To keep debts under control.
Starting October 1, the Ministry of Law (MinLaw) will implement new controls on the cost of borrowing from licensed moneylenders.
The laws will put new caps on loans. For instance, administrative fees will be capped at not more than 10% of the loan principal, while interest will be capped at not more than 4% per month.
Late interest rates will also capped at not over 4% per month, while late fees will have a cap of not over $60 per month.
Total borrowing costs should not exceed 100% of the loan principal.
These controls are the first of several changes MinLaw is making to strengthen the moneylending regulatory framework, following the Government’s acceptance of 12 recommendations made by the Advisory Committee on Moneylending in May this year.
“The controls on borrowing costs, in particular the total cap of 100 per cent of the loan principal, will help ensure that debts do not spiral out of control,” said Mr Kuo How Nam, member of the Committee and President of Credit Counselling Singapore.
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