Licensed Moneylender Cooling-Off Period Singapore: New Rules From 15 September 2026
Singapore will introduce a new borrower-protection measure for loans taken from licensed moneylenders.
From 15 September 2026, borrowers who take certain unsecured loans from licensed moneylenders will receive a mandatory cooling-off period of three business days. During this period, an eligible borrower may cancel the loan at a reduced cost.
The new licensed moneylender cooling-off period in Singapore gives borrowers time to reconsider whether the loan is necessary and affordable after receiving the funds.
However, the cooling-off period does not mean that cancellation is completely free. The borrower must return the amount disbursed, while the licensed moneylender may retain a limited portion of the loan approval fee.
This guide explains which loans qualify, how the three business days are counted, what borrowers may have to repay and what to do when cancelling an eligible loan.
Effective date notice: The new cooling-off period takes effect on 15 September 2026. Loans taken before that date may not receive the same cancellation treatment.
Key Takeaways
- The new cooling-off period starts on 15 September 2026.
- It lasts for three business days.
- Saturdays, Sundays and Singapore public holidays are excluded.
- It applies to unsecured loans from licensed moneylenders.
- Business loans are excluded.
- Secured loans are not covered by the announced framework.
- Eligible borrowers may cancel their loans at a reduced cost.
- No interest will be charged when an eligible loan is cancelled during the cooling-off period.
- For loans of S$5,000 or less, the lender may retain up to S$50 of the loan approval fee.
- For loans above S$5,000, the lender may retain up to 3.5% of the principal.
- The retained amount cannot exceed the loan approval fee originally charged.
- The total cancellation repayment cannot exceed the original principal.
What Is the New Licensed Moneylender Cooling-Off Period?
On 31 August 2026, Singapore’s Ministry of Law announced that a mandatory cooling-off period would be imposed on eligible loans granted by licensed moneylenders.
The cooling-off period allows a borrower to reconsider an unsecured personal loan after it has been granted.
If the borrower decides that the loan is unnecessary, unaffordable or unsuitable, the borrower may cancel it during the cooling-off period at a reduced cost.
Previously, when a borrower cancelled a loan, the licensed moneylender could retain the full loan approval fee and any interest that had accrued.
Under the new framework, the lender may retain only a limited portion of the approval fee when an eligible loan is cancelled within the cooling-off period. No interest will be charged for the cancellation.
The framework takes effect on 15 September 2026. Borrowers can read the official Ministry of Law announcement for the latest information.
How Long Is the Cooling-Off Period?
The mandatory cooling-off period lasts for three business days.
For this purpose, business days exclude:
- Saturdays
- Sundays
- Public holidays in Singapore
Calendar days and business days are therefore not the same.
Simple example
If an eligible loan is taken on a Monday and there are no public holidays during the week, the three-business-day period would ordinarily involve Tuesday, Wednesday and Thursday.
If the period crosses a weekend or a Singapore public holiday, the excluded day would not count as one of the three business days.
Borrowers should confirm the exact start and end time with the licensed moneylender when the loan is granted. Do not estimate the deadline yourself when a cancellation is being considered.
Which Loans Are Covered?
According to the Ministry of Law announcement, the cooling-off period applies to:
- Unsecured loans
- Granted by a licensed moneylender
- Taken on or after 15 September 2026
- Loans that are not business loans
This may include eligible unsecured:
- Personal loans
- Payday loans
- Short-term loans
- Monthly instalment loans
- Foreigner loans
- Medical loans
- Wedding loans
- Education loans
- Renovation loans
Whether a particular loan falls within the framework depends on its legal classification and contract terms.
Borrowers should not assume that a product’s marketing name determines whether it qualifies. Confirm with the licensed moneylender whether the loan is an eligible unsecured non-business loan.
Which Loans Are Excluded?
The announced cooling-off framework does not apply to:
Business loans
An unsecured loan taken as a business loan is specifically excluded.
Borrowers should understand whether they are applying in a personal or business capacity before signing the contract.
Secured loans
The announcement covers unsecured loans. Therefore, a loan secured against property or another asset is not included within the announced framework.
Loans taken before 15 September 2026
The cooling-off period is implemented from 15 September 2026. A borrower should not assume that a loan granted before the effective date can be cancelled using the new rules.
How Much Can the Moneylender Retain?
When an eligible loan is cancelled within the cooling-off period, the licensed moneylender may retain only a limited portion of the loan approval fee.
The maximum depends on the principal amount.
| Original loan principal | Maximum approval fee that may be retained |
|---|---|
| S$5,000 or less | Up to S$50 |
| More than S$5,000 | Up to 3.5% of the principal |
There is another important limitation: the lender cannot retain more than the loan approval fee that was originally charged.
