Borrowers should get their credit facilities via licensed money lenders or credit companies as they offer safer options

by NUR HANANI AZMAN / pic by TMR FILE

PROSPECTIVE borrowers who are looking for a quick fix for their financial woes are cautioned to not be easily enticed in taking out loans from organisations that seem dubious, especially those that use official logos of government-related agencies as “bait”.

The Malaysian Financial Planning Council immediate past president Michael Kok said borrowers should get their credit facilities via licenced money lenders, approved non-banking financial institutions or credit companies as they offer safer options.

The number of suspicious money lenders that offer fast solutions to borrowers, particularly those who are due for their Employees Provident Fund (EPF) withdrawals, are on the rise.

Some of the offers are attached with the EPF logo, which might give many the impression that the schemes are legit.

Crime analyst Kamal Affandi Hashim said the usage of EPF or Bank Negara Malaysia logos on any of such advertisements is an offence.

He said the Covid-19 pandemic has adversely affected many individuals economically and that becomes bait for many criminals to get creative with the schemes.

“They capitalise on human emotion and take advantage of desperate people who think that borrowing money is the light at the end of the tunnel.

“In this virtual world, don’t think everything is real. It might not even be an actual company. They can portray themselves as finance companies or licensed money lenders,” he told The Malaysian Reserve.

He said such fast money loan options can drain people’s hardearned retirement money, while the lenders make huge profits via their jacked-up fees and hidden interest rates.

“Illegal loans are designed to attract people or small business owners who might have that urgent need for cash,” Kamal said.

Kok said while the scammers and loansharks’ modus operandi is despicable, they are able to do this because financial knowledge among Malaysians is still low, as stated by the OECD Economic Surveys: Malaysia 2019 in their country report.

He said the additional ease of getting consumer credit, which comes with a higher interest rate, must be fully understood by individuals wanting to get some form of credit.

Kamal said it is important for borrowers to ask all the necessary questions so that they know the true cost that is involved.

“Remember, the moment you submit your documents to them, the details might be used for other purposes. Who knows if they will apply for credit cards or other loans?

“There are already a lot of such cases and it’s worrying that people don’t take this as a lesson,” Kamal added.

He said some people who do not have any asset and with bad credit ratings might also see money lending as a solution.

“However, they prefer an easy way. If you really need cash, please check the background of the lenders first and meet them face-to-face instead of doing it over the phone. You can also apply assistance at Zakat Management Centre,” he added.

Universiti Putra Malaysia’s Faculty of Human Ecology deputy dean (Graduate Studies and Industry and Community Network) Prof Dr Mohamad Fazli Sabri said people should be more patient and vigilant.

While desperation could drive many to make wrong decisions, he said people should be reminded that one bad debt could lead to more bad decisions in the future.

“The high interest will cause you to end up with higher debt. Don’t be lazy, do the necessary checks before you proceed.

“If you think you are smart, the scammer is five times smarter than you are. Be an informed consumer who is capable of making sensible decisions,” he added.

He said the public can find out the status of moneylenders by cross-checking the company’s registration number on the Ministry of Urban Wellbeing, Housing and Local Government website.

Mohamad Fazli said no matter how huge the amount of money — be it RM10,000 or RM100,000 — each individual needs to have a plan for it.

“Most importantly, don’t fall for illegal investment scams. Nowadays, scammers go for little volume as their modus operandi. They will offer an investment as low as RM500.

“Now imagine if 100 people fell for it. They stand to make a lot of profit and you are the one who loses,” he added.