Malaysians generally have very different opinions about borrowing loans from institutions because of several reasons. While it can be a viable option for some who accept it as the only way towards achieving their financial or material goals (like buying a car for instance), other tend to stay away from this because of their own personal reasons or cultural and social barriers. Let us have a closer look at what gains and losses a person has when considering personal loans.

What are the main benefits a person derives when taking personal loans? In fact, you can gain the following points upon choosing personal financing:

  • Personal loans can be used for virtually any purpose that the person is seeking ranging from repairing the car to buying furniture or having a nice holiday in their dream destination. As people do not have to put their property or car as a collateral, they may feel themselves much more confident and relaxed.
  • In comparison to other popular types of loans, the interest rates with personal financing are considerably lower which means you can save up decent amount of money while paying off the loan. In the case of buying a property or other expensive items, the difference in charge rates between a personal loan and a credit might be as much as your monthly salary.
  • It is possible to return the loan by breaking it up into equal monthly installations which means that a fixed amount can be charged from the monthly salary of the person who has the obligation to pay back. This is considered to be much more favorable as the debtor will not have to put in extra effort to return the money.
  • There are virtually no limits on the amount that you can borrow and additionally there is no shortage in the number of lenders. As long as it is negotiable, you will be able to lend the amount that will be enough for your personal needs.
  • It will take much less time for lenders to approve your loan and basically you will have to wait for a couple of days before the money is transferred to your account.

If you are looking for ways to obtain the money in the shortest time possible and you want to have longer repayment period, personal financing can be a good option. Many people who opt for this point out that they have more freedom with this kind of debt because many aspects can be negotiated with lenders before applying for one.

On the other hand, not everyone can handle with personal financing as the accessibility and lower rates may result in borrowing more than a person needs, thus leading the person to overspending the finances. The following downsides should also be taken into account before borrowing this type of loan:

  • Borrowing personal loans for the sake of covering previous debt can become a burden and you will end up seeing yourself with more debt cycling around you. The hidden danger is that if you are not able to pay the fixed price, the lender may take legal steps or charge you more for paying late.
  • Although many people feel comfortable with monthly repay instalments, the same option can be problematic if your monthly income level does not reach the minimum amount which will be enough to return the monthly charge above all other living expenses.
  • Personal loans are also debts and they mean you owe someone a certain amount of money. This situation might limit financial independence and prevent you from making regular choices in financial terms.


Therefore, what you need to do is give it a thorough consideration before you are ready to borrow a personal loan. Remember that it does not suit the type of people who tend to overspend and neither it is good for covering your existing credit card or other types of debts. You will also need to calculate all the installment fees and make sure you will be able to pay the same amount on a regular basis.

You are advised to demonstrate financial discipline and good money management skills by paying each installment of the debt on time each month. If you succeed in doing so, it will create a positive credit profile and you can apply for more loans in the future.