From 15 September 2026, taking an unsecured loan from a licensed moneylender will no longer be an immediate point of no return. Eligible borrowers will have a mandatory cooling-off period of three business days in which they can cancel the loan at a reduced cost.
The change is narrower than the headline may suggest. It does not cover every loan, make cancellation free or remove the need to repay money already disbursed. It applies to unsecured loans from licensed moneylenders, other than business loans. Borrowers also need to act within the prescribed period.
The main parts of the new framework, announced by the Ministry of Law (MinLaw) on 31 August 2026, were reported by both CNA and The Straits Times.
The key details are easier to understand when the loan type, timing and cancellation cost are separated.
| Question | New Rule From 15 September 2026 |
|---|---|
| Which Loans Qualify? | Unsecured loans from licensed moneylenders, excluding business loans |
| How Long Is The Cooling-Off Period? | Three business days; Saturdays, Sundays and Singapore public holidays are excluded |
| Is Interest Charged After Cancellation? | No interest is charged when an eligible loan is cancelled within the cooling-off period |
| What Can The Moneylender Retain? | Up to S$50 for loans of S$5,000 or less; for loans above S$5,000, up to 3.5% of the principal. The amount cannot exceed the approval fee charged |
| What Must The Borrower Return? | The amount disbursed, plus the permitted portion of the approval fee; the total cannot exceed the loan principal |
Table of Contents
- What Changes On 15 September 2026?
- Which Loans Qualify For The Cooling-Off Period?
- How Much Does It Cost To Cancel?
- How Are The Three Business Days Counted?
- What Should You Do If You Want To Cancel?
- What Does Not Change?
- What Should You Check Before Borrowing?
- FAQs
- What This Means For Borrowers
What Changes On 15 September 2026?
Before this framework, a licensed moneylender could retain the full loan approval fee and charge accrued interest when a borrower cancelled a loan. From 15 September, cancelling an eligible loan during the cooling-off period will not attract interest. The moneylender may retain only a limited portion of the approval fee.
The purpose is to give borrowers time to reconsider a credit decision that may have been made under pressure or on impulse. However, it is a cancellation right with conditions, not a free trial of borrowed money. The borrower must return the sum that was actually disbursed and pay the permitted retained fee.
It also does not replace the checks that should happen before signing. A cooling-off period may reduce the cost of changing your mind, but it cannot make an unsuitable loan affordable.
Also Read: How To Tell Whether A Debt Supports Or Strains Your Finances
Which Loans Qualify For The Cooling-Off Period?
The framework applies to unsecured loans from moneylenders licensed under the Moneylenders Act. An unsecured loan is not backed by collateral such as property. Business loans are expressly excluded, even if they are unsecured.
The announcement does not extend the framework to bank personal loans, credit cards, secured loans or loans from unlicensed lenders. Borrowers should therefore identify both the lender and the product before assuming that the new protection applies.
If the loan contract describes the purpose as business-related, or if there is any doubt about whether the loan is secured, ask the lender to confirm the classification and cooling-off deadline in writing before you sign.
How Much Does It Cost To Cancel?
The cancellation cost depends on the loan principal. For a loan of S$5,000 or less, the licensed moneylender may retain up to S$50. For a loan above S$5,000, it may retain up to 3.5% of the principal. In both cases, it cannot retain more than the approval fee originally charged.
MinLaw’s reported example uses a S$1,000 loan with a 10% approval fee. The borrower receives S$900 after the S$100 fee is deducted. If the loan is cancelled during the cooling-off period, the borrower repays up to S$950: the S$900 disbursed, plus up to S$50 retained from the approval fee. No interest is added.
This is different from simply paying back the stated principal. Check the cash you actually received, the approval fee deducted and the amount the lender says it may retain. Keep the disbursement record and cancellation calculation together. The regular interest and fee rules for licensed moneylender loans still matter if you keep the loan beyond the cooling-off period.
How Are The Three Business Days Counted?
The period lasts three business days. Saturdays, Sundays and public holidays in Singapore do not count.
What is not stated in the available announcement is the universal operational cut-off: for example, the precise time the window begins, the time it expires, and whether a particular notice method will be prescribed for every lender. Borrowers should not guess these details from the phrase “three business days”.
Before leaving the approved place of business, ask the lender to write down the start date, expiry date, expiry time and accepted cancellation channel. If the deadline is close, send the notice through the stated channel promptly and request acknowledgement. A phone conversation alone may be difficult to prove later.
What Should You Do If You Want To Cancel?
