Key Takeaways
- Interest is capped at 4% per month on the outstanding balance, regardless of your income, your nationality, or whether the loan is secured
- Late interest is also capped at 4% per month, and it may only be charged on the amount that is actually overdue — not on the whole outstanding loan
- Permitted fees are limited to an administrative fee of up to 10% of the principal, a late fee of up to $60 per month, and legal costs ordered by a court. Nothing else
- The total charges on any loan cannot exceed the principal itself. Borrow $5,000 and the interest, late interest, admin fee and late fees can never add up to more than $5,000
- A licensed moneylender cannot keep your NRIC, ask for your SingPass password, have you sign a blank contract, or withhold part of your principal
- You are entitled to a copy of your contract, an explanation in a language you understand, a receipt for every payment, and a statement of account every January and July
You are about to sit across a desk from someone who does this fifty times a week and knows exactly what they can get away with. You have never done it.
That asymmetry is what makes the first visit to a licensed moneylender feel like walking into a negotiation you are already losing.
You are not. The Moneylenders Act draws the boundaries before either of you sits down. This article lists them, one by one, so you walk in knowing the rules better than most people who have already borrowed.
1. They Cannot Charge More Than 4% Interest Per Month
The maximum interest rate a licensed moneylender may charge is 4% per month. This has applied since 1 October 2015. It applies regardless of your income level, and regardless of whether the loan is secured or unsecured.
The interest must be calculated on the principal remaining after your repayments have been applied. If you borrow $10,000 and you have repaid $4,000 of the principal, interest is calculated on $6,000, not $10,000.
If a lender quotes you a rate above 4% per month, they are in breach. If they calculate interest on your original loan amount after you have been repaying for months, they are in breach.
To understand how this rate compares to bank pricing and how to read the two against each other, see Personal Loan Interest Rates in Singapore Explained.
2. They Cannot Charge Late Interest on Money That Is Not Yet Due
Late interest is capped at 4% per month, and it may only be applied to the amount that is actually overdue.
Here is the worked version from MinLaw’s own guidance. You borrow $10,000. You miss your first installment of $2,000. The lender may charge late interest on that $2,000. They may not charge late interest on the remaining $8,000, because it is not yet due.
This one matters, because a lender who charges late interest on the full outstanding balance can turn a single missed month into a debt that runs away from you. That is not permitted, and it is exactly the sort of error a borrower who does not know the rule will simply pay.
If you have already missed a payment, read What Happens If You Miss a Moneylender Payment in Singapore for the full sequence of what can and cannot follow.
3. They Cannot Charge Fees That Are Not on the Permitted List
Since 1 October 2015, licensed moneylenders may impose only the following charges:
| Permitted charge | Maximum |
| Administrative fee, when the loan is granted | 10% of the principal |
| Late fee | $60 for each month of late repayment |
| Legal costs | Only as ordered by a court for a successful claim to recover the loan |
That is the complete list.
There is no processing fee. No insurance fee. No approval fee. No GST line on your interest. No “documentation charge.” If it is not on the table above, it cannot be charged.
And no fee may be collected before disbursement. The administrative fee is deducted from the loan at the point it is granted. A lender who asks you to transfer money to them before you receive anything is not conducting a legal transaction.
4. They Cannot Let the Total Cost Exceed What You Borrowed
This is the protection almost no borrower knows about, and it is the single most powerful number in the Act.
The total charges on any loan — interest, late interest, the administrative fee and late fees combined — cannot exceed an amount equivalent to the principal of the loan.
Borrow $10,000, and the total of every charge on that loan can never exceed $10,000.
Borrow $500, and the maximum you could ever be required to repay in total, in the worst case, is $1,000.
Debt from a licensed moneylender has a ceiling. That is the structural difference between the licensed system and a loan shark, and it is why the word “licensed” is not a marketing language. It is the ceiling.
5. They Cannot Hold Your Identity Documents or Your SingPass
A licensed moneylender must not:
- Retain your NRIC card, driver’s licence, passport, work permit, Employment Pass, or ATM card
- Ask for your SingPass user ID or password
- Acquire any information containing passwords to your accounts, including internet banking or email
There is no legitimate reason for any of these. Your identity documents are yours. Your SingPass credentials are yours, and sharing them is how loan scams turn into identity theft and unauthorised loans taken in your name.
If a lender holds your NRIC “until you repay,” walk out and report them.
6. They Cannot Have You Sign a Blank Contract, or Approve You Without Due Diligence
Two related protections.
