You can use a personal instalment loan for needs that other loan types cannot cover. Examples include paying for weddings, renovations, and medical costs not covered by insurance.
Some people prefer taking out a personal instalment loan instead of using a credit card because the fixed monthly repayments are easier to plan for.
For other purposes such as paying for cars, education fees, housing, it is usually cheaper to use a loan specific for that purpose. Ask your bank about car loans, education loans, home loans, et cetera. It is advised to only use personal loans when you cannot find a loan that matches your needs.
Most banks will require you to be a Malaysia Citizen or Permanent Resident, aged 21 and above (but not over 60 years old) and earn a monthly gross income of at least RM 3,000 or more. Proof of identification, income, and residence must also be submitted to be approved for a personal loan.
Banks will also look at your credit rating before approving or rejecting the loan application.
Most personal instalment loans are repaid in fixed monthly instalments.
Repayments can usually be made by mail, online, through an ATM, or at a bank branch. If the loan is from the same bank you keep your savings account in, your loan repayments can be automatically debited from this account.
A secured loan means there is some form of collateral (guarantee) made to the bank. Examples of collateral include your property, car, stock portfolio, gold assets, etc. The value of the collateral must exceed the loan amount. If you do not repay the loan as agreed, the bank has the right to seize the collateral.
An unsecured loan does not require collateral. There is no guarantee beyond your signed loan agreement (which is a legally binding contract).
In general, unsecured loans have a higher interest rate than secured loans.
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