A loan agreement is a legal document — understanding it before you sign protects you from unexpected fees or unfavorable terms. Here’s what every borrower in Singapore should check. Note that under Singapore law, the agreement is signed in person at the moneylender’s office as part of finalizing your loan.
How do I read and understand a loan agreement in Singapore?
A licensed moneylender’s loan agreement in Singapore must clearly state the principal amount, interest rate (capped at 4% per month), late payment fees, and repayment schedule. Before signing at our office, check that the moneylender’s name and license number match the official Registry of Moneylenders.
5 things to check before signing
Principal amount — the exact sum being borrowed, matching what you applied for.
Interest rate — by law, capped at 4% per month for licensed moneylenders.
Fees — check for late payment fees and any early repayment fees.
Repayment schedule — instalment amounts, due dates, and total number of instalments.
Pressure to sign without time to read the agreement
A lender who isn’t listed in the official Registry of Moneylenders
Vague or missing repayment terms
Any request to sign or receive funds anywhere other than the licensed moneylender’s registered office
Read more borrower guides on our Blog, or if you’re ready, apply for a loan online with a fully licensed moneylender.
What are my rights as a borrower in Singapore?
As a borrower dealing with a licensed moneylender in Singapore, you’re legally entitled to:
A contract you understand — the moneylender must explain all loan terms in a language you understand and give you a copy of the Note of Contract before signing.
Capped interest — a maximum of 4% per month, regardless of your income or whether the loan is secured or unsecured. Late interest is also capped at 4% per month, and only on the overdue instalment amount.
Capped fees — a one-time upfront fee of up to 10% of the principal, and late payment fees of up to $60 per month. Total charges (interest, late interest, and fees combined) can never exceed the loan principal.
The full loan amount — the moneylender can only deduct the upfront admin fee (max 10%); they cannot withhold any other part of your principal.
A receipt for every repayment, and a statement of account at least twice a year (every January and July).
In-person verification — a licensed moneylender must meet you in person at their registered office before granting a loan; they cannot approve a loan solely by phone, SMS, or email.
Protection from harassment — no threats, abusive language, or intimidation during debt collection; you can lodge a police report if this happens.
The right to complain — you can report unfair practices to the Registry of Moneylenders, or pursue the matter in court under the Consumer Protection (Fair Trading) Act.
Source: Ministry of Law, Registry of Moneylenders — FAQs on Borrowing From Licensed Moneylenders
What's the difference between licensed and illegal moneylenders in Singapore?
Licensed moneylenders are registered with the Ministry of Law, follow interest rate caps, and require in-person signing at a registered office — illegal moneylenders operate outside these protections and regulations.
