Moneylenders vs Loan Sharks: How to Tell the Difference
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More important than knowing what kind of loan to go for, is knowing where to get that loan from. And as we’ve covered before, licensed moneylenders can be a handy option when all others are out of reach. However, legitimate, legally licensed moneylenders can look a lot like their evil twin, the loan sharks.

Their bloodthirsty business practices and tactics have gotten more aggressive recently, so it’s important that you’re aware of how to spot these schemes and how they’re different from above the board moneylenders.

Moneylenders vs Loan Sharks: How to Tell the Difference

First Off, Just in Case You’re Not Sure…

There’s a chance that you’ve read this far but still insist that you can get away with getting your cash from a loan shark. You might think, “Oh, I have the money and I know their rates, I’ll be fine”. Well we’re here to remind you there are several reasons you should seriously reconsider.

  • They put in hidden costs. Loan sharks are completely comfortable with introducing hidden fees and penalties you never even agreed to. Since their business is not bound by law, they have no reason not to gouge you further even if you manage to settle your payment in full and on time.
  • They harass and threaten you. Operating outside the law means they can do whatever they feel is necessary in order to intimidate you into paying up. We don’t have to tell you the horror stories of people who fail to pay these ah longs. Chances are good you’ve heard a few tales yourself.
  • They use violence and vandalism. When we say they’ll do anything to get you to pay up, we do mean anything.
  • Their illegal operations are likely tied to other illegal activities. Even if you manage to pay everything back and then some, the money they take from you will quite likely feed back to other illegal activities that we shouldn’t be supporting.

So now that we’re clear why loan sharks should definitely be avoided, here’s how to avoid them in the first place by differentiating them from legitimate moneylenders.


One of the first things you will ever see of a loan shark is their advertising. They would put up signages in public places like on TNB boxes, lampposts, or other places where it’s actually illegal for them to advertise. These ads might already give them away by having no other contact information than a phone number.

A legitimate business will have no problem providing more information like a physical address, website, or an office number you can call instead of a mobile number. Be careful however, since loan sharks nowadays can even advertise via social media platforms with graphics and ad copy that look quite professional. If they manage to fool you with this, look out for…


A reputable business will not only be comfortable giving out their physical address, website, and office number, they would also have no problem being clear as to how the business operates. Loan sharks may not be so candid in revealing pertinent information that might reveal the true nature of their enterprise. Someone who is about to cheat you has no interest in giving you useful information.

Try asking for their business card, business license number, and as much printed material about their business as you can. In fact, ask as many questions as possible and pay attention to whether or not they answer your queries clearly and reasonably. If they constantly deflect your questions or give confusing answers, you should be ready to exit the situation. The manner in which they answer can also be telling, because it shows their…


Licensed moneylenders don’t need to coerce, bully, or otherwise push potential customers into accepting their product. Loan sharks on the other hand, do. Be aware of how an agent comes across when they engage you in conversation. Are they impatient with your questions? Do they keep insisting on you taking their product? Do you feel uncomfortable talking to them? If the answer to all these is a “no”, then the possibility of them being loan sharks is a “yes”.

Interest Rates

Even with a real physical office, no pushiness, pleasant attitude, and clear information, you might still fall prey to a predatory loan shark in sharp clothes. One good way to know for sure if to find out their interest rate.

The average rate for personal loans (and therefore moneylenders too) are about 12-16% per annum and tops out at 18%. So if you’re presented with a starting interest rate that’s even higher than that, then you know to turn the other way and search for other alternatives.

What Would Those Alternatives Be?

That would depend on what you need your cash for. If you want just quick funds in your account, you can go for a regular personal loan. You can opt for a business loan or microloan if you’re starting a business. If your credit isn’t looking too good, you can get someone to co-sign your loan, among other solutions. And should your need of money be because you’re trying to manage your debt, we recommend contacting AKPK, who can help you trim down on those interests and make your repayments easier.

There are plenty of other outlets for your money problems besides going for loans sharks and we hope this piece will help you avoid being a victim of their predatory loans in the future. Have anything to say about the article? Share your thoughts with us in the comments section down below!


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Alvin Ho
2 years ago

Can you share with me personal/business/micro loans details ? A list of names, perhaps ?

Jacie Tan
2 years ago
Reply to  Alvin Ho

You can always refer to here!

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