A padlock placed on a laptop to represent online loan and cyber security

Safeguards for Online Loan Applications Before You Submit One

7 min

More and more people in Singapore are spending a lot of time online. This means that many things, like work and entertainment, can be done with just a few taps on a device.

One thing that has become very popular online is borrowing money. Information technology has made online loans and borrowing an integral part of the society we live in today.

Several reasons why an online loan is becoming a preferred choice

1. Faster approval

Applying for a loan online is much quicker than traditional methods. In just around 10 minutes, lenders can review your financial information and let you know if you’re approved or not. This saves time and reduces the worry of waiting for an answer.

2. Improved security

Online transactions leave a digital record that can be traced. This helps in identifying any fraud or data breaches, making it potentially safer than traditional methods.

3. Lower costs

Online lenders don’t have the same overhead expenses as physical offices, so they can offer loans at lower costs. This means you may have to pay fewer fees and charges.

4. Convenience

With online loans, you can apply whenever and wherever you want. There’s no need to visit a physical location. The process is simplified, saving you time and making things less stressful.

The use of smartphones has afforded us greater conveniences to not only search and compare different loan options provided by reliable online moneylenders and banks but also to apply for these loans online.

However, there are some steps that you must take to safeguard yourself from spurious entities who look to steal your data or cheat you. Exercising caution is also advisable while considering loans online to ensure you choose the loan that is best suited to your financial constraints and does not lead to confusion and stress later.

Here are some of the things to do or look out for.

Check website URLs for secure online application

The first thing to look out for while browsing and filling up an online form for a loan application is the website URL.

In the address bar, check that the URL has ‘HTTPS’ where the ‘S’ refers to a secure website and has a padlock sign to the left of it. This means that information that you enter, like a form, is protected by an SSL certificate and will be secure from outside entities looking to steal personal data and information.

It’s important to be careful of fake or malicious websites that look exactly like real ones but are designed to trick you into giving away personal information or downloading harmful software.

These fake sites often have strange-looking web addresses, like the example here: https://cashdirect.tornadodrive.sg

You might notice that this web address has a part that seems unrelated and suspicious, like “tornadodrive.” It’s a good idea to be cautious when you come across such web addresses to avoid falling victim to scams.

Malicious websites often employ certain tactics that should raise suspicion. For instance, they may quickly send notifications urging you to update your browser, claim that you’ve won a prize and redirect you to another page, or prompt you to download a file that seems unrelated to your original search.

  • Be cautious when encountering these situations to protect yourself from potential scams or harmful downloads.

Protect your personal information

Technology and digitisation have undoubtedly revolutionised financing with online lending at the tip of our fingers. However, this has come at the expense of our personal data.

You may not realise it, but your smartphone is a good representation of who you are. This is because it stores all your valuable personal and financial details. This information is the target of malicious hackers and websites.

One of the most common methods used by malicious websites to target users is phishing emails disguised as marketing or advertising messages. It’s important to remember not to click on any links sent by unfamiliar senders. Doing so can give hackers access to your personal and financial information, putting you at risk of data theft.

To ensure your safety, avoid engaging with marketing campaigns or advertisements related to loans or credit cards. Instead, directly contact a licensed moneylender or bank when you require financial assistance. This way, you can have more control over your information and reduce the risk of falling victim to online scams.

Beware of online advertising of loans from moneylenders

Legal and licensed moneylenders are limited to placing ads outside their official business address, on their website, and in commercial directories such as the Yellow Pages.

Every ad that you receive on WhatsApp, other social platforms, or unrelated websites, is from unlicensed lenders. Do not entertain offers made by such moneylenders. These directives have been put in place by the Ministry of Law to ensure that people do not fall prey to loan sharks.

Understand the difference between the effective interest rate (EIR) versus the advertised interest rate

The advertised interest rate may not be the actual rate that you incur when you take the loan.

The effective interest rate (EIR) takes into consideration the compounding effect of the interest applicable over the loan tenure. Paying close attention to key details such as EIR, total interest payable, loan tenure, and early settlement charges/fees can help avoid future stress.

It is common to overlook these intricate details on the loan technicalities, especially when in urgent need of funds. Nevertheless, it is imperative to read through the loan agreement in full detail to understand the structure and payment of the loan. Arguing with financial institutions over late charges and fees after taking the loan is futile.

Do not simply browse through the loan agreement. Look into every detail and clarify any uncertainties you have with the loan provider, online moneylender, or banks.

Also, know that any licensed moneylender can only charge you a maximum of 4% interest rate per month. This cap has been applied by the Ministry of Law and is followed by all licensed moneylenders in Singapore.

Do not fall prey to consumerism

Luring individuals into purchasing unnecessary services or products and capitalizing on impulsive buying has become a prominent feature of consumerism. This phenomenon has also influenced the landscape of online lending, involving both banks and online moneylenders in Singapore.

The rise in consumer spending has led to a greater number of people taking out loans or applying for credit cards, even when they may not have a genuine need for them. In today’s society, credit cards are often seen by many working-class individuals as a lifestyle choice rather than a purely financial tool.

This mindset of excessive spending contributes to financial challenges and the accumulation of debt. It is crucial to prioritise our needs over our wants to achieve a healthy balance between personal finances and consumerism.

You must ensure that you are taking a loan to address a real need and not simply cover your overspending on unnecessary purchases.

Be cautious of moneylenders who promise a completely remote loan process

After an online loan application, a licensed moneylender will ask you to visit their office to complete their verification process and for the disbursement of funds. This is a compulsory step to safeguard against identity thieves.

Be cautious of moneylenders who assure you that visiting their office is unnecessary throughout the loan approval and disbursement process. Stay away from lenders who avoid face-to-face meetings or propose meetings in public places like fast-food restaurants or hawker centres.

By law, licensed moneylenders in Singapore are required to have a physical office. If a moneylender avoids inviting you to their office or lacks a verifiable physical business address, consider it a warning sign.

Get sound advice from a financial expert

Lastly, it is highly recommended to seek advice from a financial professional or loan expert before proceeding with a loan. This will enable you to carefully review all the terms and conditions, ensuring a thorough understanding of the repayment terms associated with the loan.

Remember to stay safe when applying for an online loan. Make sure you choose a licensed lender and avoid any offers that seem too good to be true. Legal lenders have restrictions on advertising and interest rates, so be cautious of any offers that go beyond those limits.

CashDirect is committed to assisting individuals with their financial needs. Our team of experienced financial experts is available to provide practical advice tailored to your specific requirements and constraints. Get in touch with us to start the conversation and explore how we can support you.


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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