You should keep these key points in mind:
- Before approaching a money lender, 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 money lender.
- 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 money lenders 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 money lender 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 money lender 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 money lenders 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.
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 money lenders in Singapore:
|Borrower’s annual income||Singapore Citizens and Permanent Residents||Foreigners residing in Singapore|
|Less than $10,000||$3,000||$1,500|
|At least $10,000 and less than $20,000||$3,000|
|At least $20,000||6 times monthly income||6 times monthly income|
With effect from 1 October 2015, the maximum interest rate money lenders 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 money lender 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 money lender 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 installment of $2,000, the money lender may charge the late interest on $2,000 but not on the remaining $8,000 as it is not due yet.
With effect from 1 October 2015, all money lenders 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 money lender for the recovery of the loan.
The total charges imposed by a money lender 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.]
Do not borrow from unlicensed money lenders. Verify that a money lender is licensed by checking the list of licensed money lenders. “Click here to access the list of licensed money lenders.”
Notwithstanding that the money lenders 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 money lender to the Registry of Moneylenders, with information such as the money lender’s business name, licence and contact numbers. Please see Question 10 for more details.
To find out more about unlicensed money lenders, you may click on this link: http://www.spf.gov.sg/ahlong/
Under the advertising rules, which took effect on 1 November 2011, licensed money lenders are permitted to advertise only through these three channels: (a) business or consumer directories (in print or online media); (b) websites belonging to the money lender; and (c) advertisements placed within or on the exterior of the money lender’s business premises. All other channels are prohibited.
In this regard, the advertising rules can help you differentiate between licensed and unlicensed money lenders. If you receive flyers, SMSes, emails or other forms of advertisements which are not permitted under the rules, these would be from either licensed money lenders operating in violation of the rules, or unlicensed money lenders. Hence, you are advised not to respond to such advertisements. Instead, you should report the advertisements to the Registry at 1800-2255-529 or via our website. Errant licensed money lenders will be investigated by the Registry and unlicensed money lenders will be investigated by the Police.
You are advised to seek clarifications on specific terms of the loan contract before signing up with a licensed money lender, and not to rely solely on the content of advertisements from the money lender.
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 money lender has explained the terms in the Note of Contract in a language that you understand; and
- The money lender does not keep your NRIC card or any other personal ID documents (e.g.driver’s licence, passport).
- The money lender does not acquire any information that contains passwords to your user accounts (e.g. Singpass account, Internet banking account, email account).
- Make sure the money lender delivers to you the correct principal amount of the loan. The money lender is only permitted an upfront deduction of a loan approval fee of up to 10% of the principal amount.
- Pay the loan installments on time to avoid incurring late payment fees and late interest.
- Make sure the money lender 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.
- You can contact the Registry at telephone number: 1800-2255-529.
- Rest assured that the Registry will not disclose your details to the money lender 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 money lender. The Registry views complaints against money lenders seriously and will investigate them thoroughly. Errant money lenders will be taken to task.
- If a money lender 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.