From 15 September, You Get Three Days to Change Your Mind About a Moneylender Loan
THE SHORT VERSION ✓Three business days to cancel on unsecured loans from licensed moneylenders. Business loans are excluded. ✓Cancel in time, and no interest is charged at all. ✓The lender may keep only a capped slice of the loan approval fee — and never more than the fee it actually charged you. ✓Whatever happens, you cannot end up repaying more than the principal amount of the loan. Singapore’s New Mandatory Cooling-Off Period for Licensed Moneylender Loans Singapore’s new mandatory cooling-off period lets you cancel an unsecured loan from a licensed moneylender within three business days — and caps what the lender is allowed to keep if you do. Here is what it covers, what cancelling actually costs, and where the rule stops. 01 What changed today Signing a loan agreement in Singapore used to be close to a one-way door. Change your mind the next morning and the moneylender was entitled to hold on to the entire loan approval fee, plus any interest that had already accrued — so a decision made under pressure on Monday was still costing you on Tuesday. From today, that door swings both ways. The Ministry of Law (“MinLaw”) has made a cooling-off period of three business days compulsory on every unsecured loan taken from a licensed moneylender, with one carve-out: business loans. Inside that window, you may cancel the loan and hand the money back at a sharply reduced cost. “Three business days” is counted the way you would hope. Saturdays, Sundays and Singapore public holidays are left out, so a loan signed on a Thursday still leaves you with Friday, Monday and Tuesday to reconsider — a genuine long weekend to think, not a technicality that expires before the working week restarts. 02 What cancelling costs you The cooling-off period is not a free trial, and it was never designed to be. A lender still does real work to approve a loan — identity checks, income verification, the credit assessment — and the rule lets it recover a capped part of that cost through the loan approval fee it charged you. PRINCIPAL OF THE UNSECURED LOAN (NON-BUSINESS) MOST THE LENDER MAY RETAIN IF YOU CANCEL $5,000 or less $50, and never more than the loan approval fee charged More than $5,000 3.5% of the loan principal, and never more than the loan approval fee charged Two things about that table are worth slowing down for. First, both figures are ceilings, not prices. If the approval fee you were charged was smaller than the cap, the smaller number is what the lender keeps. Second, the loan approval fee in Singapore is already capped at 10% of the principal under the moneylending rules — which means the 3.5% ceiling genuinely bites on larger loans, cutting the cost of a change of mind to roughly a third of what the fee would otherwise have been. The arithmetic of a cancellation is simple enough to do on the back of a receipt. You repay the cash that actually reached you — the principal minus the approval fee that was deducted upfront — plus the capped portion of that fee the lender is allowed to keep. No interest is charged for the days you held the money, and the total you hand back can never exceed the principal amount of the loan. What happens when cancelling on your loan? Enter the principal and the approval fee you were charged. Figures are an illustration of the cap, not a quote. LOAN PRINCIPAL ($) 10,000 APPROVAL FEE CHARGED (%) 10% Cash that reached you $9,000 Lender may retain $350 You repay to cancel $9,350 Above $5,000, the cap is 3.5% of the principal ($350) — or the fee you were charged, if that is lower. 03 Two worked examples EXAMPLE ONE $1,000 loan A 10% approval fee leaves $900 deducted upfront and $900 in your hands. You received $900 Lender may retain $50 You repay $950 Cost of changing your mind $50 EXAMPLE TWO $10,000 loan The same 10% fee means $1,000 deducted and $9,000 disbursed; above $5,000, the cap is 3.5%. You received $9,000 Lender may retain $350 You repay $9,350 Fee returned to you $650 The second illustration is our own working of the rule, not an example published by MinLaw. 04 Where the rule stops ●Business loans are out. The cooling-off period applies to unsecured personal borrowing; loans taken to fund a business fall outside it. ●Licensed lenders only. The rule is part of the framework governing licensed moneylenders. An unlicensed operator — a loan shark, whatever the advertisement calls itself — offers no cooling-off period, no fee cap, and no recourse, because it is breaking the law before you even sign. ●It is a right to cancel, not a right to keep the cash. Cancelling means returning the money that was disbursed to you, in full, within the window. 05 Why MinLaw brought it in MinLaw built the framework in consultation with the Credit Association of Singapore, the professional association representing licensed moneylenders, and the balance it was aiming for is stated plainly: give borrowers room to reconsider credit decisions that are sometimes made on impulse, while making sure lenders are still compensated for the work of granting a loan. The start date was not accidental either. MinLaw set commencement at 15 September 2026 to give licensed moneylenders time to adjust their processes and systems, with the Registry of Moneylenders working alongside the industry on implementation. Give borrowers room to reconsider credit decisions that are sometimes made on impulse, while making sure lenders are still compensated for the work of granting a loan. 06 The other change most borrowers missed Earlier this year, in April 2026, the Registry also updated its Professional Service Handbook for licensed moneylenders with three practices it encourages the industry to adopt: Rewards for paying well — discounts or rebates on interest and fees for borrowers who repay on time or settle ahead of schedule. Digital touchpoints — tools such as