The publicly reported framework explains the cost limits but does not set out a complete, universal cancellation procedure. Follow the procedure given in your contract and by the licensed moneylender. The following record-keeping steps can reduce avoidable disputes without assuming a legal notice method that has not been confirmed:
- Check That The Loan Is Covered. Confirm that it is an unsecured, non-business loan granted by a licensed moneylender on or after 15 September 2026.
- Confirm The Deadline. Ask for the final cancellation date and time in writing.
- Use The Stated Cancellation Channel. Follow the contract or lender’s written instructions rather than relying on an informal verbal request.
- Request An Itemised Amount. The calculation should distinguish the amount disbursed from the portion of the approval fee retained. Interest should not be charged for a valid cancellation within the period.
- Keep Proof. Retain the contract, disbursement record, cancellation notice, acknowledgement, payment receipt and any statement showing that the loan has been closed.
If the lender disputes whether the notice was on time, do not alter dates or rely on assumptions. Preserve the original records and seek clarification from the Registry of Moneylenders or independent legal advice where appropriate.
What Does Not Change?
The new protection does not make borrowing risk-free. If you do not cancel within the period, the loan continues under its contract. You remain responsible for repayments, interest and permitted fees. It is still sensible to compare the total repayment amount, repayment dates and early settlement terms before agreeing.
Existing borrower safeguards also remain important. The Registry of Moneylenders’ borrower FAQs state that a moneylender must explain the loan terms in a language you understand and give you a copy of the loan contract. The Registry also advises borrowers to consider whether repayments are manageable.
Licensed moneylenders cannot solicit loans through SMS, phone calls or social media, and they must conduct face-to-face identity verification at their approved place of business. Compare the details against the official list of licensed moneylenders, rather than trusting a link sent in an unsolicited message. A comparison of licensed lenders and loan sharks can help you recognise the practical warning signs.
What Should You Check Before Borrowing?
Treat the cooling-off period as a final safeguard, not the first stage of loan comparison. Before signing, check the amount you will receive after the approval fee, the instalment schedule, total repayment, late charges and whether the repayments fit your existing commitments.
Also check how much you may already owe across licensed moneylenders. The applicable borrowing limits do not show whether a new repayment is affordable for your household. A permitted loan can still be the wrong choice if it merely shifts an unpaid bill into a more expensive monthly commitment.
Also Read: What To Compare Before Choosing Your First Personal Loan
If your existing repayments are already unmanageable, taking another loan may deepen the shortfall. Contact the lender early and consider independent debt support instead of assuming that a new loan will solve the underlying problem.
Also Read: What To Do If You Cannot Repay A Moneylender
FAQs
Does The Cooling-Off Period Apply To Every Moneylender Loan?
No. It applies to unsecured loans from licensed moneylenders, excluding business loans. It does not cover bank loans, credit cards, secured loans or loans from unlicensed lenders.
Is Cancelling The Loan Free?
No. No interest is charged for an eligible cancellation within the cooling-off period, but the licensed moneylender may retain part of the approval fee. The cap is S$50 for loans of S$5,000 or less, or 3.5% of the principal for loans above S$5,000. The retained amount cannot exceed the approval fee charged.
Do Weekends And Public Holidays Count?
No. Saturdays, Sundays and Singapore public holidays are excluded from the three business days. Confirm the exact expiry date and time with the lender in writing because the available announcement does not provide a universal hour-by-hour calculation.
Can I Keep The Money After Cancelling?
No. You must return the amount disbursed, together with the permitted portion of the approval fee. The total repayment for the cancellation cannot exceed the loan principal.
What If A Lender Refuses A Valid Cancellation?
Keep the contract, your dated cancellation notice, acknowledgement attempts and payment records. Ask the lender to state its reason in writing. You may then contact the Registry of Moneylenders for regulatory guidance or obtain independent legal advice if the dispute concerns your contractual rights.
What This Means For Borrowers
The cooling-off period gives borrowers a real but limited chance to reverse an eligible loan decision. Its value lies in reducing the cost of a prompt cancellation: no interest, a restricted retained fee and a total repayment that cannot exceed the principal.
The safest approach is still to understand the contract before accepting the loan. If you proceed from 15 September 2026, ask the licensed moneylender to identify the cooling-off deadline and cancellation procedure in writing. If you change your mind, act early and keep a complete record.
News Reference: Licensed Moneylender New Cooling-Off Rule: Key Changes For Borrowers
Important note: This article is for general information only and does not consider your personal financial situation. Before taking a loan, review the loan contract carefully and make sure repayments are manageable.