Therefore, the amount retained is the lower of:
- The permitted cooling-off limit; or
- The actual loan approval fee charged
Example 1: Cancelling a S$1,000 Loan
Assume the following:
- Loan principal: S$1,000
- Loan approval fee: 10%, or S$100
- Amount disbursed after the fee: S$900
If the borrower cancels during the cooling-off period:
| Calculation | Amount |
|---|---|
| Amount received by borrower | S$900 |
| Maximum approval fee retained | S$50 |
| Maximum amount to be repaid | S$950 |
| Interest charged | S$0 |
The lender may retain up to S$50 because the principal is S$5,000 or less.
The borrower would not repay the full S$1,000 in this example because only S$50 of the original S$100 approval fee may be retained.
Example 2: Cancelling a S$5,000 Loan
Assume:
- Principal: S$5,000
- Approval fee: S$500
- Amount disbursed: S$4,500
If the loan is cancelled within the cooling-off period:
| Calculation | Amount |
|---|---|
| Amount received | S$4,500 |
| Maximum fee retained | S$50 |
| Maximum cancellation repayment | S$4,550 |
| Interest | S$0 |
Although the original approval fee was S$500, the lender may retain no more than S$50 because the principal does not exceed S$5,000.
Example 3: Cancelling a S$10,000 Loan
Assume:
- Principal: S$10,000
- Approval fee charged: 2%, or S$200
- Amount disbursed: S$9,800
For loans above S$5,000, the percentage limit is 3.5% of the principal.
In this example:
- 3.5% of S$10,000 is S$350
- The actual approval fee charged was only S$200
- The lender cannot retain more than the actual S$200 fee
The calculation would therefore be:
| Calculation | Amount |
|---|---|
| Amount received | S$9,800 |
| Maximum fee retained | S$200 |
| Maximum cancellation repayment | S$10,000 |
| Interest | S$0 |
The lower limit applies. Although 3.5% would produce S$350, only S$200 was originally charged.
Is Interest Charged When the Loan Is Cancelled?
No interest will be charged when an eligible loan is properly cancelled during the cooling-off period.
According to the Ministry of Law, the borrower’s repayment will consist of:
- The remaining principal amount disbursed after the loan approval fee was deducted; and
- The portion of the approval fee that the lender is allowed to retain.
The total amount repayable for the cancellation cannot exceed the original principal.
This protection applies to a qualifying cancellation during the cooling-off period. It should not be confused with ordinary repayment after the cooling-off period has ended.
Learn more about regular loan costs in EZ Pte Ltd’s guide to licensed moneylender interest rates in Singapore.
Is Cancelling a Loan Completely Free?
Not necessarily.
Although no interest will be charged, the licensed moneylender may retain part of the original loan approval fee.
For loans of S$5,000 or less, the lender may retain up to S$50.
For loans above S$5,000, the lender may retain up to 3.5% of the principal.
In both cases, the amount cannot exceed the approval fee originally charged.
The purpose of allowing the lender to retain a limited amount is to cover part of the overhead and due-diligence costs involved in processing and granting the loan.
How to Cancel a Loan During the Cooling-Off Period
The Ministry of Law announcement establishes the cancellation framework but borrowers should follow the licensed moneylender’s prescribed cancellation procedure.
A borrower considering cancellation should:
1. Contact the lender immediately
Do not wait until the third business day. Inform the lender as soon as you decide to reconsider the loan.
2. State the request clearly
Tell the lender that you want to cancel the eligible loan during the mandatory cooling-off period.
3. Request the cancellation calculation
Ask for a written breakdown showing:
- Original principal
- Original approval fee
- Amount disbursed
- Portion of the fee being retained
- Interest charged
- Total amount required for cancellation
4. Confirm the repayment method
Use only the lender’s verified payment instructions. Do not transfer funds to an unfamiliar personal account.
5. Keep evidence
Retain:
- Your cancellation request
- Written calculation
- Payment receipt
- Loan contract
- Correspondence with the lender
- Written confirmation that the loan has been cancelled
6. Obtain final confirmation
Do not assume that sending a message alone completes the cancellation. Obtain written confirmation that the cancellation has been processed and that no further amount remains outstanding.
What the Cooling-Off Period Does Not Mean
It is not a three-day payment holiday
The cooling-off period is an opportunity to cancel an eligible loan. It does not mean the borrower can use the funds freely for three days without consequences.
Cancellation is not automatic
A loan remains active unless the borrower takes the required steps to cancel it.
It does not make every loan reversible
Business loans, secured loans and loans outside the effective framework are not covered by the announced protection.
It does not make borrowing risk-free
A limited cancellation right does not remove the need to review affordability before signing.
