Why Trust MoneySmart?Licensed moneylenders in Singapore are legally capped at charging a maximum interest rate of 4% per month. This ceiling is set by the Ministry of Law and applies to all borrowers, regardless of your income level, and applies equally to both secured and unsecured loans. Any lender advertising or charging a higher interest rate is operating outside the law. On MoneySmart, listed licensed moneylenders' promoted annual interest rates range from about 9.00% p.a. to 26.60% p.a.
How interest is calculated
Interest on loans from licensed moneylenders is always charged on a reducing-balance basis, not on the original principal amount.
With every repayment, your outstanding principal goes down, and interest is calculated on the new, lower balance for the next month.
Example: If you borrow $10,000 and repay $4,000, the following month’s interest is charged on the remaining $6,000 only.
Rules for late interest and fees
The Singapore government tightly regulates additional charges to protect borrowers from runaway debt.
Late interest: Can be up to 4% per month, but only on the overdue amount—not on your entire outstanding balance.
Administrative fee: Licensed moneylenders can charge a one-time admin fee up to 10% of the principal, typically deducted upfront.
Late payment fee: Maximum of $60 per month for each month you miss or delay a payment.
Total charges cap: All interest, late interest, and fees combined cannot exceed the original amount you borrowed.
Beware of unlicensed moneylenders (loan sharks)
If a lender charges more than the 4% per month legal cap, they are almost certainly an unlicensed moneylender—commonly called a loan shark. These illegal lenders often disguise their practices, levy hidden or exorbitant fees, and may harass or threaten borrowers in attempts to collect debts. Avoid them at all costs and report suspicious lenders.
How to protect yourself
Always verify the lender’s licence on the Ministry of Law’s Registry of Moneylenders.
Insist on receiving a clear, written contract that outlines all interest rates, fees, and repayment terms before you sign.
Report any suspicious advertisements, harassment, or illegal lending activities to the Registry of Moneylenders immediately.
💡 Having trouble choosing the right licensed moneylender? |
Let us do the work for you! Compare all licensed moneylenders at one glance on our alternate lenders comparison page! |
