Borrowing Guide

Notes to Borrowers When Obtaining Loans from Licensed Moneylenders

1) What should I consider before taking up a loan?

You should keep these key points in mind:

• Before approaching a moneylender, consider other alternatives, such as the various
  financial assistance schemes offered by various Government agencies. You may
  contact the agencies to find out more about their schemes.
• 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.
• Consider carefully before agreeing to any contractual term which allows a
  moneylender to lodge a caveat on the sale proceeds of your real estate property upon
  default of the loan repayment. When a caveat is lodged against your property, you
  will not be able to sell it without first repaying the moneylender in full. If the
  repayment is taken from the net proceeds from the sale of the property, it can wipe
  out all or a substantial portion of the proceeds.
• You should shop around different moneylenders for the most favourable terms. You
  should not rush into and commit yourself to a loan until you are satisfied with the
  terms and conditions.

2) How much can I borrow?

For secured loans, you can obtain a loan of any amount. For unsecured loans, please refer to
the table below for the total maximum amount that you may borrow at any time across all
moneylenders in Singapore:

3) What are the interest rates moneylenders can charge?

With effect from 1 October 2015, the maximum interest rate moneylenders can charge is 4%
per month. This cap applies regardless of the borrower’s income and whether the loan is an
unsecured or secured one. If a borrower fails to repay the loan on time, the maximum rate of
late interest a moneylender can charge is 4% per month for each month the loan is repaid
late.

The computation of interest charged on the loan must be based on the amount of principal
remaining after deducting from the original principal the total payments made by or on behalf
of the borrower which are appropriated to principal. [To illustrate, if X takes a loan of $10,000,
and X has repaid $4,000, only the remaining $6,000 can be taken into account for the
computation of interest.]

The late interest can only be charged on an amount that is repaid late. The moneylender
cannot charge on amounts that are outstanding but not yet due to be repaid. [To illustrate, if
X takes a loan of $10,000, and fails to pay for the first instalment of $2,000, the moneylender
may charge the late interest on $2,000 but not on the remaining $8,000 as it is not due yet.]

4) What are the fees that moneylenders can charge?

With effect from 1 October 2015, all moneylenders are only permitted to impose the
following charges and expenses:

• a fee not exceeding $60 for each month of late repayment;
• a fee not exceeding 10% of the principal of the loan when a loan is granted; and
• legal costs ordered by the court for a successful claim by the moneylender for the
  recovery of the loan.

The total charges imposed by a moneylender on any loan, consisting of interest, late interest,
upfront administrative and late fee also cannot exceed an amount equivalent to the principal
of the loan. [To illustrate, if X takes a loan of $10,000, then the interest, late interest, 10%
administrative fee and monthly $60 late fees cannot exceed $10,000.]

5) How do I know whether a moneylender is licensed or not?

Do not borrow from unlicensed moneylenders. Verify that a moneylender is licensed by
checking the list of licensed moneylenders at https://www.mlaw.gov.sg/content/rom.
Notwithstanding that the moneylenders are licensed, be mindful if they:

• Use abusive language, or behave in a threatening manner towards you.
• Ask for your SingPass user ID and/or password.
• Retain your NRIC card or any other personal ID documents (e.g. driver’s licence,
  passport, work permit, employment pass or ATM card).
• Ask you to sign on a blank or incomplete Note of Contract for the loan.
• Grant you a loan without giving you a copy of the Note of contract for the loan and/or
  without properly explaining to you all the terms and conditions.
• Grant you a loan without exercising due diligence (e.g. approving a loan over the
  phone, SMS or email before even receiving your loan application form and supporting
  documents, such as the income tax assessment and payslips).
• Withhold any part of your principal loan amount for any reason.

Such practices are not acceptable. If you encounter them, you should report the moneylender
to the Registry of Moneylenders, with information such as the moneylender’s business name,
licence and contact numbers. Please see Question 10 for more details.

6) In the event that I am standing as a surety for a loan, what should I look out for?

You should ensure that:

• You understand your responsibilities as a surety;
• You receive a copy of the Note of Contract at the time that the loan is granted to the
  borrower;
• The moneylender has explained the terms in the Note of Contact in a language that
  you understand; and
• The moneylender does not keep your NRIC card or any other personal ID documents
  (e.g. driver’s licence, passport).
• The moneylender does not acquire any information that contains passwords to your
  user accounts (e.g. Singpass account, Internet banking account, email account).

7) What should I do after being granted a loan?

• Make sure the moneylender delivers to you the correct principal amount of the loan.
  The moneylender is only permitted an upfront deduction of a loan approval fee of up
  to 10% of the principal amount.
• Pay the loan instalments on time to avoid incurring late payment fees and late
  interest.
• Make sure the moneylender issues to you a receipt every time you make any
  repayment towards your loan, and check it for correctness (e.g. name, amount, date).
• Make sure you receive a statement of account for all your loan(s) at least once every
  January and July, and check it for correctness (e.g. name, amount, date); and
• You should retain all statement of accounts and receipts of payments, as
  documentation and evidence of payments.

8) How do I lodge a complaint against a moneylender against unfair practices and/or
contract?

• You can contact the Registry at 1800-2255-529 or via our website. Rest assured that
  the Registry will not disclose your details to the moneylender without your consent.
  To facilitate the Registry to investigate your complaint, you may need to attend an
  interview with our officers and provide us with all relevant information and
  documents related to your loan transactions and circumstances of your dealings with
  the moneylender. The Registry views complaints against moneylenders seriously and
  will investigate them thoroughly. Errant moneylenders will be taken to task.
• If a moneylender has engaged in an unfair practice towards you, you can pursue the
  matter through the Small Claims Tribunal or the Court under the Consumer Protection
  (Fair Trading) Act. The Court also has the power to set aside loan transactions that are
  exorbitant or substantially unfair.

Issued by the Registry of Moneylenders on 1 June 2012

Last updated 17 July 2019