Determine the loan that suits your needs.

You should keep these key points in mind:

• Before approaching a moneylender, consider other alternatives, such as the various financial assistance schemes offered by Government agencies. You may contact the agencies to find out more about their schemes.
• You are legally obliged to fulfil any loan contract you enter into with a licensed moneylender. Consider whether you are able to abide by the contractual terms, bearing in mind your income and financial obligations.
• Borrow only what you need and are able to repay. 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 — in particular the repayment schedule, the interest rate charged and the fees applicable.
• Consider carefully before agreeing to any term which allows a moneylender to lodge a caveat on the sale proceeds of your property upon default. Once a caveat is lodged you cannot sell the property without first repaying the moneylender in full, and repayment from the net proceeds can wipe out all or a substantial portion of them.
• Shop around different moneylenders for the most favourable terms. Do not rush into a loan until you are satisfied with the terms and conditions.

For secured loans, you can obtain a loan of any amount. For unsecured loans:

Singaporeans and Permanent Residents

• If your annual income is less than $20,000, you can borrow up to $3,000.
• If your annual income is at least $20,000, you can borrow 6 times your monthly income.

Foreigners residing in Singapore

• If your annual income is less than $10,000, you can borrow up to $1,500.
• If your annual income is at least $10,000 but less than $20,000, you can borrow up to $3,000.
• If your annual income is at least $20,000, you can borrow up to 6 times your monthly income.

With effect from 1 October 2015, the maximum interest rate moneylenders can charge is 4% per month. This cap applies regardless of the borrower’s income and whether the loan is unsecured or secured.

If a borrower fails to repay the loan on time, the maximum rate of late interest a moneylender can charge is 4% per month for each month the loan is repaid late.

The computation of interest charged on the loan must be based on the amount of principal remaining after deducting from the original principal the total payments made by or on behalf of the borrower which are appropriated to principal.

To illustrate: if X takes a loan of $10,000 and has repaid $4,000, only the remaining $6,000 can be taken into account for the computation of interest.

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 on any loan — interest, late interest, the upfront administrative fee and late fees — 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.

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.
• The moneylender does not keep your NRIC card or any other personal identification documents (for example, driver’s licence or passport).
• The moneylender does not acquire any information that contains passwords to your user accounts (for example, Singpass, internet banking or email accounts).

• Make sure the moneylender delivers to you the correct principal amount of the loan. The moneylender is only permitted an upfront deduction of a loan approval fee of up to 10% of the principal amount.
• 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 (name, amount, date).
• Make sure you receive a statement of account for all your loans at least once every 6 months, and check it for correctness.
• Retain all statements of account and receipts of payment as documentation and evidence of payment.