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Since 30 November, all borrowers dealing with moneylenders have been subject to specific loan caps, depending on their individual income levels. The regulations accord with Ministry of Law statements issued on 16 November (Friday), which were previously announced on 4 October of the same year.
The following guidelines apply to Singaporean citizens and also permanent residents, which include resident foreigners:
- Singaporean citizens and permanent residents earning below S$20,000 every year may borrow up to S$3,000, regardless of how many or which lenders they approach.
- Singaporeans and permanent residents earning beyond this level may borrow up to six times their average earnings per month. This implies that any person who earns S$48,000 or so every year may borrow up to S$24,000 from different lenders.
- Foreigners are subject to a lower cumulative borrowing cap of S$1,500, which is only imposed on those with yearly incomes below S$10,000.
- Foreigners with yearly incomes from S$10,000 up to S$20,000 may borrow up to S$3,000.
- Resident foreigners with yearly incomes of S$20,000 or more may borrow up to six times their average earnings per month.
Since 1 October 2015, moneylenders may only apply certain loan interest rates, as follows:
- The maximum interest rate that a borrower may be charged by a moneylender is 4% per month. This cap applies regardless of whether the lending involves an unsecured or secured loan and irrespective of the borrower’s earnings level.
- Were the borrower not to make a loan repayment according to schedule, the highest monthly late interest rate that may be charged is 4%, during any month of late payment.
- The interest rate applied to a typical loan will depend upon the total outstanding amount of the remaining principal. Nevertheless, any payments made by or on behalf of the borrower that are appropriated towards the principal are thereby deducted from the original amount.
As an example, were you to borrow S$10,000 and S$4,000 were already repaid, only the outstanding loan balance of S$6,000 would have to be accounted for in the computations for interest.
Late interest fees only apply to any amounts due that were repaid late, if any. Lenders may not apply such charges to outstanding loan balances that are not yet due. In the example where you secure a loan of S$10,000, but fail to repay the initial instalment of S$2,000, the moneylender may assess a late interest charge for the S$2,000 that would be due for repayment, but not for the outstanding loan balance of S$8,000, as the latter amount would not be due as yet.
Since 1 October 2015, moneylenders may only impose certain loan fees and expenses, as follows:
- A charge of up to S$60 for any month of late payment
- A charge of up to 10% of the principal of the loan, upon its arrangement
- Legal expenses as mandated by courts that pertain to successful claims by lenders towards the recovery such loans
Fees for loans from moneylenders are as follows:
- Loan interest rates
- Late interest rates
- Late payment charges
- Upfront administrative expenses
The total of all such fees and expenses may not exceed the principal amount of the loan. In the example where you secure a loan of S$10,000, all interest, late interest, and administrative fees, including any late interest charges of up to S$60 per month, cannot exceed in total the original principal amount of S$10,000.