We don’t study personal loans or personal finance in general in school, yet we still need to be knowledgeable about it. The usual life cycle of a working adult starts in school, where they attend elementary and secondary school before maybe continuing their education and entering the profession.
To pay for that higher education, student loans are frequently acquired, which implies that we are entering the workforce in debt.
Therefore, having a basic grasp of budgeting, saving, paying off debt, and investing may make a difference in your day-to-day life and determine whether you live in affluence or poverty. Due to this, we will discuss the fundamentals of personal loans and personal loan interest rate today, including what is needed to qualify for one in Malaysia, its benefits, and appropriate justifications.
Personal loans in Malaysia explained:
Unsecured or non-collateralized loans include personal loans. Other loans, like those for homes or cars, are specifically designated for the purchase of that particular good, in which case the house or automobile you are buying serves as security for the loan. In contrast, no collateral is needed for a personal loan, hence the term “unsecured personal loan” may be used interchangeably.
With a personal loan, the bank or lender assumes a lot of risk in giving the money, whilst the borrower assumes less risk. Higher interest rates on personal loans are the result of the lender or bank taking on more risk, and Malaysia is no exception.
Should you apply for a personal loan in Malaysia?
There are several reasons why someone would choose a personal loan in Malaysia from A-Credit over other financial instruments.
What makes getting one a good idea? The fact that a personal loan is a less expensive choice is one of the main pros or cautions to mention. Interest rates alone are particularly appealing when compared to credit cards. Personal loans are the best option for financing company ventures, home down payments, or emergency medical expenses. Of course, you can only do this if you’re strapped for cash and have no other choice.
In Malaysia, the annual maximum interest rate for credit cards is 18%, while the maximum withdrawal charge for a cash advance is 12%. A fee to withdraw money from an FD or investment insurance plan applies, in addition to the lost chance to invest if the money has not yet reached maturity.
How to know if you can get a personal loan in Malaysia?
Different banks in Malaysia have different requirements or qualifying standards for personal loans. Your age, profession, income, ability to repay the loan, and place of living are among the fundamental factors at play.
You must have a reliable source of income, whether it be a salary or self-employment. Your eligibility is based on your organization, credit history, and unpaid obligations, such as credit card bills, mortgages, and auto loans.
Some conditions for obtaining a personal loan include the following:
- A steady income, whether from a job or being self-employed
- A good credit score and debt-to-income ratio
Some of the paperwork needed for your application is listed below:
- Income evidence
- Current employment agreement
- Payment history and subsequent sanctions
How much of an income is required for a personal loan in Malaysia?
Generally speaking, your chances of getting a personal loan are slightly greater if you still have 70% or more of your monthly income left over after deductions. But specifically, there are financial institutions that do provide low-income borrowers with personal loans. As long as they have a steady source of income and a good credit history, anyone earning the minimum wage is eligible to apply for personal loans.
Advantages and benefits of a personal loan:
When we discussed why you might want to consider getting a personal loan, we briefly touched on some of the benefits. Here are a few more benefits that you might want to think about.
Processing is more rapid:
There is a lot of paperwork if you’re new to banking. Unless you’re requesting a credit card or personal loan. Even some banks now provide rapid loan approval through their web platforms.
Aids in managing your credit portfolio:
Your credit portfolio is expanded through personal loans—interesting, huh? Your ability to manage your financial obligations is demonstrated by your credit score.
As a result, a personal loan helps you improve your credit score, which makes it simpler for you to get approved for higher credit lines like a house loan.
Using the loan:
As you are aware, the titles of loans correspond to what they are used for; a home loan is used to buy a home, a vehicle loan is used to buy a car, and so on. Loans for personal use are exactly that—personal. A personal loan can be used for any reason, therefore you are not constrained by it.
