Sometimes, money is all one needs to begin the journey towards his or her goals. While few individuals are lucky to be able to fund their goals, many require financial assistance to do so. Regardless of whether you want to study, invest, start a business, or buy a property, you can seek financial aid in Malaysia by taking up a personal loan. In this article, you will learn useful information regarding personal loans. Besides, you will also get to discover which personal loan in Malaysia is the best fit for you. Read on if you want to find out!
Types of Personal Loans
A personal loan consists of a fixed amount of money borrowed by the bank to an individual for a fixed period of time. After the loan period, the borrower is expected to repay the loan and the interest charged through monthly instalments until the end of tenure. The different types of personal loans and jargons can be confusing for new loan borrowers. Hence, in this section, we have provided details of the different kinds of personal loans.
1. Secured Loans
A secured loan is a loan that requires collateral, which often comes in the forms of fixed deposit, unit trust, property, and other assets. For security purposes, a guarantor is needed for secured loans. However, depending on the guarantor’s eligibility, he or she may or may not need to pledge assets as collateral.
2. Unsecured Loans
As opposed to secured loans, unsecured loans do not require collateral or security in any forms. As long as the loan borrower meets the eligibility requirements, he or she can take up unsecured loans without having to pledge assets or look for a guarantor. However, if the loan borrower is ineligible, a guarantor is required for unsecured loans.
3. Conventional Loans
Abiding by the principles of money lending, conventional loans allow the bank to earn profits through borrowing loans. Hence, these loans often come with interest rates that are charged on the total loan amount.
Conventional loans can be used to serve any purposes, as long as they are legal. Besides, conventional loan borrowers are fully responsible for all the risks that accompany their loans. In the events of overdue payments, compound interests will be charged.
4. Islamic Loans
The terms and conditions of an Islamic personal loan are based on the Shariah contract of financing in Malaysia. This means that Islamic loans steer clear of exploitive profits such as usury or riba’. Instead of charging interest rates, these loans charge a profit rate on the total loan amount.
As long as the Shariah laws permit, Islamic loans can be used for any halal purposes. To earn returns, the bank is responsible for some of the risks carried by Islamic loans. Also, the bank does not make a profit during events of overdue payments.
5. Loans with Takaful/Insurance Coverage
Whether or not a loan borrower applies for insurance coverage is entirely optional. Usually, loans that come with Takaful or insurance coverage will help to pay the remaining loan during events of death or total permanent disability of the loan borrower. Due to the additional insurance coverage, this type of personal loan is generally more expensive in Malaysia as the insurance fee is added onto the loan amount.
6. Loans without Takaful/Insurance Coverage
In contrast, loans without Takaful or insurance coverage allow a borrower to receive the total amount of money loaned. Besides, these loans are also cheaper as compared to loans with insurance coverage. However, the borrower or the beneficiary will be fully responsible for the remaining loan during events of death or total permanent disability of the borrower.
Applying for a Personal Loan
1. Eligibility Criteria
Keep in mind that you will have to fulfill the eligibility criteria, which varies across banks. Listed below are some of the standard criteria for a personal loan shared across the various banks in Malaysia:
- Applicants can either be Malaysian, a permanent resident of Malaysia, or a foreigner.
- The applicant must be at least 21 years old and not older than 60 years old.
- The applicant must either be self-employed or salaried employed in public or private sectors.
- The income of the applicant should be either on a fixed, contract, or commission basis.
- The applicant must possess a residential status, be it owning or renting a house, living with relatives/family, or in a company-provided property.
2. Lifestyle, Credit History, and Credit Score
Besides meeting the eligibility criteria set out by the bank, you will also have to ensure that the monthly loan instalments are affordable for your current lifestyle. In order to make sure that you can afford the loan, the bank will check your employment histories, places of residence, salary and disposable incomes, and so on.
Other than that, the bank will also assess your credit history and credit score. Credit history is a report that records all your debt payments and credit histories from all Malaysian financial service providers. The data will be stored for up to 12 months. Meanwhile, a credit score is an evaluation of a borrower’s creditworthiness based on the individual’s credit history. To put it simply, a high credit score suggests that an individual is favourable by the bank.
