A monthly instalment loan sounds simple: borrow a sum, repay it in equal amounts every month until it is cleared. That is broadly right. The useful detail lives underneath — how each instalment is split, what happens in the first days after the money reaches you, and what a missed payment triggers.
This guide walks through a loan from application to final payment, with actual figures, including a rule that changed recently: since 15 September 2026, unsecured personal loans from licensed moneylenders carry a mandatory cooling-off period.
What is a monthly instalment loan?
A monthly instalment loan is repaid in fixed, equal payments on the same date each month over an agreed term. At a licensed moneylender in Singapore, each instalment covers two things: interest on the amount you still owe, and part of the original sum borrowed. The instalment stays the same throughout, but the split between those two parts changes every month.
That changing split is the key to how these loans work.
How each instalment is calculated
As of October 2026, the maximum interest a licensed moneylender may charge is 4% per month — a cap in force since 1 October 2015 for secured and unsecured loans alike. By law, interest must be worked out only on the principal still outstanding after your repayments — the reducing balance — not on the original sum for the whole term.
Here is what that looks like. Take a S$3,600 loan over six months at 4% a month. The instalment is S$686.74 every month:
| Month | Owed at start | Interest | Principal repaid | Owed at end |
|---|---|---|---|---|
| 1 | S$3,600.00 | S$144.00 | S$542.74 | S$3,057.26 |
| 2 | S$3,057.26 | S$122.29 | S$564.45 | S$2,492.80 |
| 3 | S$2,492.80 | S$99.71 | S$587.03 | S$1,905.77 |
| 4 | S$1,905.77 | S$76.23 | S$610.51 | S$1,295.26 |
| 5 | S$1,295.26 | S$51.81 | S$634.93 | S$660.33 |
| 6 | S$660.33 | S$26.41 | S$660.33 | S$0.00 |
Illustrative figures at the legal maximum rate. Not a quote.
Read down the interest column. In month one, S$144 of your S$686.74 goes to interest — 21%. By month six it is S$26.41, under 4%. Each payment lowers what you owe, so more of the same instalment goes toward clearing the loan.
Over six months you repay S$4,120.46: the S$3,600 borrowed plus S$520.46 interest.
The loan approval fee is deducted upfront
As of October 2026, a licensed moneylender may charge a fee of up to 10% of the principal when the loan is granted. The Ministry of Law calls this the loan approval fee (you may also see it called an administrative fee), and it is permitted only as an upfront deduction.
On the S$3,600 example, a 10% fee is S$360, taken from the amount paid out — you receive S$3,240 but repay on the full S$3,600. It is not in the table above. Add it to the interest and the loan costs S$880.46, not S$520.46.
When the money reaches you, check you received the principal minus the fee and nothing less. No part of the principal may be held back for any other reason.
What happens from application to final payment
- You apply, and we check our criteria. We consider Singapore Citizens, Permanent Residents and foreigners residing in Singapore aged 21 to 65, with a minimum income of S$18,000 a year. Meeting the criteria is not approval — that depends on our assessment of your income, existing commitments and ability to repay.
- We meet you in person. Licensed moneylenders must verify your identity face to face at their approved place of business before granting any loan. A loan carried out entirely online, or anywhere other than the approved premises, is not allowed.
- We explain the contract in a language you understand and give you a copy of the Note of Contract, as the law requires. Never sign a blank or incomplete one.
- The loan is disbursed, less the loan approval fee.
- The cooling-off period runs — three business days in which you can cancel at reduced cost.
- You repay in monthly instalments on the agreed date until the balance reaches zero.
- We issue receipts and statements — a receipt for every repayment, and a statement of account at least once every January and July. Check each for your name, amount and date, and keep them.
The cooling-off period
Since 15 September 2026, unsecured loans from licensed moneylenders in Singapore — other than business loans — carry a mandatory cooling-off period of three business days. It applies to loans disbursed on or after that date.
The three days are counted from the date the loan is disbursed, not including that day, and exclude Saturdays, Sundays and Singapore public holidays. A loan disbursed on a Friday gives you until the following Wednesday, if no public holiday falls in between.
If you cancel within that window:
- No interest is charged.
- The total you repay cannot exceed the principal.
- The lender may keep only part of the loan approval fee — and nothing else.
| Principal of the loan | Most of the approval fee the lender may keep |
|---|---|
| S$5,000 and below | S$50, and never more than the fee paid |
| More than S$5,000 | 3.5% of the principal, and never more than the fee paid |
You repay the amount you received, plus that retained portion.
