Key Takeaways

• From 15 September 2026, a mandatory cooling-off period of three business days applies to unsecured loans, other than business loans, taken from licensed moneylenders.
• Saturdays, Sundays and public holidays in Singapore do not count towards the three business days.
• A borrower may cancel an eligible loan during the cooling-off period, even after the loan amount has been disbursed.
• No interest is charged when an eligible loan is cancelled within the cooling-off period.
• For a principal of S$5,000 or below, the licensed moneylender may retain up to S$50 of the approval fee.
• For a principal above S$5,000, the licensed moneylender may retain up to 3.5% of the principal.
• The amount retained cannot exceed the approval fee actually charged, while the total cancellation repayment cannot exceed the original principal.
• Borrowers should confirm the deadline, review the cancellation calculation and retain written records of the outcome.

Receiving the money from a loan can feel like the point at which the decision becomes final. However, a borrower may reconsider after reviewing the repayment schedule, speaking with family members or finding another way to manage the expense.

Singapore’s new moneylender cooling-off period provides eligible borrowers with a limited opportunity to cancel a covered loan after it has been taken. It does not allow borrowers to keep the funds without repayment. Instead, the borrower returns the amount disbursed together with the permitted portion of the approval fee, without being charged interest for the eligible cancellation.

This guide follows what happens from loan disbursement to the end of the cooling-off period, including how to check eligibility, calculate the repayment and record a cancellation correctly.

What Changes from 15 September 2026?

The Ministry of Law announced that the new framework will be implemented on 15 September 2026. It applies to unsecured loans, other than business loans, taken from licensed moneylenders in Singapore.

Before the new framework, a licensed moneylender could retain the full loan approval fee and any interest accrued when a borrower cancelled a loan. Under the new arrangement, only a regulated portion of the approval fee may be retained when an eligible loan is cancelled within the cooling-off period. No interest will be charged for that cancellation.

According to the official MinLaw announcement, the framework is intended to give borrowers an opportunity to reconsider their need for credit while recognising the work completed by licensed moneylenders when assessing and granting a loan.

Which Moneylender Loans Are Covered?

The new cooling-off period does not apply to every financial product. Its scope depends on the lender, the loan purpose and whether the loan is secured or unsecured.

A borrower taking an unsecured personal loan from a licensed moneylender may be covered, provided it is not a business loan and meets the applicable requirements.

If you are uncertain about the classification of your loan, check the contract and ask the licensed moneylender to confirm whether the cooling-off period applies.

What Happens After the Loan Is Disbursed?

The period after disbursement should be treated as an opportunity to verify what was agreed and determine whether the repayment commitment remains suitable.

Stage 1: Record the Amount You Received

Start by comparing the loan contract with the amount actually disbursed. Record the following information:

• original loan principal;
• approval fee charged;
• amount deducted before disbursement;
• net amount received;
• disbursement date;
• repayment schedule; and
• cooling-off cancellation deadline.

The principal and amount received may not be identical because an approval fee may have been deducted before the remaining amount was disbursed. This difference is important when calculating how much must be returned.

Borrowers should also understand the licensed moneylender contract terms they have accepted, including the repayment dates and applicable charges.

Stage 2: Use the Three Business Days to Review the Loan

The cooling-off period lasts for three business days. Saturdays, Sundays and public holidays in Singapore are excluded.

Three business days may therefore cover more than three calendar days. Do not rely solely on your own calendar calculation. Confirm the exact start and expiry of the period with the licensed moneylender and, where possible, obtain the deadline in writing.

Stage 3: Decide Whether to Cancel or Continue

Before deciding, consider whether the money is still needed and whether the instalments fit comfortably within your budget.

You should also check whether the funds remain available. If you have already spent part of the money, you will still need to return the full cancellation repayment required under the framework.

Keeping the loan means continuing with the interest, fees and instalments set out in the contract. Cancelling means promptly returning the amount required. Compare both outcomes before the deadline rather than assuming that one option will always be better.

Documents and Figures to Check Before Cancelling

Having the relevant documents ready can help you verify the cancellation amount and retain evidence of what happened.

Keep these documents together rather than relying only on a telephone conversation or verbal confirmation.

How Much Can the Licensed Moneylender Retain?

When an eligible loan is cancelled within the cooling-off period, the licensed moneylender may retain only a limited portion of the approval fee.

These limits do not mean the maximum amount will always be charged. The amount retained cannot exceed the approval fee that was actually imposed.

For example, if 3.5% of the principal is S$350 but the actual approval fee was S$200, the licensed moneylender may retain no more than S$200.

No interest is charged when the covered loan is cancelled within the cooling-off period.

How Is the Cancellation Repayment Calculated?

The cancellation repayment generally consists of two components:

Cancellation repayment = Amount disbursed after the upfront approval-fee deduction + permitted portion of the approval fee retained

The total repayment cannot exceed the original loan principal.

It is therefore important to distinguish between:

• Principal: The original loan amount stated in the contract
• Approval fee: The fee charged when the loan is granted
• Amount disbursed: The money received after the upfront fee deduction
• Retained fee: The portion of the approval fee that the lender is permitted to keep

Two Official Cancellation Examples from MinLaw

MinLaw provides two illustrations showing how the cancellation repayment works.

