In today’s financial landscape, many individuals are burdened with high commitments and struggle to manage their debts effectively. For those seeking a personal loan with high debt to income ratio, the path to financial stability can seem challenging.
This article explores how to obtain such loans and offers solutions to help alleviate financial stress for individuals in this situation.
Understanding High Debt to Income Personal Loans
A high debt to income personal loan is a financial service designed for clients with significant financial commitments but who still need to borrow from banks.
You may be considered a high-commitment client if your Debt Service Ratio (DSR) exceeds 60%. This ratio is calculated by dividing your monthly bank repayments by your net salary.
For example, if you are repaying RM5,000 monthly with a net salary of RM7,000, your DSR would be 71.4%. This means you have only RM2,000 for living expenses after debt repayments.
Our Solution for Individuals with High Debt to Income Ratio
As a certified loan agency, Bluebricks offers a unique solution for clients with high debt-to-income ratios. Here is how we do it:
- Bluebricks will pay off your current debts (credit card debt, personal loans, etc.)
- Wait for your CTOS (credit report) to update
- Apply for a new loan with a bank that has a high approval chance
This method can be effective because once Bluebricks clears your existing debts, banks will view your financial burden as lower. With a reduced DSR, you are eligible to apply for a new personal loan with potentially better terms.
Before settling your debts, Bluebricks will confirm your desired loan amount, the interest rate, the time period to repay it, and the monthly instalment.
Why Engage a Loan Agency like Bluebricks?
Even if you have the financial means to settle your debts independently, partnering with a loan agency like Bluebricks can offer significant advantages.
Our expertise in navigating Malaysia’s complex banking landscape can help you secure the best possible loan terms and ensure a smooth debt consolidation process. Here is why:
Bank Selection
With numerous banks in Malaysia, each offering different products and terms, Bluebricks can guide you to the most suitable option for your specific situation.
Easier Approval
Bluebricks can help identify banks that are more likely to approve your loan and determine the maximum amount you might be eligible for.
Contingency Planning
If your preferred bank does not approve the loan due to high debt to income ratio, Bluebricks can quickly pivot to alternative options.
Terms Negotiation
We help you find banks offering the lowest interest rates and suitable repayment periods for your financial profile, which can significantly lower your monthly payments.
Risk Mitigation
If you are borrowing to settle existing debts, Bluebricks can help calculate if the new loan terms are truly beneficial and ensure you have a viable repayment plan.
Steps to Get a Personal Loan for High Debt to Income Ratio
If you are a high commitment individual looking to borrow from banks, you have two main options:
Self-Improvement Approach
To qualify for a personal loan on your own, focus on meeting these conditions:
- Improve your CTOS score to at least 550
- Reduce your credit card balance to below 50% of the limit
- Lower your DSR to below 60%
If you meet these conditions, you can directly apply for a personal loan with banks.
Seeking Professional Assistance
You can consider Bluebricks’ assistance if you need:
- Lower interest rates (Bluebricks connects with 12 personal loan banks to compare interest rates)
- Longer repayment periods
- More cash in hand (by finding banks willing to approve higher amounts)
Eligibility for High Debt to Income Ratio Personal Loans
You may still be eligible for a personal loan if you meet these two conditions:
- No legal cases or summons in your CTOS/Experian report
- Basic salary of RM3,000 and above
Why Banks Are Cautious with High Debt to Income Ratio Clients?
Banks are often hesitant to lend to clients with high debt to income ratio due to the following reasons:
- Limited disposable income after debt repayments
- Insufficient buffer for unexpected expenses
- Higher risk of default if unforeseen circumstances arise
For instance, if your monthly bank repayment is RM5,000 and your net salary is RM7,000, you are left with only RM 2,000 for all living expenses, which may not be sufficient.
Why Consider a New Personal Loan?
Even if you are already in a situation with high debt to income ratio, there are several reasons to consider a new personal loan:
- Consolidate high-interest debts with a loan with lower interest rates
- Lower your monthly instalments
- Potentially receive some cash in hand
- Escape the cycle of minimum credit card payments
Should You Borrow Another Personal Loan if You Have High Debt to Income Ratio?
You should only consider applying for a personal loan if:
- You have significant credit card debt (For example, you have a credit card debt of RM30,000, and you have been unable to completely clear the outstanding debt for more than 6 months).
- Your current debts have annual interest rates exceeding 12%
- You’ve started delaying loan repayments
- Your debt service ratio (DSR) is more than 80%, meaning every month you don’t have enough cash flow. (For example, if your monthly commitment is RM5,600 and your net salary is RM7,000, you are left with only RM1,400 after debt repayment.)
