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A Guide to Personal Loan for Self Employed in Malaysia

Embarking on the journey to secure a personal loan for self employed Malaysians may seem overwhelming, but it doesn’t have to be.

Self employed individuals without a fixed income may find it difficult to meet the criteria for loan approvals, but we’re here to help you consider your options.

By equipping yourself with the knowledge and guidance in this article, you’ll gain the understanding necessary to make informed financial decisions, unlocking a world of opportunities for professional growth.

What are the Benefits of Personal Loans for the Self Employed in Malaysia?

Personal loans offer numerous benefits to self employed individuals, whether you’re just starting your own business or already have a well-established operation. They include:

1. Flexible Financing

One of the significant benefits of personal loans for the self employed is the freedom to determine the loan amount and utilise the funds according to their specific requirements.

Be it for business expansion, working capital, debt consolidation, or personal expenses, they enable self employed individuals to address their financial needs effectively.

2. Unsecured Borrowing

Personal loans are generally unsecured, which means that they do not require collateral.

This feature is advantageous for self employed individuals who may not possess substantial assets or are hesitant to pledge collateral against a loan.

3. Quick Access to Funds

Personal loans also have a quick approval and disbursement process, which benefits self employed individuals who face unexpected expenses or need to seize business opportunities promptly.

Read More: Top-Up Loan Malaysia: 3 Important Things to Know Before You Apply

Best Personal Loans for Self Employed Individuals in Malaysia

As entrepreneurs and freelancers navigate the dynamic business world, they often require flexible financing solutions that align with their variable income streams and specific requirements.

Recognising this growing demand, financial institutions in Malaysia have developed specialised personal loans for the self employed segment. Below are the three popular personal loan options that are readily accessible:

1. Alliance Bank CashFirst Personal Loan

The Alliance Bank CashFirst Personal Loan offers a flexible loan tenure ranging from one to seven years, allowing borrowers to choose a repayment period that suits their financial circumstances.

Plus, the loan amount can go up to RM200,000, depending on the applicant’s creditworthiness.

2. RHB Bank Personal Financing

With RHB Personal Financing, borrowers can obtain funds up to RM150,000.

Similar to the Alliance Bank CashFirst Personal Loan, its repayment period ranges from one to seven years, providing borrowers with flexibility in managing their monthly instalments.

3. Al Rajhi Personal Financing-i

Al Rajhi Personal Financing-i is an Islamic financing option available to self employed individuals in Malaysia that follows the principles of Shariah-compliant financing.

It has a loan tenure of up to 10 years, giving borrowers a longer period to repay their loan.

However, the loan amount depends on various factors, including income, credit history, and the applicant’s business stability.

Please note that while these are three popular options, the best personal loan for a self employed individual will vary based on their specific needs, financial circumstances, and repayment capacity.

It’s always recommended to compare different loan offers and thoroughly read the terms and conditions before making a decision.

Read More: Cash-Out Refinancing Malaysia: The 4 Advantages You Should Know

Personal Loan Application Challenges for Self Employed Individuals

Self employment offers individuals in Malaysia the freedom and flexibility to pursue their entrepreneurial dreams.

However, when it comes to seeking financial assistance through personal loans, they often face distinct challenges that set them apart from traditionally employed borrowers.

1. Documentation

One of the primary challenges faced by self employed individuals when applying for personal loans is the documentation requirement.

Unlike salaried employees who can provide regular pay slips, self employed individuals often have irregular income or multiple sources of income.

This variability makes it difficult for them to provide the necessary documents lenders require during the loan application process. Examples include:

  • Income tax returns
  • Business financial statements
  • Bank statements

2. Limited Credit History

Lenders typically assess a borrower’s creditworthiness based on their credit scores and reports.

However, if you are newly self employed with a limited credit history or a short credit track record, lenders may perceive you as a high-risk borrower.

As a result, you may face loan rejections or be offered higher interest rates, making it more difficult or expensive to secure a personal loan.

3. Collateral Requirements

When borrowing money from lenders, particularly for personal loans, it is not uncommon for some lenders to request collateral as a form of security.

Collateral refers to assets or property that the borrower pledges to the lender, which can be seized or sold by the lender if the borrower fails to repay the loan.

Unfortunately, if you do not possess substantial assets to offer as collateral, lenders may be hesitant to approve your loan application or will impose stricter repayment terms.

4. Limited Loan Options

Traditional banks and financial institutions typically impose stricter eligibility criteria for self employed individuals.

Hence, self employed individuals may have limited options when seeking personal loans from these institutions.

Read More: Property Valuer In Malaysia: How Do They Help Homeowners

Other Ways to Obtain Funds for the Self Employed in Malaysia

As mentioned earlier, self employed individuals in Malaysia face numerous challenges when obtaining personal loans from traditional institutions. But, there is good news.

Fortunately, an alternative funding solution has emerged in the form of private lenders.

However, it’s important to note that private lenders have stricter eligibility requirements compared to traditional banks, including a thorough assessment of:

  • Income stability
  • Credit history
  • Business viability

Read More: Home Equity Loan vs Personal Loan Malaysia: Which is Better?

How Bluebricks Can Help with Personal Loans for Self Employed

Getting a personal loan as a self employed individual in Malaysia can be challenging.

Therefore, entrusting your application to loan experts is highly recommended, as they significantly enhance your chances of approval.

Bluebricks is a reputable, licensed loan agency based in Malaysia. With our deep knowledge and years of experience, we manage mortgage loans, business loans, and more.

Our goal is to offer excellent financial consulting services to our valued clients, assisting them in discovering optimal solutions that align with their individual requirements.

Personal Loan Rejected Services

Bluebricks specialises in providing personalised loan rejected services, where our team works closely with individuals to customise solutions that meet their financial goals.

Additionally, we offer fast cash loan solutions for those in urgent need of funds.

Personal Loan for Self Employed – FAQs

In this section, we have compiled a range of frequently asked questions to shed light on the intricacies of securing personal loans for self employed individuals in Malaysia.

Whether you’re looking to fund a business venture or cover unforeseen expenses, these questions aim to provide you with the necessary insights to make informed decisions regarding personal loans.

Can freelancers and self employed individuals apply for a personal loan for the self employed?

Unfortunately, banks rarely approve personal loan applications for self-employed individuals, including freelancers and gig economy workers (e.g. Grab drivers).

Can I secure a personal loan for the self employed without a co-applicant?

It is possible to secure a personal loan for the self employed without a co-applicant. However, the eligibility criteria and loan terms depend on the lender and your financial situation.

Can I obtain a personal loan for the self employed solely based on having good credit?

Having good credit improves your chances of obtaining a personal loan with favourable terms and a low-interest rate compared to individuals with fair or poor credit scores.

But, it’s important to note that each lender has their specific requirements, so there is no guarantee of receiving the best rate even with good credit.

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About Bluebricks

BlueBricks Holding is one of the top ten leading loan agency companies in Malaysia in terms of loan approval rates. As a leading licensed loan agency company, we have extensive knowledge and experience in mortgage and business loans, and this enables us to help our customers to get the deal that is best suitable to them.

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