Guide to Borrowing from a Licensed Moneylender in Singapore?

1.   What should I consider before taking a loan?

– Consider other alternatives, such as the various financial assistance schemes offered by various Government agencies.
– Consider whether you are able to abide by the contractual terms. Bear in mind your income and financial obligations. Thus only borrow what you need and are able to repay.
– Consider carefully before agreeing to any contractual term which allows a moneylender to lodge a caveat on the sales proceeds of your real estate property upon default of the loan repayment.

2.   How much can I borrow?

For secured loans, you can obtain a loan of any amount. On the other hand, for unsecured loans you can obtain:
(A) Up to $3,000, if your annual income is less than $20,000.
(B) Up to 2 months’ income, if your annual income is $20,000 or more but less than $30,000.
(C) Up to 4 months’ income, if your annual income is $30,000 or more but less than $120,000
(D) Any amount if your annual income is $120,000 or more.

3.   How much interest can moneylenders 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.

4.   What are the fees moneylenders can charge?

With effect from 1 October 2015, all moneylenders are only permitted to impose the following charges and expenses:
(A) A fee not exceeding $60 for each month of late payment.
(B) A fee not exceeding 10% of the principal of the loan when a loan is approve.
(C) Legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

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