According to an article recently released by in the news last year at November, the government has introduced a plan to cap loans from licensed money lenders in Singapore. Some earlier measures adopted were the 4 per cent licensed money lender Singapore interest rate to all borrowers, which was implemented in 2015.
Borrowers earning less than $20,000 per year will only be able to borrow a total of $3,000 regardless of the number of licensed money lenders that they have approached. However, for those borrowers that earn more than this amount, they are able to borrow a maximum of six times of their monthly income. This is all to prevent borrowers from borrowing an amount that they cannot repay.
All in all, the licensed money lender interest rate in Singapore is to be cap at 4 percent.
Now, a licensed money lender can only charge 6 types of fees excluding the interest that is to be charged. Some of these fees only apply in certain circumstances. Firstly, it would be late fees; whereby the fees should not exceed 4% on the outstanding amount, and they cannot accumulate monthly. Secondly, they are also allowed to charge an up-front service charge. Thirdly, in an event that there is a court challenge, the company is able to charge clients fees to cover the legal costs. Fourthly, they are able to charge you for each dishonoured cheque issued by you. They are also allowed to charge you for each unsuccessful GIRO deduction from a customer’s bank account that should have been used as payment. Lastly, they are allowed to charge you for any early return of the loan or termination of a loan contract.
For licensed money lender in Singapore, the interest rate that they can charge for secured loans and unsecured loans are at 13 percent and 20 per cent respectively for borrowers whose annual income is less than $30,000.
The total charges given by a moneylender to a borrower cannot exceed the amount equivalent to the total loan borrowed, which means that the company cannot charge you twice of the amount borrowed [If you take up a $1,000 loan, and even if you have payed the amount back late, and including the admin fee, the total amount charged cannot exceed $1,000].
If you are thinking of borrowing a loan from a licensed money lender and is wondering about the standard interest rates offered in the market, then you can take a look at the list of licensed money lenders that are approved by the government: https://www.mlaw.gov.sg/content/rom/en/information-for-borrowers/list-of-licensed-moneylenders-in-singapore.html
According to this list, the interest rate that is to be charged by all these money lenders are to be at 4 percent as mentioned above.