Singapore mandates three-day cooling-off
From September 15, 2026, borrowers taking unsecured loans from licensed moneylenders will have a mandatory three-business-day cooling-off period, allowing
A mandatory cooling-off period for unsecured loans from licensed moneylenders will take effect in Singapore on September 15, 2026. The Ministry of Law (MinLaw) announced the new rule on Monday, August 31.
The three-business-day period, excluding Saturdays, Sundays, and public holidays, applies to all unsecured loans except those for business purposes. It is designed to give borrowers time to reconsider credit decisions made on impulse.
Under the new framework, borrowers who cancel during this window will pay no interest. Licensed moneylenders may only retain a portion of the loan approval fee to cover their costs. The amount they can keep depends on the loan size.
| Loan Principal Amount | Maximum Fee Retained by Moneylender on Cancellation |
|---|---|
| Up to S$5,000 | Up to S$50 (not exceeding the approval fee charged) |
| Above S$5,000 | Up to 3.5% of the principal (not exceeding the approval fee charged) |
Currently, lenders can keep the full approval fee and any accrued interest if a borrower cancels. The change significantly reduces the cost of reconsideration.
Borrower repayment calculations
Borrowers will need to repay only the principal amount disbursed, minus the upfront approval fee deduction, plus the portion of the fee the moneylender is allowed to retain. "There will not be any interest charged, and the total amount to be repaid by the borrower cannot exceed the principal amount of the loan," MinLaw stated.
The ministry provided an example. A borrower taking a S$1,000 loan would receive S$900 after a 10% approval fee (S$100) is deducted upfront. If they cancel during the cooling-off period, they would repay up to S$950. This comprises the S$900 disbursed and the S$50 the moneylender may retain from the fee.
Industry consultation and implementation
The framework was developed in consultation with the Credit Association of Singapore, which represents licensed moneylenders. MinLaw said it aims to balance borrower protection with maintaining access to credit from licensed sources. It also ensures moneylenders are compensated for work done in granting a loan.
MinLaw noted that licensed moneylenders will need time to adjust their processes and systems. The ministry will work closely with relevant parties to ensure a smooth rollout.
This regulatory update follows other borrower-friendly measures. In April, the Registry of Moneylenders updated its handbook to encourage practices like offering incentives for timely repayments and providing digital loan management tools. Licensed moneylenders are also prohibited from soliciting loans via text messages, phone calls, or social media. They must conduct in-person, face-to-face identity verification at an approved place of business before granting any loan.
