Effective 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 interest charged on the loan must be based on the remaining principal after deducting any repayments made. For example, 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.
Late interest can only be charged on amounts that are repaid late, not on amounts that are outstanding but not yet due. For example, if X takes a loan of $10,000 and fails to pay the first installment of $2,000, the moneylender may charge late interest on $2,000 but not on the remaining $8,000 as it is not due yet.
Effective from 1 October 2015, moneylenders are only permitted to impose the following charges and expenses:
The total charges imposed by a moneylender on any loan, consisting of interest, late interest, upfront administrative, and late fee cannot exceed an amount equivalent to the principal of the loan. For example, 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.
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