A licensed moneylender must not ask you to sign a blank or incomplete Note of Contract. Every term must be filled in before your signature goes on it.
A licensed moneylender must not grant you a loan without exercising due diligence — for example, approving a loan over the phone, by SMS, or by email before they have even received your application form and supporting documents such as your income tax assessment and pay slips.
An approval that arrives before you have submitted anything is not a sign of a generous lender. It is a sign that no lending decision was made at all, because lending was never the plan. If the approval arrived by message, the channel already told you: Every Loan SMS and WhatsApp You Receive Is Illegal. Here Is the Rule.
7. They Cannot Withhold Part of Your Principal
You must receive the correct principal amount of your loan. The only permitted upfront deduction is the administrative fee of up to 10%.
If you are approved for $5,000, the maximum permitted deduction is $500, and $4,500 must reach you. If the lender hands you $4,000 and says the rest is being “held,” that is not a deduction. That is a breach.
Count the money before you leave.
What You Are Entitled To
The Act does not only restrict the lender. It gives you specific rights.
- The lender must explain the terms of the loan in a language you understand
- You must be given a copy of the loan contract
- You must be issued a receipt for every repayment you make. Check the name, amount and date
- You must receive a statement of account at least once every January and July
- Keep every receipt and statement. They are your evidence
If a Lender Crosses the Line
The ugly truth: knowing the rules does not stop a bad actor from breaking them. It only means you notice.
The path forward: noticing is the whole point, because the reporting channels work and they are free.
Report the moneylender to the Registry of Moneylenders at 1800-2255-529, or lodge a report through their online channel, with the lender’s business name, licence number and contact details. Provide your documents. The Registry does not disclose your details to the moneylender without your consent.
If a moneylender has harassed you during debt collection — vandalism, violence, or threatening words or behaviour — lodge a police report as well as informing the Registry. Debt collectors may lawfully contact you to ask for repayment. They may not threaten you.
If your difficulty sits on the bank side rather than the moneylender side, the numbers behind it are explained in The 12x Rule: Why Your Credit Cards Get Suspended in Singapore.
If you are struggling to repay, the Registry cannot renegotiate the loan for you, as it is a private contract. What exists instead is a list of voluntary welfare organisations that assist borrowers with licensed moneylender debt, including Credit Counselling Singapore for cases that also involve bank debt. Approaching them early is not a failure. It is the move that keeps a bad month from becoming a bad year.
Frequently Asked Questions
Can a licensed moneylender charge interest on my original loan amount for the whole tenure?
No. Interest must be calculated on the principal remaining after repayments have been applied to it. A lender computing interest on the original sum for the entire tenure, after you have been repaying for months, is not applying the rule correctly. Ask for the calculation in writing.
Is a licensed moneylender allowed to visit my home or my office?
Licensed moneylenders may take reasonable steps to recover debts, and approaching a debtor at their residence or workplace does not by itself constitute an offence, however embarrassing it may be. What is not permitted is vandalism, violence, or threatening words or behaviour. If any of that occurs, lodge a police report.
Can I stop a family member from borrowing from moneylenders?
The Registry cannot compel a lender to refuse someone who is otherwise legally eligible. What exists is self-exclusion, applied for voluntarily by the individual through the Moneylenders Credit Bureau. Once registered, licensed moneylenders may not grant that person any unsecured loan, apart from a debt consolidation loan. The minimum period is one or two years for Citizens and PRs, and two years for foreigners. It is voluntary, and no one can be excluded without their own consent.
What should I check before I sign?
The interest rate, the repayment schedule, every fee, the total repayable, and that no field on the contract is blank. Read it before you sign, not after. A lender who rushes you through the contract is telling you something about the contract. Our walkthrough of What to Expect at a Licensed Moneylender covers the full sequence.
How do I confirm a lender is actually licensed?
Check the official list published by the Ministry of Law at rom.mlaw.gov.sg. Do not rely on a license number shown on the lender’s own material, and do not rely on a list published by a lender. Use the registry.
Before You Sit Down
Every rule in this article exists because someone was harmed before it was written. The 4% cap, the fee list, the ceiling on total charges, the ban on holding your NRIC — none of these are courtesies. They were fought for.
Which means the person walking into that office is not powerless and never was. You are walking into a regulated transaction with a ceiling on what it can cost you, a written contract you are entitled to understand, and a registry that will hear you if the lender steps outside the line.
Read the rules once. Then walk in as someone who knows them.
One Lendify.sg application shows you which licensed lenders will consider your profile, before you sit down anywhere.