In the first example, the borrower receives S$900 after a S$100 approval fee is deducted from the S$1,000 principal. As the principal does not exceed S$5,000, the lender may retain up to S$50. The borrower therefore repays up to S$950.

In the second example, the borrower receives S$9,800 after a S$200 approval fee is deducted from the S$10,000 principal. Although 3.5% of S$10,000 is S$350, the actual approval fee was only S$200. The lender may retain no more than S$200, resulting in a maximum cancellation repayment of S$10,000.

How to Request and Record a Cancellation

If you decide to cancel, act before the applicable deadline.

1. Contact the licensed moneylender promptly. State clearly that you wish to cancel the eligible loan during the cooling-off period.
2. Follow the specified procedure. Use the cancellation method provided by the licensed moneylender rather than assuming that a message sent through any channel will be sufficient.
3. Request a written calculation. It should show the amount disbursed and the portion of the approval fee being retained.
4. Check the figures. Compare the calculation with your contract, disbursement record and the applicable retention limit.
5. Return the required amount. Use the payment method confirmed by the licensed moneylender.
6. Obtain a receipt. Keep proof showing the amount paid and payment date.
7. Request confirmation. Obtain written confirmation that the loan has been cancelled and whether any further action is required.

Do not wait until the final hour to submit the request. An incomplete request or payment problem close to the deadline may make the situation harder to resolve.

What the Cooling-Off Period Does Not Do

The new framework provides an important borrower protection, but it should not be misunderstood.

The cooling-off period is a limited opportunity to reconsider an eligible loan. It is not a payment holiday, interest-free borrowing arrangement or automatic cancellation.

What If You Decide to Keep the Loan?

If you decide that the loan remains necessary and affordable, no cancellation is required. However, you should retain the loan contract and follow the repayment schedule.

Record each instalment date and set aside the required amount before spending on non-essential items. Keep receipts for every payment and review your remaining balance regularly.

Our responsible borrowing checklist explains other considerations that can help borrowers assess affordability and manage repayment obligations.

If your circumstances change and you expect difficulty making a repayment, approach the licensed moneylender early. Waiting until several payments have been missed may increase the charges and make the situation more difficult to manage.

Frequently Asked Questions

When does the new moneylender cooling-off period start?

The mandatory cooling-off period takes effect on 15 September 2026. It applies to unsecured loans, other than business loans, taken from licensed moneylenders that fall within the framework from that date.

Does the cooling-off period begin before or after disbursement?

The framework allows a borrower to cancel a covered loan after it has been taken, and MinLaw’s illustrations calculate repayment using the amount already disbursed after the approval-fee deduction. Borrowers should confirm the exact start and expiry of their cooling-off period with the licensed moneylender.

Can I cancel an eligible loan after receiving the money?

Yes. A borrower may cancel a covered loan after receiving the money, provided the cancellation is made within the cooling-off period and the required amount is returned. This generally consists of the amount disbursed plus the permitted portion of the approval fee retained by the licensed moneylender.

What happens if a weekend falls within the three-day period?

Saturdays and Sundays do not count as business days. Public holidays in Singapore are also excluded. The cooling-off period may therefore cover more than three calendar days, so borrowers should confirm the precise deadline with the licensed moneylender.

Do I need to pay interest when cancelling?

No interest is charged when an eligible loan is cancelled within the cooling-off period. However, cancellation may not be completely free because the licensed moneylender may retain a limited portion of the approval fee.

How much of the approval fee may the lender retain?

For a principal of S$5,000 or below, the lender may retain up to S$50. For a principal above S$5,000, the lender may retain up to 3.5% of the principal. In both cases, the retained amount cannot exceed the approval fee actually charged.

What if I have already spent part of the loan money?

Spending part of the money does not reduce the cancellation repayment. If you cancel, you must still return the amount required under the framework. Check that you can assemble the full repayment before proceeding with the cancellation request.

How can I prove that I cancelled within the deadline?

Keep a dated copy of your cancellation request, the lender’s response, the repayment calculation, proof of payment and written confirmation that the loan was cancelled. Follow the cancellation procedure provided by the licensed moneylender and avoid relying solely on a verbal conversation.

Final Thoughts

The new moneylender cooling-off period gives eligible borrowers three business days to reconsider an unsecured non-business loan taken from a licensed moneylender. It offers a clearer cancellation route, but borrowers remain responsible for returning the amount disbursed together with the permitted portion of the approval fee.

After receiving the loan, record the principal, approval fee and amount disbursed. Confirm the precise deadline, review whether the instalments remain affordable and request a written calculation if you decide to cancel.

Whether you cancel or continue, act within the required timeframe and retain complete records of your decision.

Understand Your Loan Terms Before Proceeding

If you are considering a loan, take time to understand the principal, approval fee, interest, repayment schedule and total commitment before accepting the offer.

Horison Credit can explain the available loan terms and repayment requirements based on your circumstances. All applications remain subject to the applicable eligibility requirements and an assessment of repayment ability.

Submit a loan application to Horison Credit for assessment and review the offered terms carefully before proceeding.