Personal loan

Personal Loans In Malaysia are often the basis for financing education, property purchase, debt consolidation. This year, banks are offering lucrative loan programs based on competitive rates. Customers are offered flexible terms, facilitated and expedited applications. We will consider in this article the principles of personal loans, the peculiarities of choosing a suitable package. The nuances of effective repayment management to guarantee financial stability will also be considered.


Principles of personal loans


Personal loan is called the allocated funds of the bank, which the client is obliged to return in fixed payments for an agreed period of time. The principal sum or loan amount and interest (interest rate on the loan) will determine the total amount of the loan. The interest rate depends on the credit rating, income of the recipient and the repayment period. For example, a RM 10,000 loan with a personal loan interest rate of 5% over 3 years will yield an interest of RM 1,500. Loans can be secured (collateralized), unsecured, conventional and Islamic (Shariah compliant).


How long is the repayment period for a bank loan?


Terms can range from 3 months to 10 years and affect the monthly instalment. Shorter periods are characterized by longer monthly instalments, but then you get less interest. For example, RM 10,000 with interest rates of 5% for one year implies RM 875 per month, for 10 years - RM 125, with an overpayment of RM 5,000. When choosing a term, the customer should consider monthly income and other commitments to reduce the risk of default. 


What interest will I have to pay?


Interest rates depend on the terms and conditions of a particular bank, your credit score and the term. A low credit score will increase the rate, so check your rating through the CTOS system before applying for a loan. Overpayments will be lower if you take out a short-term loan. Banks will take into account the total monthly liabilities of the customer to calculate the terms and conditions and the available rate. 


What kind of personal loan can I get in Malaysia?


Personal loans in the country are categorized into the 4 types mentioned above. The amounts range from RM500 (Adacash) to RM300,000 (Bank Islam). Islamic loans comply with Sharia law and exclude usury. Personal loan online is a convenient and fast option using various platforms. It is characterized by a simplified applying process and the possibility for the client to compare the offers of banks to choose the best option. 


When to use a personal loan


Personal loan is a serious step and should be financially justified. It is worth applying for a loan to finance education, investment, business development or debt consolidation. Some banks offer to consolidate debts and reduce monthly payments for customers. Loans are designed to improve your financial situation, but should be tailored to the borrower's capabilities.


How does the loan process work?


To apply for a personal loan, a client needs to fulfill the following conditions: 


  • be between 21 and 60 years of age;
  • be a resident or citizen of the country;
  • have a stable income and documents confirming it.

Personal loan application can be submitted at the bank in person or through online systems. The credit history is checked through CCRIS based on the submitted documents. Loan approval takes 1 to 5 business days. Online loan through Ringgit Plus will speed up the loan application process. It is also convenient to compare terms and conditions.


Requirements and list of documents


You need to prepare all the necessary documents to speed up the application process. The requirements depend on the type of employment, but the general requirements are as follows:


  • ID card;
  • salary statements or certificates for the last 6 months;
  • business registration certificate;
  • BE/EA tax form or bank statement for 6 months.

Documents confirm citizenship and ability to pay. Check the requirements with your chosen bank.


Monthly commitment of the client


Monthly commitment comes into effect one month after the loan is received. A delay will result in penalties (the amount depends on the terms of the loan and the specific bank) and a lower credit rating. If financial difficulties arise, contact the bank or AKPK to request debt restructuring.


Payment methods


You can make payments each month in convenient and affordable ways:


  • Internet banking (IBFT or IBG);
  • automatic transactions through the bank;
  • in cash at a branch.

Automatic debit will help you avoid late payments and aid in credit discipline.


Early repayment


This helps reduce the overall amount of interest, but will require a written request to the bank. Some banks have an early repayment fee.


Bank

Rate (per annum)

Term

CIMB

4,38-19,88 %

2-5 years

Maybank

6,50-8,00%

2-6 years

Bank Islam

4,50-7,50%

1-10 years

Partial repayment does not always reduce the amount of interest. Some banks consider it as an advance payment.