QUICK ANSWER:
From 15 September 2026, borrowers who take an unsecured loan from a licensed moneylender in Singapore, other than a business loan, have three business days after disbursement to cancel the loan at a reduced cost. The measure gives borrowers more time to reconsider whether they still need the credit and whether the repayment commitment is manageable for them.
✦ KEY TAKEAWAYS
On 31 August 2026, the Ministry of Law (MinLaw) announced a mandatory three-business-day cooling-off period for unsecured loans granted by licensed moneylenders, excluding business loans. The measure took effect on 15 September 2026. Under the new framework, eligible borrowers may cancel a qualifying loan during this period without paying interest. The moneylender may retain only part of the loan approval fee to cover costs already incurred in assessing and processing the loan.
According to MinLaw, the framework was developed in consultation with the Credit Association of Singapore, which represents licensed moneylenders. The objective is to give borrowers more time to reconsider a credit decision, noting that borrowing decisions may sometimes be made on impulse, while recognising that lenders may already have incurred costs in assessing and granting the loan.
From Friday Finance’s perspective as a licensed moneylender in Singapore, the principle is a constructive one. Borrowing is a financial commitment that often extends well beyond the immediate need for funds, and providing borrowers with a short period to reflect can support more informed and considered financial decisions.
The most immediate benefit is that borrowers now have a defined period during which they can change their minds without bearing the full cost that might otherwise apply.
That extra time can be useful. Once the immediate pressure to obtain funds has eased, the borrower may be in a better position to reassess whether the loan is still necessary, whether the repayment amount fits alongside existing commitments, and whether an alternative option may be more suitable.
At the same time, the cooling-off period should not replace careful consideration before taking a loan.
Three extra business days do not make an unaffordable loan affordable. Borrowers should still take the time to understand the amount borrowed, the total repayment commitment and the impact on their monthly budget before they proceed.
For licensed moneylenders, the new requirement adds another stage to the lending process. Systems and internal processes must now accommodate borrowers who decide to cancel a loan during the cooling-off period, even after the loan has already been approved and disbursed.
There are also practical costs involved when a loan is cancelled after the lender has already completed its assessment, verification, and due diligence processes. This is why the framework allows the lender to retain a limited portion of the approval fee rather than requiring every cost associated with the loan to be reversed.
There may also be a broader benefit. Beyond regulatory compliance, the measure reinforces the importance of responsible lending. By assessing repayment capacity, clearly explaining loan terms and giving borrowers time to reconsider their decisions, lenders can help build greater trust and confidence in the borrowing process.
The amount depends on the size of the loan.
For an unsecured loan of S$5,000 or less, the licensed moneylender may retain up to S$50, but no more than the approval fee originally charged.
For a loan above S$5,000, the lender may retain up to 3.5% of the principal amount, again capped at the approval fee actually charged.
No interest is charged when a qualifying loan is cancelled during the cooling-off period, and the total amount the borrower repays cannot exceed the original principal.
According to the Ministry of Law, for example, if a borrower takes a S$1,000 loan with a S$100 approval fee deducted upfront, the borrower receives S$900.
If the borrower cancels the loan within the three-business-day cooling-off period, the licensed moneylender may retain up to S$50 of the original approval fee.
The borrower would therefore repay up to S$950, comprising the S$900 received and the maximum S$50 fee retained.
In this example, the borrower’s net cost of cancelling the loan is S$50, with no interest charged.
For Friday Finance, it only retains $50 no matter how much the granted loan amount is.
This is where the distinction between cancelling a loan and settling it early becomes important.
The new cooling-off framework gives borrowers a specific right to cancel a qualifying loan at reduced cost during the three-business-day window. If the borrower does not cancel within that period, the loan continues in accordance with its original contractual terms.
That does not necessarily mean the borrower must maintain the loan until the end of its original tenure. Depending on the lender’s policy and the loan agreement, early settlement may still be possible.
However, early settlement is different from cancelling under the statutory cooling-off period framework. Outside the three-day window, there is no standard cancellation cost that applies to every loan. The amount payable will depend on factors such as the outstanding principal, any accrued interest, and the terms of the agreement.
At Friday Finance, there is no penalty for early repayment, and interest is calculated daily on the reducing balance. For more understanding on early repayment and monthly instalments, read our guide to licensed moneylender repayment terms in Singapore.
The cooling-off period is an opportunity for a second review, not a substitute for assessing affordability before taking a loan.
Start with your monthly budget. Consider housing, food, transport, and existing debt commitments, and ask whether the repayments would still be manageable if an unexpected expense arises.
Next, review the full cost of borrowing. Look beyond the amount disbursed and consider the fees, interest, repayment dates, and total amount repayable.
Finally, reconsider whether the loan is still necessary. If your circumstances have changed, another source of funds has become available, or the repayments no longer feel manageable, the cooling-off period provides an opportunity to reassess your decision.
If you decide to cancel the loan, contact your licensed moneylender promptly to understand the cancellation procedure, the amount that must be repaid, and how the cancellation will be processed. Follow the lender’s instructions within the statutory period and request written confirmation once the cancellation has been completed.
The three-business-day cooling-off period provides borrowers with an additional safeguard, but making an informed borrowing decision remains essential.
Before taking a loan, understand the total borrowing cost, repayment terms and how the monthly instalments fit within your budget.
For more guidance, explore Friday Finance’s resources on responsible borrowing, or review our personal loan rates, eligibility criteria and repayment terms before applying.
For more guidance, explore Friday Finance blogs for practical guides and resources, or reach out to us if you’re considering a personal loan and want to understand the costs and repayment commitment before applying.
IFS Consumer Services Private Limited (Licence No. 85/2026) is a licensed moneylender operating under the Friday Finance brand name.
Friday Finance is a product of IFS Consumer Services Private Limited, a licensed moneylender regulated by the Registry of Moneylenders of the Ministry of Law in Singapore
