Looking for a financial boost to cover some unexpected expenses or finance an investment? Apply for a personal loan today!
Personal loans are a popular financing option in Malaysia, allowing individuals to access funds for a variety of purposes, such as unexpected medical fees, home renovations, or debt consolidation.
However, applying for a personal loan can be daunting, with different lenders offering various loan products with varying terms and conditions.
In order to simplify your application process, this article will provide a comprehensive overview of how you can successfully apply for a personal loan in Malaysia.
We’ll explore the different types of personal loans, the application process, and more to help you obtain the financing you need!
Understanding Personal Loans in Malaysia
Before you apply for a personal loan, understanding the different types of personal loans available is vital to get the best deal for your financial situation.
Personal loans in Malaysia can be classified into two categories: secured and unsecured loans.
When applying for a secured personal loan, borrowers must provide collateral, such as property, vehicles, or other valuable assets, to guarantee the repayment of the loan.
Since they present a lower risk to the lender, they generally come with lower interest rates and higher borrowing limits.
However, borrowers must be prepared to face the potential loss of their assets if they cannot repay the loan.
On the other hand, a lender relies on the borrower’s creditworthiness, income, and other factors to determine eligibility for an unsecured loan.
As a result, unsecured loans typically come with higher interest rates and lower borrowing limits due to the increased risk for the lender.
Fixed & Variable Interest Rates
Fixed interest rates remain constant throughout the entire loan tenure, meaning that borrowers pay a fixed minimum repayment amount every month.
This allows for easier budgeting and setting up of recurring monthly repayments.
However, they are generally higher than variable interest rates at the beginning of the loan, as lenders factor in the potential fluctuations in market rates.
In contrast, variable interest rates are subject to change based on market conditions and the lender’s discretion. This means that monthly repayments may increase or decrease over the loan tenure.
Read More: Term Loan vs Flexi Loan Malaysia: Know the Difference
Alternative Solutions for Rejected Applications
1. Determine the Type of Personal Loan You Want to Apply For
When applying for a personal loan, you must first determine the type of loan that best fits your financial situation. You should:
- Carefully consider how much money you need to borrow
- Think about the reason for applying for the loan
- Calculate the exact amount you require
Doing so will help you avoid borrowing more than needed, making it easier to repay the loan within the agreed timeframe.
2. Research & Compare Different Lenders
By comparing different lenders and carefully reviewing loan offers, you can make an informed decision and apply for a personal loan that meets your needs.
One key factor to consider when comparing various loan offers is whether any additional charges are associated with the loan, such as payment penalties or early repayment fees.
These charges can add up, so it’s important to consider them when comparing loan options.
Additionally, it is essential to carefully read through the loan’s terms and conditions before signing any documents.
And if you have any doubts or uncertainties, don’t hesitate to seek clarification from the lender or consult a financial advisor for guidance.
3. Prepare the Necessary Documents
It is vital that you prepare all the required documents beforehand when applying for a personal loan. The following are several essential documents you will need to prepare:
- Identification documents (e.g. identity card (IC) or other government-issued ID)
- Income statements (e.g. latest three to six months’ payslips and complete income tax returns with tax receipt)
- Latest three to six months bank statements
4. Submit Your Application & Wait For Approval
When applying for a loan, you can either submit your application online or through a banker. However, both methods have their own advantages and disadvantages you should know of.
Online loan applications are typically fast and convenient. But, their rejection rate tends to be higher compared to offline methods.
Additionally, the loan amounts available for online applications are often limited and typically do not exceed RM30,000.
Therefore, an online application may not suit your needs if you require a larger loan.
On the other hand, submitting a loan application through a banker generally takes a longer period, ranging from three to fourteen working days.
The duration depends on the specific banker and the processing system employed by the bank.
However, one of the advantages of the offline application method is the higher approval rate. Banks have more comprehensive evaluation processes that may result in a higher chance of approval.