A worked example
Illustrative figures only.
Say you borrow S$5,000 with a 10% loan approval fee of S$500 deducted upfront, so you receive S$4,500. Two days later you decide you do not need it. You cancel and repay S$4,500 plus at most S$50 — S$4,550 in total, with no interest.
On an S$8,000 loan with an S$800 fee, you would receive S$7,200. The lender may retain up to 3.5% of S$8,000, which is S$280, so you would repay at most S$7,480.
Previously, a lender could keep the full approval fee plus accrued interest.
A licensed moneylender must let you cancel if you meet the requirements — refusing breaches its licence conditions and can be reported to the Registry of Moneylenders. If you do not cancel within the three business days, the loan continues on its original terms.
What happens if you miss a payment
As of October 2026, if a repayment is late a licensed moneylender may charge a late fee of up to S$60 for each month of late repayment, plus late interest of up to 4% per month. Late interest can be charged only on the amount actually overdue, never on instalments not yet due.
On the S$3,600 example, missing one S$686.74 instalment could add up to S$60 plus S$27.47 in late interest that month.
One protection applies throughout: interest, late interest, the loan approval fee and late fees combined can never exceed the principal. A S$3,600 loan cannot lawfully cost more than S$3,600 in total charges.
If you can see a repayment problem coming, speak to us before the due date. MinLaw’s April 2026 update to its Professional Service Handbook encourages licensed moneylenders to help distressed borrowers by restructuring repayments or referring them to a social service agency.
Can you repay early?
Because interest is charged on the reducing balance, clearing a loan early means fewer months of interest. Singapore law does not fix early repayment terms, so your contract governs it. Ask before you sign.
Warning signs, even at a licensed lender
MinLaw lists practices it treats as unacceptable from any licensed moneylender. Report the lender to the Registry if it:
- asks for your Singpass user ID or password
- keeps your NRIC, passport, work pass, driver’s licence or ATM card
- asks you to sign a blank or incomplete Note of Contract
- grants a loan without giving you the contract or explaining its terms
- approves a loan by phone, SMS or email before receiving your application and documents
- withholds any part of your principal
We will never do any of these. Licensed moneylenders also may not solicit loans by text, phone call or social media.
Frequently asked questions
Does my monthly instalment change over the loan?
No. The instalment stays the same every month for the full term. What changes is the split inside it: early payments are mostly interest, later payments mostly principal, because interest is charged only on the reducing balance that each repayment lowers.
When does the cooling-off period start?
The three business days are counted from the date your loan is disbursed, and that date itself is not counted. Saturdays, Sundays and Singapore public holidays are excluded. The period applies to unsecured, non-business loans from licensed moneylenders disbursed on or after 15 September 2026.
Can a lender refuse to let me cancel during the cooling-off period?
No. A licensed moneylender in Singapore must allow cancellation if you meet the cooling-off requirements, and refusing is a breach of its licence conditions. You can report a refusal to the Registry of Moneylenders, which investigates complaints about licensed lenders.
What happens if I pay one instalment late?
As of October 2026, a licensed moneylender may charge a late fee of up to S$60 for that month, plus late interest of up to 4% per month on the overdue amount only. All charges combined can never exceed the principal you borrowed.
Can I take a loan from a licensed moneylender entirely online?
No. Licensed moneylenders in Singapore must meet you in person at their approved place of business to verify your identity before granting any loan. A loan transaction completed fully online, or at any other location, is not allowed under MinLaw’s rules.
The bottom line
A monthly instalment loan is predictable by design — the same payment, on the same date, every month. What makes it work for you is understanding what the instalment does not show: the approval fee taken upfront, the interest share that falls as you repay, the cost of a late payment, and the three business days you now have to change your mind.
Read the contract, check the total rather than the instalment, and if a payment is going to be difficult, tell us before it is due.
GOLD ALLIANZE CAPITAL PRIVATE LIMITED is a licensed moneylender (Licence No. 39/2026) regulated by the Registry of Moneylenders, Ministry of Law. You can verify any moneylender’s licence on MinLaw’s list of licensed moneylenders before you apply. Borrow only what you need and are confident you can repay on time — late fees and late interest add up quickly. You can work through repayment figures for your own situation using the loan calculator on this site.