In other words, it is easier to apply for a personal loan if you have a good credit history and a high credit score. Otherwise, you will risk having your application rejected.
3. Required Documents
The required documents for the application of personal loan varies across banks and borrowers. Listed below are the typical documents needed during the application of personal loans:
- Application Form
- Identity Card (Mykad) or Passport
- Passport-sized Photo
- Residential Proof
- Proof of Income: Latest 3 months’ salary slips, latest 6 to 12 months bank statements, latest BE from official tax receipt, latest 2 years income tax returns, pension returns
Best Personal Loans in Malaysia 2021
The table below shows the best personal loans in Malaysia as of Jan 2021. All tabulated information is retrieved from the official website of CompareHero, which can be found here.
|Loan||Interest rate from||Tenure||Loan Amount||Minimum Income||Processing Fee||Employment||Approval time||Additional info|
|AEON iCASH Personal Financing||7.92%||5 – 7 years||RM1,000-RM100,000||RM1,500||2% up to RM400||Salaried or Self-employed||3 working days||Malaysian citizen only|
|Al-Rajhi Personal Financing-i||6.99%||1 – 8 years||RM5,000-RM150,000||RM4,500||Nil||Salaried only (GLC/PLC/MNC/Sdn Bhd)||NA||Malaysian citizen & PR|
|Alliance Bank CashFirst Personal Loan||4.99%||1 – 7 years||RM5,000-RM150,000||RM3,000 (locals)RM120,000 (foreigner with PR)||Nil||Salaried or Self-employed||NA||Malaysian citizen & PR|
|Alliance CashVantage Personal Financing-i||4.99%||1 – 7 years||RM5,000-RM150,000||RM3,000 (locals)RM120,000 (foreigner with PR)||Nil||Salaried or Self-employed||NA||Malaysian citizen & PR|
|AmBank Personal Financing-i||8.00%||1 – 5 years||RM5,000-RM100,000||RM1,500||Nil||Salaried (public & private sector)||NA||Malaysian citizen only|
|AmBank AmMoneyLine Facility-i||8.00%||1 – 5 years||RM5,000-RM100,000||RM2,000||Nil||Salaried / Commission Earner / Self-employed||NA||Malaysian citizen & PR|
|AmBank AmMoneyLine||8.00%||1 – 5 years||RM5,000-RM100,000||RM2,000||Nil||Salaried / Commission Earner / Self-employed||NA||Malaysian citizen only|
|Bank Islam Personal Financing-i (non-package)||6.00%||1 – 10 years||RM10,000-RM150,000||RM3,500||Nil||Salaried only (public/GLC/PLC/MNC)||NA||Malaysian citizen only (guarantor needed for >RM30k)|
|Bank Islam Personal Cash Line-i||4.03%||1 – 5 years||RM5,000-RM200,000||RM2,000||RM50||Salaried or Self-employed||NA||Malaysian citizen only|
|Bank Islam Flat Rate Personal Financing-i (package)||4.99%||1 – 10 years||RM5,000-RM200,000||RM2,000||RM50||Salaried only (public/GLC/PLC/MNC)||NA||Malaysian citizen only|
|Bank Rakyat Personal Financing-i Private||4.95%||1 – 10 years||RM5,000-RM150,000||RM2,000||RM30||Salaried only (private)||NA||Malaysian citizen only|
|Bank Rakyat Personal Financing-i for Pensioner||4.63%||1 – 10 years||RM5,000-RM100,000||RM800||RM30||Pensioner only (public)||NA||Malaysian citizen only|
|Bank Rakyat Personal Financing-i Public Sector (Fixed Rate)||3.27%||1 – 10 years||RM5,000-RM200,000||RM1,000||RM30||Salaried only (public)||NA||Malaysian citizen only|
|BSN Eksekutif-1 (Floating Rate)||4.10%||2 – 10 years||RM50,000-RM200,000||RM3,000||Nil||Salaried only (GLC/PLC/MNC)Min 1 year working experience||5 working days||Malaysian citizen only. Permanent & Contract executives|
