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Personal Loans in Malaysia

A personal loan is a type of loan that is issued by banks and financial institutions. It is the perfect solution when you are in need of extra funds to finance personal expenses like your home renovations, holidays, education costs, business, medical bills or anything else. Personal loans give you the financial flexibility to use the funds as per your convenience and needs.
Personal loans work in the same way any other bank loan works. You apply for a specific loan amount from the bank to pay for things you need or want. If your personal loan application is approved, you will receive the lump sum amount that you applied for and then pay the bank back in regular monthly installments back. The monthly repayment amount includes the principal amount plus fees and interest. Personal loans typically have shorter repayment periods than other types of loans, ranging from 6 months to 10 years.
Personal loans are unsecured loans. This means that you do not need to offer any collateral or assets (like your house or car) to the bank when you borrow money. You also don't need to put a downpayment. Banks will review your financial background, such as your minimum salary and credit score, to determine whether to approve your personal loan application and at what interest rate. Because the loan isn't secured to any asset or collateral, the interest rates tend to be higher.
Taking out a personal loan in itself does not affect your credit score. However, there are factors that come with taking a loan that can hurt or help your credit score. This includes your payment history, the amount of debt you owe, the length of your credit history, and the number of credit lines you have recently opened under your name. When you apply for a personal loan, the two factors that are immediately impacted would be the amount of debt you owe, and the number of credit lines you have recently opened. However, if you make timely payments and have a long history of managing debt, then the introduction of a new loan is less likely to have an effect.
Yes, but each bank has different criterias that need to be met, including minimum income, as it currently is not standardised. For instance, Alliance Bank requires Malaysians working in Singapore to earn a minimum income of SGD2,000 per month; AmBank requires the equivalent of RM5,000 per month; HSBC requires the equivalent of RM10,000 per month; Citibank requires the same amount in SGD and in RM; and Standard Chartered and Maybank requires the equivalent of RM3,000 per month, to name a few. These requirements are as of April 2017.
Almost all of the trusted banks in Malaysia offer personal loans to its customers. Every bank offers unique products and services, so it's always best to compare the personal loans available across the market before deciding on the one that suits your needs best. Head over to the provider page for a full list of banks.
In the simplest of terms, Flat Rate Interest is the type of interest that will stay the same on the principal loan amount, throughout your loan tenure. This means that whatever interest rate that you?re charged at the time you take out the loan will remain the exact same figure as your final month?s loan repayment.
On the website, you will notice a column titled "Annual Rate". This is the interest rate that is advertised however, you should be looking at the EIR - the Effective Interest Rate. The EIR is a more accurate picture as it takes into consideration the compounding interest, processing and handling fees, which comes up to what you actually pay on your loan.
Lowest interest rate loans typically range between 3.99% to 8% and as of July 2018, these include the Alliance CashFirst Personal Loan, Standard Chartered Cash One, HSBC Amanah Personal Financing-i, KFH Personal Financing-i, and Citi Personal Loan
A personal loan application might be rejected because you have a bad credit score, do not meet the minimum income requirements, have inconsistencies in your personal details and application form, have an unstable employment history, hold too many loans, or have overly high credit card debt.
While there is no limit to the number of personal loans you can have, banks may not approve your application if you currently have a personal loan under your name. This is because banks review your credit history, credit score, monthly income, repayment patterns and debt service ratio when deciding to approve or reject your application. If a bank believes you are servicing too much debt, your second loan application may be rejected. We also know that personal loans come with much higher interest rates as it is an unsecured loan (see above) therefore, we do not recommend taking out multiple loans as this can be very expensive.
A debt consolidation loan consolidates several loans into one single repayment amount and a single interest rate. This can work in your favour if you are currently repaying multiple loans with multiple interest rates, and want to have one single loan amount with a reduced interest rate. If you decide to go for a debt consolidation loan, choose the best option that minimises your cost. A balance transfer can only be applied to credit card debts. It basically transfers outstanding debt from one credit card to another credit card with a lower interest rate. It does not have as much flexibility as a debt consolidation loan. Consider your needs to make the best decision for yourself. Just make sure you take any early settlement fees into account, when making your calculations!

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