It does not allow borrowers to keep the funds
The amount disbursed must be repaid as part of the cancellation process, together with the permitted portion of the approval fee.
Questions to Ask Before Accepting a Loan
The cooling-off period provides additional protection, but borrowers should still understand the contract before accepting any money.
Ask the lender:
- Is this loan unsecured?
- Is it classified as a personal or business loan?
- Does the mandatory cooling-off period apply?
- When does my cooling-off period begin?
- What is the exact cancellation deadline?
- How do I submit a cancellation?
- How much was deducted as the approval fee?
- How much could the lender retain if I cancel?
- What payment method must I use?
- When will I receive written cancellation confirmation?
Review your estimated instalments using EZ Pte Ltd’s loan calculator before deciding whether the proposed repayment is affordable.
Why Has the Cooling-Off Period Been Introduced?
The framework is intended to give borrowers an opportunity to reconsider a need for credit that may have arisen impulsively.
Financial decisions are sometimes made under pressure because of:
- An urgent bill
- A medical expense
- A temporary salary gap
- Family pressure
- Multiple repayment obligations
- Fear of missing a deadline
The three-business-day period gives an eligible borrower additional time to review the cost and decide whether the loan remains necessary.
The framework was developed by the Ministry of Law in consultation with the Credit Association of Singapore. It seeks to balance borrower protection with compensating licensed moneylenders for the work involved in assessing and granting a loan.
Borrow Responsibly Even With a Cooling-Off Period
Before taking any loan, calculate whether the instalments will fit your monthly budget.
Consider:
- Income after CPF and other deductions
- Rent or mortgage
- Food and transport
- Utilities
- Insurance
- Medical expenses
- Family commitments
- Existing loans and credit-card repayments
- Emergency savings
A loan should address a genuine financial need without making essential expenses unaffordable.
Check EZ Pte Ltd’s loan eligibility requirements and understand the complete repayment schedule before signing.
How to Verify a Licensed Moneylender
The cooling-off protection applies to loans from licensed moneylenders. Borrowers should therefore verify the lender before applying.
Check that the following information matches the Ministry of Law’s official registry:
- Company name
- Licence number
- Approved office address
- Contact information
Be cautious if someone:
- Sends unsolicited loan offers through SMS or WhatsApp
- Guarantees approval
- Requests an upfront payment
- Asks for your Singpass password
- Offers to grant a loan without meeting you at the approved office
- Refuses to provide a proper contract
- Uses another company’s licence number
Read how to identify a licensed moneylender in Singapore before submitting personal information.
Frequently Asked Questions
When does the new cooling-off period begin?
The mandatory cooling-off period takes effect on 15 September 2026.
How long is the cooling-off period?
It lasts for three business days. Saturdays, Sundays and Singapore public holidays are excluded.
Does the cooling-off period apply to all moneylender loans?
No. It applies to unsecured loans from licensed moneylenders, excluding business loans.
Are business loans covered?
No. Business loans are expressly excluded from the announced framework.
Are secured loans covered?
The announcement applies to unsecured loans. Secured loans are not included in the announced framework.
Will I be charged interest if I cancel?
No interest will be charged when an eligible loan is cancelled during the cooling-off period.
Is cancellation free?
Not necessarily. The lender may retain a limited portion of the loan approval fee.
How much can the lender retain for a loan of S$5,000 or less?
The lender may retain up to S$50, but not more than the approval fee originally charged.
How much can the lender retain for a loan above S$5,000?
The lender may retain up to 3.5% of the principal, but not more than the approval fee originally charged.
Can the cancellation repayment exceed the original principal?
No. The total amount to be repaid for an eligible cancellation cannot exceed the loan principal.
Is the loan cancelled automatically after three days?
No. The borrower must follow the applicable cancellation procedure during the cooling-off period.
Should I keep proof of cancellation?
Yes. Keep your request, payment receipt and written confirmation that the loan has been cancelled.
Final Thoughts
The new licensed moneylender cooling-off period in Singapore gives eligible borrowers three business days to reconsider an unsecured non-business loan.
From 15 September 2026, a qualifying borrower who cancels during this period will not be charged interest. The licensed moneylender may retain only a limited portion of the approval fee, and the total cancellation repayment cannot exceed the original principal.
The cooling-off period is an important additional safeguard, but borrowers should still assess affordability carefully before signing.
EZ Pte Ltd explains the loan principal, approval fee, interest and repayment schedule before a borrower enters into a contract. If you have questions about how the new cooling-off framework applies to a particular loan, contact EZ Pte Ltd for clarification.
This article provides general information and does not constitute legal or financial advice. The cooling-off framework takes effect on 15 September 2026. Refer to the Ministry of Law and your loan documents for the applicable requirements.
