loans. Enquire about our loans today. Whether it is for big ticket purchases or to support medical emergencies, we provide loans that cater to your needs.


The information provided on our website is for educational and informational purposes only and is not intended to be a substitute for legal or financial advice. While we try to ensure that information on this website is accurate, we do not warrant that the information will be free from error. We shall not be liable for any loss or damage that may arise from the use of this website.

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