To help borrowers understand the maximum allowable interest and fees under the current rules and regulations applied to moneylenders in Singapore, we have put together a handy example loan calculation to illustrate the maximum legal cost of a hypothetical $1,000 one-month loan.
|Upfront Administrative Fee: 10% of principal, maximum||$100|
|Interest: 4% nominal interest rate (NIR) per month, maximum||$40|
|Total if paid on time:||$1140 (114% of principal)|
|Additional month of interest: 4% nominal interest rate (NIR) per month, maximum||$40|
|Late interest: 4% late nominal interest rate (NIR) per month (2 months), maximum||$80|
|Late fees: $60 per month, maximum||$60|
|Total if paid 1 month late:||$1,320 (132% of principal)|
|NOTE: *Total borrowing costs are capped at 100% of principal. This means no matter how late a loan is repaid, a moneylender may only collect a maximum of $2,000 total on a $1,000 loan.|
As you can see from our hypothetical example above, for a one-month loan paid on time, the maximum a lender can legally charge you is 14% of the principal. Should you repay a one-month loan one month late, the maximum you can be charged is 32% of the principal. Regardless of how long you take to repay your loan, lenders may not charge more than 100% of the principal you borrowed in total fees, interest, late fees and late interest.
If you suspect you have been overcharged, you may wish to read this guide on how to file a complaint against a licensed moneylender. Also see our recent article detailing actual current loan offers from licensed lenders in Singapore.