|BSN Eksekutif-1||6.00%||2 – 10 years||RM10,000-RM200,000||RM3,000||Nil||Salaried only (GLC/PLC/MNC)Min 3 years working experience||5 working days||Malaysian citizen only. Permanent & Contract officers/staff|
|CIMB Cash Plus Personal Loan||6.88%||2 – 5 years||RM2,000-RM100,000||RM2,000||Nil||Salaried (public & private sector)||1 working day||Malaysian citizen only|
|Citibank Personal Loan||5.88%||2 – 5 years||RM5,000-RM150,000||RM4,000||Nil||Salaried (private & GLC) or Self-employed||NA||Malaysian citizen & PR|
|Hong Leong Personal Loan||5.60%||2 – 5 years||RM5,000-RM250,000||RM2,000||Nil||Salaried (public & private sector) or Self-employed||NA||Malaysian citizen & PR. Fresh graduate confirmed staff can apply|
|Hong Leong Personal Financing-i||5.60%||2 – 5 years||RM5,000-RM150,000||RM2,000||Nil||Salaried (public & private sector) or Self-employed||NA||Malaysian citizen & PR. Fresh graduate confirmed staff can apply|
|HSBC Amanah Personal Financing-i||7.50%||2 – 7 years||RM6,000-RM250,000||RM3,000||Nil||Salaried (public & private sector).||NA||Malaysian citizen & PR. Fresh graduate confirmed staff can apply|
|instaDuit||12.00%||6 – 24 months||RM1,000-RM10,000||RM1,500||Nil||Salaried Only||3 hours – 1 working day||Malaysia citizen only. KL/Selangor/Putrajaya only|
|JCL Personal Loan||12.00%||1 – 5 years||RM500-RM50,000||RM1,000||Nil||Salaried or Self-employed||2 working days||Malaysian citizen only|
|KFH Murabahah Personal Financing-i (Private Sector)||6.88%||2 – 10 years||RM5,000-RM250,000||RM3,000||Nil||Salaried (private sector)||3 working days||Malaysian citizen only|
|Maybank Personal Financing-i||6.50%||2 – 6 years||RM5,000-RM100,000||RM3,500||Nil||Salaried (public & private sector)||2 working days||Malaysian citizen & PR|
|Maybank Personal Loan||6.50%||2 – 6 years||RM5,000-RM100,000||RM3,500||Nil||Salaried (public & private sector)||2 working days||Malaysian citizen & PR|
|Public Bank BAE Personal Financing-i||4.88%||2 – 10 years||RM5,000-RM150,000||RM1,500||Nil||Salaried (public & GLC)Government staff only||NA||Malaysian citizen only|
|RHB Personal Financing-i for Civil Sector||4.50%||2 – 10 years||RM2,000-RM200,000||RM2,000||RM30||Salaried (public & GLC) or Self-employed||NA||Malaysian citizen only|
|RHB Easy Pinjaman Ekspres||8.31%||1 – 5 years||RM2,000-RM150,000||RM2,000||Nil||Salaried / Commission Earner (private or GLC) / Self-employed||NA||Malaysian citizen only|
|RHB Personal Financing||8.18%||1 – 7 years||RM2,000-RM150,000||RM2,000||Nil||Salaried (private) or Self-employed||on the spot approval & disbursement||Malaysian citizen only|
|Standard Chartered Personal Financing-i||5.50%||1 – 7 years||RM3,000-RM250,000||RM5,000||Nil||Salaried (public & private sector) or Self-employed||NA||Malaysian citizen & PR|
|Standard Chartered Quick Cash EDGE™||5.50%||1 – 7 years||RM5,000-RM250,000||RM5,000||Nil||Salaried (public & private sector) or Self-employed||NA||Malaysian citizen & PR|
|Standard Chartered CashOne||7.00%||1 – 7 years||RM5,000-RM250,000||RM3,000||Nil||Salaried (public & private sector) or Self-employed||NA||Malaysian citizen & PR|
|UOB Personal Loan||9.99%||1 – 5 years||RM5,000-RM100,000||RM2,000||Nil||Salaried or Self-employed||NA||Malaysian citizen & PR|
Finally, we have summed up everything you need to know about choosing the right personal loan in Malaysia. We hope you found this article useful. If you enjoyed reading this article, discover more financing and banking articles via LokaPost and more!