Bank loans are designed to meet the specific needs of individuals or businesses, including expansion, launching a new venture, consolidating debt, and more. They are also sometimes utilised as trade credit or overdraft facilities.
In Malaysia, there is a wide variety of bank loans, each with its advantages and disadvantages, influenced by several crucial factors. Therefore, when applying for a loan, it’s important to understand which type is best suited for your objectives based on the intended purpose of the loan.
Banks have their own criteria for any loan application, and being employed is one of them. This is because your income indicates if you are capable of repaying the loan.
If you fail to prove that you are employed or are producing enough income to repay the loan, the bank will automatically reject your loan application.
Even if you have proven that you are employed, any changes to your income can also affect your application. For example, although your credit score does not indicate your current income level, banks will require you to disclose the information for further assessment. Your application will be rejected if your salary does not meet the bank's requirements.
The bank will access your track records, including late or overdue transactions and your monthly balance. They will use this information to assess your credit risk and determine whether you are a trustworthy borrower.
Some of us may not have credit cards or other financial commitments as we are too worried about spending. However, this does not help when it comes to a loan application. This is because the bank does not have enough information to decide if you are a good paymaster or vice versa.
Banks in Malaysia offer various types of loans, including personal loans, home loans, car loans, education loans, and business loans, each designed to meet different financial needs and goals.
Eligibility criteria for bank loans in Malaysia vary by loan type and bank but generally include:
Minimum income requirements depend on the loan type and the bank's policy, but they typically start at RM3,000 per month for basic personal loans. Requirements can be higher for more substantial loans like home mortgages.
Failing to repay a bank loan in Malaysia can lead to penalties, increased interest rates, and negative impacts on your credit score. In severe cases, it may lead to legal action and the seizure of assets used as collateral for secured loans.
