Personal Loan FAQ
Needing money fast is a situation that many Malaysians experience every single day. When you need a new car, new phone, or just some extra money fast, a personal loan from a licensed money lender is exactly what you need. But you might have questions about personal loans, how such a process works, and if you are eligible.
This FAQ will answer your most pressing questions; should you still have some questions or concerns once you finish, please don’t hesitate to contact us today.
General FAQ about Personal Loans in Malaysia
Listed below are frequently asked questions about personal loans:
What are Personal Loans?
A personal loan is usually an unsecured loan that can be used for your personal financial needs. There are different types of personal loans in Malaysia at varied interest rates to suit your needs.
What is the difference between secured and unsecured loans?
A secured loan means that the loan provider has been given some form of collateral (a guarantee) that provides the investment will be returned to them. Examples of collateral include personal possessions, such as
- stock portfolio
- gold assets, and the like.
The collateral must be valued above the loan amount, and if you do not repay the loan, the bank will have the power to seize the collateral. Unsecured loans, however, do not require collateral. The only guarantee you provide the bank is a signed loan agreement (a legally binding contract). Because of this, unsecured loans usually have a higher interest rate than secured loans.
What are the types of Personal Loans available?
There are several types of personal loans available for Malaysians. These include: personal instalment, credit line, and balance transfer.
What is loan insurance?
Loan insurance is a policy that repays all or a large sum of the loan, in the event that you become unable to continue repayment. A typical fee for loan insurance is around 1% of the loan amount. Many banks will automatically include loan insurance in the fee, or it may be optional.
What is a personal instalment?
A personal instalment loan is when you and the Malaysia licensed moneylender agree upon a loan amount that will be repaid over fixed monthly instalments with an arranged repayment period.
What is a credit line?
A credit line is when banks offer you a line of credit based on your income. You only have to return what you borrow. Money can usually be withdrawn from an ATM or transferred into your bank account.
What is a balance transfer?
A balance transfer is best used when you have a outstanding debts on accounts that can be transferred to a single account for a lower interest rate. It is a form of consolidation. This way, you will save money when paying interest.
How can I use a balance transfer?
When you are about to take on rollover debt – or the state when you are unable to or unwilling to pay your credit card off in full – the amount of debt may become too significant to handle, especially when considering the ongoing interest rate. When this happens, you should think about making a balance transfer to reduce to overall interest rate and regain control of payments.
Should I use a credit line instead of a credit card? Why?
A credit line will have a lower interest rate (around 18% per annum) as opposed to a credit card, which may run around 24% per annum. It will be more tolerable to pay a more manageable interest rate with a credit line rather than dealing with a credit card payment. Additionally, you are spared from the advance fee on a credit card, which runs around 6% of the amount you withdraw. Credit lines charge zero fees when funds are withdrawn from it.
How much can I borrow?
As a borrower, you can usually get a personal loan from private licensed moneylender that is up to four times your monthly salary. The amount varies depending on your credit history and bank or Malaysia licensed moneylenders policies. There is also usually a minimum of how much you can borrow, depending on which type of personal loan you want to use. For small amounts, credit lines are usually more preferable to personal instalment loans.
How can a personal loan be used?
Unlike other loans that are quite specific – car, school, home, etc, the best thing about personal loan is that it can be used for any personal financial need, such as credit card debt payment, a medical emergency, wedding, or travel expenditures.
Will there be an interest rate on my personal loan?
Yes. The interest rate depends on the overall loan amount and tenure. Banks may also issue various interest rates.
How can the personal loan be repaid?
Depending on your bank and location, loan repayment methods can be done at various establishments, including GIRO (IBG), regular bank transfers, cash or cheque deposits at bank branch counters. Be sure to check with your loan provider for more options.
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