Interest Rates

With effect 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 an unsecured or secured one. 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 computation of interest charged on the loan must be based on the amount of principal remaining after deducting from the original principal the total payments made by or on behalf of the borrower which are appropriated to principal. [To illustrate, if X takes a loan of $10,000, and X has repaid $4,000, only the remaining $6,000 can be taken into account for the computation of interest.]

The late interest can only be charged on an amount that is repaid late. The moneylender cannot charge on amounts that are outstanding but not yet due to be repaid. [To illustrate, if X takes a loan of $10,000, and fails to pay for the first instalment of $2,000, the moneylender may charge the late interest on $2,000 but not on the remaining $8,000 as it is not due yet.]


Borrower Requirements

Are foreigners eligible for loans as they are not mentioned in the Moneylender’s ACT?
The eligibility is decided by the moneylender. The moneylender does not contravene the Act in extending loans to foreigners.
Are moneylenders allowed to go to the borrowers’ homes to collect the money loaned?
In view of numerous harassment brought about by illegal moneylenders to their borrowers, Section 28 of the Act [Harassing borrowers, besetting his residence etc.] has been enacted to arrest such unlawful acts. The section generally refers to “Illegal moneylenders” and/or their representatives.
As a legal moneylender lender you can go to the borrowers’ residence. As a lender you must mind your mannerism in the words used and acts exhibited in a fashion that it is not perceived as threatening, alarming, abusive or insulting.
Can the moneylender ask for credit card information from the borrower?
The moneylender cannot ask for the credit card information of the borrower.
Is there a limit to the number of public nominations that any individual can submit?
There is no limit.
What avenues do borrowers have to look for a resolution if they feel that they have been unfairly treated or taken advantage of by the moneylender?
The Association has set up a mediation panel to mediate disputes between borrowers and Lender . [ Refer to the website – Mediation feature for details] The borrower can also seek the help of Consumer Protection Association for their disputes
What does having multiple borrowers and multiple sureties for the same loan mean?
It means that that the liability to repay the moneylender is shared by “Many”. Where one borrower fails to repay, the Moneylender can pursue legally for the full settlement of the outstanding and the legal cost incurred, from either or all the other borrowers and sureties.

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