Personal loan

For Malaysian residents, a personal loan is an unsecured credit facility-conventional or Islamic-in cash of up to RM300 000, repayable by fixed monthly instalments over 1 to 10 years, and usually approved online within 48 hours.

This fast, collateral-free financing is regulated by Bank Negara Malaysia and suits expenses such as medical bills, home upgrades, weddings or debt consolidation.

Personal Loans In Malaysia are frequently the starting point of buying education, homes, consolidating debts. This year banks outdo each other this year with attractive programmes based on cut throat rates. Customers are given ‘loaded’ terms, ‘facilitated swiftness’, applications. We’ll take a look in this article however, of the principles of personal loans, the idiosyncrasies of choosing the right package. The vagaries of sound repayment management to secure your financial independence will also reflect in our view.

Principles of personal loans

Personal loan is referred to as the funds of the bank, which the customer must repay in set payments over an agreed period of time. The principal and interest (interest rate on the loan) determines the total amount of the loan. The interest level depends upon the credit rating, income of the recipient and length of the loan. For example, with a RM 10,000 loan at personal loan interest rate of 5% over 3 years, an interest of RM 1,500 will be generated. Loans may be secured (collateralized), unsecured, conventional and Islamic (Shariah compliant).

How long is the repayment period for a bank loan?

The terms can vary from 3 months to 10 years, which will affect the monthly installment amount. Shorter periods will result in longer monthly instalments but then of course you get less interest! For example RM 10,000 at 5% for one year will be RM 875 per month, for 10 years - RM 125, giving an overpayment of RM 5,000. Generally you must decide on a term based upon your monthly income and other commitments so that the danger of being unable to meet repayments is reduced.

What interest will I have to pay?

Interest rates will depend on the terms and conditions of the bank making the loan, your credit score that would take into account the terms. A low credit score will raise the rate of interest, so do check your rating through the CTOS system prior to making the loan application. Your overpayments will be less if you take a short-term loan. On the other hand banks will look into the notified total monthly liabilities of the customer to determine the terms and conditions and the rate of interest the client will carry.

What kind of personal loan can I get in Malaysia?

In the country, personal loans are divided into the 4 types mentioned above. The amounts range from RM500 (Adacash) to RM300,000 (Bank Islam). Islamic loans comply with the provisions of Sharia and do not involve usury. Personal loan online is a function, simple, fast and most of the time using a number of platforms. It does not have a complicated applying process and enables the client to compare the offers of the banks to take her pick.

When to use a personal loan

Personal loan is a serious step and is worth entering into if it is financially justified. A loan is worth applying for if it is a loan for education, investment, business development, or debt consolidation. Quite a number of banks offer services to consolidate debts and lower monthly payments for their customers - Loans are designed to help you and your financial situation, but they should be designed to suit the person borrowing.

How the Loan Process Works

To apply for a personal loan, a client has to meet the following criteria: be between 21 and 60 years of age; be a resident or citizen of the country; have a stable income supported by documentation. Personal loans application can be done at the bank personally or through a login system. Credit record is taken from CCRIS based on documents submitted. Loans are approved in 1 to 5 working days Online loan through Ringgit Plus will fasten your loan application. Easy way to compare terms and conditions.

Requirements and list of documents

You’ll need all of the documents prepared ahead of time in order to move your application process along. The requirements change depending on your type of employment, but are, generally: ID card; proof of salary statements or certificates for the last 6 months; business registration certificate; BE/EA tax form/bank statement details for 6 months. Documents confirm your citizenship and ability to pay. Check with your chosen bank for requirements.

Monthly commitment of the client

Monthly commitment is effective one month after you have received the loan (i.e. if you wait beyond this period, you’ll be penalised (amount dependant on loan terms and specific bank) and also have a lower credit rating). If you’re having monetary difficulties, do get in touch with your bank or AKPK to restructure your debt.

Method of payment

You can pay each month in the easy and affordable way that suits you best: IBFT or IBG internet banking; or cash at a branch. Choose automatic transactions through the bank to avoid late payments and to boost your discipline!

Early repayment

This helps you lower the interest charge but you’ll need to request it in writing to the bank. Some banks charge 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.