Pros and Cons of Bluebricks Personal Loans for High Debt to Income Ratio
Disadvantages:
- Increases your total debt due to fees to a loan agency like Bluebricks
Advantages:
- Reduces monthly financial burden
- Lowers monthly instalments
- Increases monthly cash flow
- Enables saving and investing
- Makes installments more affordable
- Reduces interest rates (potentially from 18% to 3%-12%)
- Provides a clear debt repayment timeline
- Improves CTOS/Experian score
- Enhances future borrowing capacity for major purchases (e.g., houses, cars)
Bluebricks’ Advice for People with High Debt to Income Ratio Seeking Personal Loans
Thinking about getting a personal loan when you are already in debt? Here is what we suggest:
- Figure out why you need the loan:
- Need quick cash? (Bluebricks takes at least 30 days because of high commitment factors)
- Want to lower your monthly payments?
- Need more money in your pocket each month?
- Trying to fix your high debts fast? (Maybe for a credit card, car, house, or job requirement)
- Tired of banks calling you about money?
- Is it an emergency? If not, you might want to slowly clear your debts first before borrowing a personal loan.
- Take a good look at your spending. Where is your money going?
- Remember that loan agencies like us can help, but we are not a permanent fix for money troubles.
If none of this sounds like you, you could either work on clearing your bad credit slowly or check out AKPK to help manage your debts.
How to Get a Personal Loan When You Already Have High Debt?
For high debt to income ratio clients seeking favourable loan terms:
- Banks are selective when giving low interest loans. Usually, only government workers or employees in multinational corporations (MNCs) get monthly interest rates as low as 2%.
- Most banks offer a repayment period of 5 to 7 years. To obtain a 10-year loan tenure, it depends on the client’s employment status and overall financial profile.
- Getting cash in hand depends on your financial documents and CTOS report. We will need to check these first.
How Long to Approve a High Debt to Income Ratio Personal Loan?
It can take anywhere from 30 to 90 days, depending on:
- Your current bank’s record update speed
- The loan amount requested (larger amounts take longer)
How Much Can You Borrow?
Bluebricks calculates the loan amount you can borrow based on:
- Your credit report
- Your income range
- Your DSR
Just provide us with the necessary documents to receive a potential loan amount estimate within 3-5 days.
Features of Bluebricks High Debt to Income Ratio Personal Loans
- We do not charge you interest on the money we use to pay off your debts.
- No guarantor or collateral is required.
- No upfront fees (e.g., lawyer fees, document fees, account opening fees)
Basic Conditions for Bluebricks Personal Loans for High Debt to Income Ratio
Eligible applicants must be:
- Salaried employees with a basic income above RM3,000
- Receiving EPF deductions
- Employed for more than 6 months and confirmed staff
Bluebricks does not assist:
- Clients with legal cases/summons
- Business owners
- Commission-based workers
- Those with basic salaries below RM3,000
Our Service Fee for Personal Loans for High Debt to Income Ratio
The service fee is between 15% – 30%. The following factors are considered in determining the fee:
- Issues in your CTOS report:
- What problems need to be settled?
- How much money is needed to settle?
- After settling Bad Credit, how many banks can we work with?
- After settling Bad Credit, how much of a loan can be borrowed?
- Your income situation:
- Is your income stable?
- How much is your income?
- What industry do you work in?
- Is your debt service ratio (DSR) 70%, 80% or even higher?
- Does the lender consider your risk high or low?
- How much cash-in-hand do you need?
- How much loan amount do you need?
Personal Loan for High Debt to Income Process
- Collect credit reports and full income documents.
- Provide a bank proposal and calculation breakdown within 3-5 days.
- Sign agreement and perform debt settlement.
- Wait for CTOS update and submit the loan application.
- Receive bank approval; client repays Bluebricks the fund and service fee.
- Set up monthly direct payments to the bank.
Sample Documents
1. Low & Poor CTOS score: (300-650)
2. Late Payment
3. SAA (Special Attention Account)
4. AKPK Record
5. Trade reference
a) Koperasi Trade Reference Sample
b) Money Lender Trade Reference
c) Telecommunication & Buy Goods Trade reference
Sample Proposal
Frequently Asked Questions
Up to 400,000 RM from one bank, depending on employment and education level.
Generally, interest rates around 19.22% are considered high, usually for small loans less than RM50,000.
It depends on your profile. If you do not mind higher interest rates, CIMB Bank is often a good option.