Getting a Personal Loan in Malaysia

While there are many types of loans being offered in Malaysia, many prefer to take a personal loan, because it is easy to get approval, and there are fewer restrictions. In Malaysia, a personal loan is often approved within one day. While car, housing and other loans can only be used for a specific purpose, there are no restrictions for a personal loan since it is a cash loan. The loan may be used for different purposes like debt consolidation, vehicle repairs, home renovation. Some of the details which you should know while applying for a Personal Loan in Malaysia are listed below:

Interest rate

Individuals who opt for Personal Financing should be aware that the interest for a personal loan is calculated using a flat rate for the entire amount. This is unlike home loans, where the borrower is only paying interest on the reduced balance. Hence effectively, the interest rate for a personal loan is usually 1.7 to 1.9 times, the listed interest rate, since the borrower has to pay interest for the entire amount till he repays it.

Loan value, types and collateral

All government employees can take a personal loan for amounts which vary depending on their income, with a maximum amount of RM 150K. If a loan is taken in the joint name, the income of all the loan applicants will be considered. In secured loans, a collateral like car, house, FD is pledged or a guarantor is required, while for unsecured loans, no collateral is required. Though the interest rate for secured loans is lower, if the borrower does not repay the loan, the collateral is forfeited. Malaysian lenders are usually offering unsecured personal loans without any collateral. Like other banking products, in Malaysia, the borrower can choose between Islamic financing or conventional personal loans.

Government and associated employees

Employees of government organizations or government linked companies (GLC) are eligible for special deals on personal loans specifically formulated for civil servants and GLC employees. Since the salary is guaranteed, the employees have to pay lower interest rates, yet the amount is automatically deducted using Angkasa for loan repayment.

Comparing non-bank lenders with banks

In Malaysia, people opt for loans from either commercial banks or licensed money lenders. Most people are aware of the major commercial banks like Alliance, CIMB, RHB, Maybank, Standard Chartered. A majority of the borrowers will prefer taking loans from banks since the interest rates charged are lower compared to the other options available. In case the borrower is unable to repay the loan, only legally allowed methods will be used for loan recovery. However, the banks have more stringent criteria for loan application approval.

Individuals who are unable to get bank personal loans, they can also get a loan from moneylenders. The government ministry of housing, urban wellbeing and local government is regulating the licensing and functioning of money lenders and pawnbrokers in Malaysia. Approximately 3000 moneylenders are licensed in the country. These moneylenders will usually charge 12% annual interest for a secured loan and 18% p.a for unsecured loans, which is are the maximum rates allowed under the 1951 Money lenders act. However, these lenders will usually also impose additional charges.

Other considerations

A person who is applying for a personal loan should also consider processing, documentation fees and stamp duties, though some banks may waive some of these fees. The lender may also impose fees or penalties for early settlement. If the borrower wishes to repay the personal loan before the due date, the amount due is not the remaining amount of loan, Rule 78 has to be used for calculation. Repaying an additional amount for a personal loan does not help the borrower save any money, unlike a mortgage loan. It is extremely risk to borrow money from a moneylender who is unlicensed

Conclusion

Government employees prefer to take personal loans since the loans are quickly approved and there is more flexibility. Sunnytrix Marketing is offering a wide range of personal loans for government employees at attractive rates. However, the interest rates for personal loans are high, so a person should apply for a loan only if he requires it. It always more cost effective to save money for purchasing an item, instead of taking a loan for the purchase.