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Unsecured Loan
Facts You Must Know When Applying For a Unsecured Loan in Singapore

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1. What should I consider before taking up a loan?

You should keep these in mind:

  • Have you consider other alternatives before approaching a moneylender.
    There are various financial assistance schemes offered by various Government agencies that you may contact them for assistance.
  • You are Legally obliged to fulfil any loan contract you enter into with a licensed moneylender.
  • Alway borrow only what you need and your ability to repay.
    Be mindful that if you are unable to meet the contractual terms, the late payment fees and interest payment will be a financial strain not just on yourself but also on your family.
  • The law requires moneylenders to explain the terms of a loan to you in a language you understand and to provide you with a copy of the loan contract.
    Make sure you fully understand the terms of the contract, in particular, the repayment schedule, the interest rate charged and the fees applicable.
  • Consider carefully before agreeing to any contractual term which allows a moneylender to lodge a caveat on the sale proceeds of your real estate property upon default of the loan repayment.
    When a caveat is lodged against your property, you will not be able to sell it without first repaying the moneylender in full.
    If the repayment is taken from the net proceeds from the sale of the property, it can wipe out all or a substantial portion of the proceeds.
  • DO NOT commit yourself to a loan until you are satisfied with the terms and conditions.

2. What are the fees that moneylenders can charge?

For loans contracted between 1 June 2012 and 30 September 2015, moneylenders are only permitted to charge six types of fees:

  • For each occasion of late repayment of principal or interest;
  • For each occasion the terms of the loan contract are varied at your request;
  • For each dishonoured cheque issued by you;
  • For each unsuccessful GIRO deduction from a bank account, as payment to the moneylender;
  • For early redemption of the loan or early termination of the contract; and
  • Legal costs incurred for the recovery of the loan.

Any other fees are not permitted, and are hence not enforceable by the moneylender.

With effect from 1 October 2015, all moneylenders are only permitted to impose the following charges and expenses:

  • a fee not exceeding $60 for each month of late repayment;
  • a fee not exceeding 10% of the principal of the loan when a loan is granted; and
  • legal costs ordered by the court for a successful claim by the moneylender for the recovery of the loan.

    The total charges imposed by a moneylender on any loan, consisting of interest, late interest, upfront administrative and late fee also cannot exceed an amount equivalent to the principal of the loan. [To illustrate, if X takes a loan of $10,000, then the interest, late interest, 10% administrative fee and monthly $60 late fees cannot exceed $10,000.]

3. What should I do after being granted a loan?

  • Make sure the moneylender delivers to you the full principal amount of the loan as stipulated in the Note of Contract, there should be no instalments or fees deducted up‐front.
  • Pay the loan instalments on time to avoid incurring late payment fees and late interest.
  • Make sure the moneylender issues to you a dated and signed receipt every time you repay your loan or pay any fees in cash, and check it for correctness (e.g. name, amount, date).
  • Make sure you receive a statement of account for all your loan(s) at least once every 6 months, and check it for correctness (e.g. name, amount, date); and
  • You should retain all statement of accounts and receipts of payments, as documentation and evidence of payments.

4. How can I tell whether an advertisement is from a licensed moneylender or an unlicensed moneylender?

Licensed moneylenders are permitted to advertise only through these three channels:

(a) business or consumer directories (in print or online media);

(b) websites belonging to the moneylender; and

(c) advertisements placed within or on the exterior of the moneylender’s business premises.

ALL OTHER CHANNELS ARE PROHIBITED.

5. In the event that I am standing as a surety for a loan, what should I look out for?

You should ensure that:

  • You understand your responsibilities as a surety;
  • You receive a copy of the Note of Contract at the time that the loan is granted to the borrower;
  • The moneylender has explained the terms in the Note of Contract in a language that you understand; and
  • The moneylender does not keep your NRIC card or any other personal ID documents (e.g.driver’s licence, passport).
  • The moneylender does not acquire any information that contains passwords to your user accounts (e.g. Singpass account, Internet banking account, email account).