Personal loans tend to get a bad reputation. For most people, borrowing money (for any reason) is never a good thing. From social stigmas to cultural issues and hearsay, there are plenty of factors that can hold back a person from seeking financial assistance whenever he/she needs to. But it can be a viable option in a variety of circumstances.
First, let’s define it.
Personal loans are also known as personal financing, a type of unsecured financing. Personal financing product is disbursed on the basis of the individual's credit history and ability to pay the financing from personal income. Repayment is usually through fixed amount installments over a fixed term.
Some financing are earmarked for a specific purchase. You buy a home with a mortgage (or home loan), you purchase a car with a hire purchase (auto loan) and you might pay for education with a student loan. But personal financing can be used for just about anything. Some financiers want to know what you will do with the money they lend you, but as long as you’ve applied for and received it for a responsible and legal reason, you can do what you want with it.
Did you know?
Personal financing profit rates can be much lower than credit card interest rates! You can end up saving thousands.
With proper planning to boost your finances, personal financing could be the more appropriate option to provide immediate cash flow. With a fixed profit rate and repayment terms, you can definitely plan in advance to enjoy full control over your budget and start chasing your dreams!
Here are three Malaysians who found personal financing to be a viable and helpful option.
Nina, late 20s, in Corporate Law
Nina works at a legal department in an MNC, and she’s finally got her keys to her new apartment she bought. Now she wants to turn her property into a liveable home with some basic renovations and furnishing. After days of research and comparing, she learnt that instead of placing the burden on her credit card (which many people do), why not opt for personal financing that can finance up to RM120,000.00 with a flat profit rate of 6.00% per annum? And that is what she did. Now, she not only has a dream home but a much more comfortable payment schedule as well.
Adam, mid 30s, in Pharmaceutical Sales
An enthusiastic young chap, Adam finally felt it was right time to settle down with his long-time girlfriend. They planned to self-fund their small intimate wedding and started to make arrangements. In the excitement of things, Adam purchased all the jewellery, wedding costumes and paid for the deposits of the venue and photographers. But now he realises he doesn’t have enough to fund the rest and is trying to pay off multiple sources for the wedding purchases. So Adam decided to apply for personal financing and to his delight, there was one that suited him best with his monthly income. Now, he has cash flow and has consolidated all his debt from previous purchases into a fixed rate payment plan.
Jo, early 30s, Business Analyst in a MNC.
Jo has great ambitions and plans to grow both herself and her career; with that in mind, she wants to take on a Master’s Degree in Business Administration - an MBA. Unfortunately, she is unable to afford the full tuition fees by herself, as she has to balance her living expenses and other commitments. Instead of trying to save RM1,000 per month to fund a part time MBA course, which would take many years, she decides on financing. Applying for financing shouldn’t be stressful, Jo chose a provider that has hassle-free application, offers instant disbursement upon approval and a fixed profit rate, all with a monthly repayment she can afford. Jo could then invest her time and efforts in her future education.
Financial self-control is key. If you have existing debt, it is strongly advised that you don’t add new debt. Consider consolidating your debt and refrain from spending too much on unnecessary things or make an effort to earn more so as to pay your commitments. Failing to make prompt loan payments or defaulting on repayments could get you into serious financial troubles and distresses. On-time payments on your loans can improve your overall credit profile along with your credit score. This shows diligence, financial discipline, and good money management.
This financial article is for general information purposes only. It is not prepared with any particular individual or purposes in mind and does not take into account any investment objectives, financial situation or personal circumstances or needs of any particular individual. This document is not investment advice or recommendation. You should not use or rely on the results of this financial personality quiz in making any investment or financial decision. HSBC Amanah is not responsible for such use or reliance by you. You should consult your independent professional advisor before making any financial decision or if you have any questions.