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What You Need To Know About Applying For A Loan

From Nov 30 onwards, moneylender borrowers are to be subject to certain loan caps in accordance with their income levels. These new regulations are based on Ministry of Law statements made on Friday (Nov 16), which were announced last 4 October.


The following rules will apply to both citizens and permanent residents of Singapore, including resident foreigners:


  • Singaporeans and permanent residents who earn below S$20,000 per year can borrow as much as S$3,000, no matter which and how many lenders they might approach.
  • People with incomes above this level may borrow as much as six times their average monthly earnings. This means that a person earning some S$48,000 per year can borrow as much as S$24,000 from various lenders.
  • Resident foreigner borrowers are subject to a lesser cumulative loan cap of $1,500, which only applies to those who earn below $10,000 per year.
  • Foreigners earning from $10,000 to $20,000 per year can borrow as much as $3,000.
  • Foreigners earning at least $20,000 can borrow as much as six times their average monthly earnings.
  • Starting 1 October 2015, a moneylender can only impose the following interest rates on loans:
  • The highest interest rate that moneylenders may charge borrowers is 4% per month. The cap will apply regardless of whether it is a secured or unsecured loan and no matter the income level of the borrower.
  • Were a borrower to fail in making loan repayment on schedule, the maximum monthly rate of late interest that may be charged borrowers is 4%, in any month that payment is late.
  • The Interest charged on a typical loan is based on the total amount of the principal remaining, after all, payments made by or for a borrower that is appropriated to the principal are deducted from the original principal amount.

For example, were you to secure a loan of $10,000 and have repaid $4,000 already, only the outstanding balance of $6,000 would need to be accounted for in interest computations.


Late interest charges can only be applied to amounts that are paid late. A lender cannot impose charges on any outstanding amount that is not yet due for repayment. For example, were you to secure a loan of $10,000 but neglected to pay for the initial installment of $2,000, the lender may apply late interest charges on the $2,000, but not on the outstanding balance of $8,000, for the latter would not yet be due for repayment.


Starting 1 October 2015, a moneylender can only impose the following fees and expenses on loans:

  • A fee of not more than $60 for each month of late payment;
  • A fee of not more than 10% of the loan principal when the loan is arranged; and
  • Legal costs mandated by a court that involve successful claims by the lender towards recovering the loan.

The charges for a moneylender loan comprise the following:

  • Interest rates
  • Late interest rates
  • Upfront administrative fees
  • Late payment fees

All of these charges cannot exceed the loan principal amount in total. For example, were you to secure a loan of $10,000, all interest fees, late interest fees, the 10% administrative fee, as well as any monthly late fees of some $60, may not exceed $10,000 in total.