Laws in Singapore Govern Interest, Late Fees and other Charges on Loans

Laws in Singapore Govern Interest, Late Fees and other Charges on Loans

Money lenders in Singapore, for a secured loan, can loan any amount. But for those loans that arenot secure, you are able to borrow:

  • Up to $3,000, when your yearly income is below $20,000;
  • Loan amount can be total of 2 months income, when yearly income is $20,000 or more and less than $30,000;
  • Loan amount equal to 4 months income, when yearly income is $30,000 or more and less than $120,000;
  • Loan amount can be anything when your yearly income is $120,000 or more. 

Interest rates

In October of 2015 laws covering interest rates when into effect. The maximum the interest rate money lender Singapore can charge is 4% eachmonth. This cap is applicable no matter what the borrower’s yearlyincome is and whether the loan is a secured or unsecured loan. When the borrower of the loanfails to repay the loan on time, the maximum rate for late charges is 4% each month for any month that the loan payment is not made.

Interest charged

The interest rate on a loan is fixed on the principal after deducting from that original loan amount the total payments made. For example, if X takes out a loan of $5,000 and has repaid $1,000, only the remaining $4,000 can be considered for the calculation of interest or late fees.

Fees charged

Also going into effect October 2015, the guidelines for maximum fees allowed to be charge went into effect. All licensed Singapore moneylenders can impose only the following expenses or charges:

  • Fee cannot exceed $60 for every month when payment is late;
  • Fee cannot exceed 10% of the loan when that loan is first granted.
  • Legal fees ordered by a court when there is aneffective claim by the moneylender for recovering the loan. This total charge ordered by the court and charged by a moneylender on any loan, consists of interest and late interest, an administration fee of 10% and $60 late fee, cannot surpass an amount equal to the loan principal. For example, if X has taken out a loan of $5000, the interest, late interest, administrative fee of 10% and $60 late fee monthly cannot be more than $5000.

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