Maximise Your Borrowing Power: Understanding the Money Lenders Act Maximum Interest Rate in Singapore

If you’re looking to borrow money in Singapore, you’ll want to familiarize yourself with the Moneylenders Act and its maximum interest rates. The Moneylenders Act is an important piece of legislation that regulates the moneylending industry in Singapore. It sets out the rules and regulations that moneylenders must follow, including the maximum interest rates they can charge.

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Money lenders set high interest rates

Under the Moneylenders Act, the maximum interest rate that moneylenders can charge is 4% per month. This cap applies regardless of the borrower’s income and whether the loan is an unsecured or secured one. The maximum interest rate is designed to protect borrowers from being charged excessive interest rates and from falling into debt traps.

Compliance with the Moneylenders Act is crucial for both borrowers and moneylenders. Failure to comply with the Act can result in hefty fines and legal action. As a borrower, it’s important to ensure that you’re dealing with a licensed moneylender who is in compliance with the Act. This will help you avoid falling victim to loan sharks and other unscrupulous lenders who may charge exorbitant interest rates and engage in illegal practices.

Key Takeaways

  • The Moneylenders Act sets the maximum interest rate that moneylenders can charge in Singapore at 4% per month.
  • Compliance with the Moneylenders Act is crucial for both borrowers and moneylenders to avoid legal action and hefty fines.
  • Dealing with licensed moneylenders who comply with the Act can help borrowers avoid falling victim to loan sharks and other unscrupulous lenders.

Understanding the Money Lenders Act

A money lender sits at a desk, counting a stack of bills while a sign prominently displays the maximum interest rate allowed by the Money Lenders Act

If you are considering taking out a loan from a moneylender, it is important to understand the regulations set out in the Moneylenders Act. This act is designed to protect borrowers from unscrupulous lenders and ensure that the lending industry operates in a fair and transparent manner.

Key Provisions and Interest Rate Caps

One of the key provisions of the Moneylenders Act is the cap on interest rates that moneylenders can charge. Since October 1, 2015, moneylenders are restricted to charging a maximum interest rate of 4% per month. This interest rate limit applies universally, regardless of the borrower’s income level or whether the loan is secured or unsecured.

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In addition to the interest rate cap, the Moneylenders Act also specifies that moneylenders can only impose certain fees and charges. These include a one-time administrative fee of up to 10% of the principal loan amount, and a late interest fee of up to 4% per month on the outstanding amount of the loan.

Licencing Requirements for Moneylenders

To operate as a moneylender in Singapore, a person or business must hold a valid licence issued by the Registry of Moneylenders. This licence is only issued to individuals who meet certain criteria, including passing a fit and proper test, having a good credit history, and demonstrating an understanding