Alwin Goh
Sometimes, we may face financial emergencies or require quick cash for unexpected expenses. In these challenging times, borrowing from a moneylender can be an ideal way to get the needed funds.
However, before taking out a loan, it is vital to understand the interest rates and fees that private moneylenders can charge in Singapore.
In this article, we’ll dive deep into the interest rates and fees a licensed moneylender can legally charge in Singapore and explore what this means for borrowers.
So, let’s get started!
What You’ll Discover:
- How Much Can You Borrow From A Licensed Lender In Singapore?
- What Are The Interest Rates A Licensed Moneylender Can Legally Charge?
- What Are The Fees A Licensed Money Lender Can Legally Charge?
- Other Things To Consider When Borrowing From A Licensed Moneylender?
How Much Can You Borrow From A Licensed Lender In Singapore?
If you need quick cash for an emergency, a licensed moneylender in Singapore can be a reliable source of funds. It is important to know how much you can borrow from a licensed moneylender because of this.
The amount you can borrow from a licensed lender depends on your annual income. Moreover, the amount varies among Singapore citizens and foreigners.
| Annual income | Singapore Citizens and Permanent Residents | Foreigners residing in Singapore |
| Less than S$10,000 | S$3,000 | S$500 |
| At least S$10,000 and less than S$20,000 | S$3,000 | S$3,000 |
| At least S$20,000 | 6 times of monthly income | 6 times of monthly income |
Singaporeans and permanent residents who earn less than S$10,000 annually can borrow up to S$3,000. Those with an annual income of at least S$10,000 but not more than S$20,000 can borrow up to S$3,000 as well. Moreover, those who earn at least S$20,000 annually can borrow up to six times their monthly salary.
On the other hand, foreigners earning less than S$10,000 annually can borrow a maximum of S$500. If their annual income ranges between S$10,000 and less than S$20,000, they can borrow up to S$3,000. Individuals with an annual income of at least S$20,000 can borrow up to six times their monthly income.
It is important to note that these loan limits are the maximum amounts you can borrow. The actual amount you can borrow will depend on your income, credit history, and other factors.
Additionally, moneylenders may not always approve loans for the maximum amount, and they may also offer different loan terms and interest rates depending on their assessment of your creditworthiness.
What Are The Interest Rates A Licensed Private Moneylender Can Legally Charge?
In addition to understanding the maximum borrowing limit, it is crucial to gain knowledge about the interest rates that licensed moneylenders are legally allowed to charge.
| Maximum Interest Rate Per Month | Maximum Late Interest Rate |
| 4% | 4% (each month of late repayment) |
Maximum Interest Rate
Starting October 1, 2015, licensed money lenders can charge a maximum interest rate of 4% per month on personal loans, regardless of the loan type (secured or unsecured) and the borrower’s income.
It is important to note that the interest on the loan must be calculated based on the remaining principal amount after deducting the total payments made by the borrower that are appropriated to the principal.
For instance, if a borrower takes out a loan of S$10,000 and pays back S$4,000, then the interest calculation must be based on the remaining S$6,000.
Maximum Late Interest Rate
In the event of late repayment, the maximum late interest rate that can be charged by the moneylender is also 4% per month for each month that the loan remains unpaid.
Moneylenders are not allowed to charge for late interest on amounts that are outstanding but not yet due for repayment.
For example, if a borrower takes out a loan of S$12,000 and fails to pay the first instalment of S$2,000, the moneylender can only charge late interest on the outstanding S$2,000, not on the remaining S$10,000 that is not yet due for repayment.
What Are the Fees a Licensed Money Lender Can Legally Charge?
Licensed moneylenders are allowed to charge the following fees:
- A fee of no more than $60 for each month of late repayment
- A fee of no more than 10% of the loan principal at the time of loan disbursement
- Legal costs imposed by a court as a result of a successful claim by the moneylender for loan recovery
It is essential to note that the total charges on a loan (including interest, late interest, upfront administrative, and late fees) cannot exceed the loan’s principal amount.
For instance, if the borrower receives a loan of S$10,000, the total interest, late interest, 10% administrative fee, and monthly late fees of S$60 cannot exceed the principal amount, which is S$10,000.
These regulations have been implemented to protect borrowers from being exploited by moneylenders who may impose excessive fees and charges.
It is the borrower’s responsibility to be aware of their rights and ensure that they are not being overcharged when obtaining a loan.
Other Things To Consider When Borrowing From A Licensed Moneylender?
There are additional things you should consider before taking out a loan aside from interest rates and fees.
Here are some considerations before borrowing from a licensed lender:
Repayment Flexibility
Look for a lender that offers flexible repayment options that fit your financial situation. Some lenders may offer the option to make early repayments, extend the repayment period, or pay off the loan in full without incurring penalties.
Loan Eligibility
Check the lender’s eligibility criteria to ensure that you qualify for the loan. They may have specific requirements, such as a minimum income level or credit score, so ensure you meet these requirements before applying.
Credibility
Look for a licensed lender with a good reputation in the industry. Check the lender’s reviews, ratings, and feedback from previous customers to ensure they are credible and reliable.
Transparency
Ensure that the lender is transparent about their terms and conditions, interest rates, fees, and other charges. They should be upfront about all the costs involved in the loan, so you don’t end up with any hidden fees.
Customer Service
Look for a lender that provides excellent customer service. They should be available to answer any questions you have and provide you with the support you need throughout the loan application process.
The Bottom Line
In conclusion, understanding the interest rates and fees that a licensed moneylender can charge is essential before borrowing money from them.
By knowing the maximum interest rates, late interest charges, and other fees that can be charged, borrowers can protect themselves from being overcharged or exploited. It is also important to consider the credibility, transparency, and repayment flexibility of the licensed moneylender to ensure that you are getting the best deal.
Always remember to read and understand the loan agreement. Make sure that your repayments are on time, and communicate with the lender if any financial difficulties arise.
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