Moreover, offline applications can generally accommodate higher loan amounts as banks can offer larger loans based on their financial resources and lending policies.
5. Review the Loan Agreement
Once your loan application is approved, the lender will provide a loan agreement outlining the loan terms, interest rate, repayment schedule, and any additional fees or conditions.
You must read the agreement carefully and ensure you understand and agree with all the terms before signing.
Additionally, some banks may only require a call recording before releasing the loan amount, making the entire experience hassle-free for you.
6. Receive the Loan Disbursement
Lastly, the lender will disburse the loan amount through a direct deposit into your bank account. This process may take several days to complete.
Additionally, in order to receive your funds, some banks require you to open a savings account with them. However, this requirement may vary depending on the bank you are borrowing from.
Read More: Best Bank for Refinance: How to Choose the Right Bank for You
Where to Apply for a Personal Loan
There are many ways you can apply for a personal loan in Malaysia. You can consider the following:
- Non-banking financial institutions, such as licensed money lenders
- Credit unions
4 Tips for a Successful Personal Loan Application
1. Improve Your Credit Score
Improving your credit score is an essential step to take before you can apply for a personal loan.
This is because most lenders use your credit score to evaluate your creditworthiness and determine if you can repay the loan.
To improve your credit score, you can start by ensuring your loan payments are paid on time and in full. Any delays in payments can negatively affect your credit score.
2. Apply for the Right Amount
Applying for too much may result in a higher monthly repayment, whereas applying for too little may not provide enough funds to cover your expenses.
Therefore, you should take into account your income, expenses, and current liabilities to determine the amount you are eligible for.
3. Provide Accurate and Complete Information In Your Loan Application
A minor mistake or inconsistency in your documents can lead to your loan application being rejected.
As a result, you must ensure that all the information provided is accurate and up to date. Examples include:
- Your address
- Your date of birth
- Your contact information
- Your employment and income information
4. Minimise Your Existing Debts & Financial Obligations
Outstanding debt can adversely impact your credit score, making your loan application more challenging and time-consuming.
It’s advisable to pay off as much of your debt as possible before applying for a personal loan to increase your chances of approval and obtain a favourable interest rate.
Read More: Bankruptcy Malaysia: How to Remove Bankruptcy Status in Malaysia
How Bluebricks Can Help You
As a one-stop loan services provider in Malaysia, we understand that applying for a personal loan can be challenging.
Our experts understand the common reasons for loan application rejection and have the expertise to review your application, identify the issues and provide solutions to improve your chances of approval.
Comprehensive Personal Loan Rejected Services
At Bluebricks, we are dedicated to helping you through your loan application process, even if you have a bad CTOS score.
We understand the challenges you may face, which is why we offer comprehensive personal loan rejected services to help our clients secure the loans they need.
Plus, we also offer quick cash loan solutions to individuals in need of urgent funds.
Applying for A Personal Loan – FAQs
In this section, we have compiled some frequently asked questions about applying for personal loans in Malaysia to help you solve any issues you may encounter during the application process.
1. When applying for a personal loan, what kind of questions can I expect from the bank?
Several common questions you can expect banks and other financial institutions to ask include:
- Can you offer any collateral to secure the loan?
- Do you have the capacity to meet the required loan payments?
- What is your plan for repaying the loan?
- What is the intended purpose of the loan?
- What is your credit history like?
- What is the amount of funding required?
2. What is the maximum amount I can apply for a personal loan in Malaysia?
Generally, the maximum amount one can borrow is around RM200,000 to RM250,000. However, it can vary depending on the lender and the borrower’s financial profile.
Some lenders may even offer higher amounts to individuals with strong credit profiles and high-income levels.
3. What are the risks of applying for a personal loan?
Personal loans can pose several risks that borrowers need to be aware of. These risks include high-interest rates, prepayment fees, and origination fees.
In addition, failure to pay on time or defaulting on the loan can result in damage to the borrower’s credit score as well.