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How to Settle Personal Loan Faster in Malaysia

Are you eager to bid farewell to your debt and wondering how to settle personal loan faster? Fret not! Bluebricks is here to help.

Paying off your personal loan faster not only relieves you from debt but also helps you save money on interest.

In this article, we’ll share some strategies you can employ to accelerate your loan repayment.

How to Settle Personal Loan Faster in Malaysia

Whether your aim is to alleviate financial pressures, reduce interest expenses, or enhance your credit rating, these approaches will equip you with the means to assume control of your personal loan repayment journey.

Through the application of these methods, you can work towards settling your personal loan more quickly and achieving financial freedom.

1. Utilise Existing Equity

Leverage assets you already possess to settle your loan, potentially accelerating your loan repayment. This approach eliminates the necessity for additional actions like seeking extra employment or reducing your budget.

Here’s how it works: Let’s say you own a property that has appreciated in value over the years.

You might contemplate acquiring a home equity loan or establishing a line of credit by utilising the equity in your property as collateral.

With the funds obtained from this loan, you can make a lump-sum payment towards your personal loan.

By doing so, you reduce the principal amount of your personal loan, which can significantly decrease the interest you’ll pay over the loan term.

Additionally, it allows you to settle your loan faster than following the regular repayment schedule.

2. Examine Your Budget

Reviewing and maintaining your budget is a great way to see where you can reduce your spending.

It involves a careful analysis of your income and expenses, with the goal of identifying areas where you can reduce spending and allocate more funds towards your loan repayment.

For example, you can be more thrifty by preparing home-cooked meals, avoiding impulse buys, and considering buying secondhand items.

This strategy doesn’t require major lifestyle changes but rather a conscious effort to manage your finances more efficiently, ultimately helping you achieve your financial goals sooner.

3. Make Extra Loan Payments

Repay your personal loan faster by making additional payments than the scheduled monthly instalments.

By doing so, you can expedite the repayment process and achieve your financial goals sooner!

Begin by identifying additional funds that you can allocate to your loan repayment. These can come from various sources, such as:

  • Work bonuses

If you receive periodic bonuses or incentives from your employer, consider directing a portion of this extra income toward your loan.

  • Savings from lifestyle changes

Assess your spending patterns and pinpoint areas where you can trim down your expenses.

For instance, reducing expenses on non-essential items like dining out at expensive restaurants or frequenting cafes can free up funds for extra loan payments.

4. Gain Secondary Income Streams

Increase your capacity to pay more towards your personal loans by looking for new job opportunities with higher pay or by taking on a side gig in your free time.

Diversify your income sources and actively seek opportunities to boost your earnings and make substantial progress in repaying your personal loan more quickly.

You can also generate extra income by selling items you no longer need or use on social media platforms or resale websites such as Carousell or REFASH (for secondhand clothing).

The key is to remain committed and disciplined, directing the extra income toward reducing your loan balance.

5. Refinancing Your Personal Loan

Another effective strategy to settle your personal loan faster is by considering refinancing.

Refinancing entails obtaining a new loan to clear your current personal loan, often featuring a reduced interest rate.

If you have multiple personal loans to pay off, consolidating your debts into a single new loan may help you settle the debt earlier.

Depending on your repayment capability, you can opt for a shorter loan term through refinancing, which increases your monthly instalments but lets you pay less in overall interest.

Read More: Refinancing Costs: Understanding the Total Costs of Refinancing

What to Consider Before You Settle Personal Loan Faster

While the idea of settling your personal loan faster is enticing, there are several important factors to consider before taking action. Here’s what you should keep in mind:

1. Impact on Your Savings

Before allocating extra funds to repay your personal loan, ensure that you have enough savings for emergencies and unexpected expenses.

It’s crucial to maintain an emergency fund to cover medical bills, car repairs, or other unforeseen events.

A good rule of thumb is to save at least three months’ worth of your salary as a reserve.

2. Prioritise High Interest Debts

If you have multiple debts, prioritise paying off those with higher interest rates first. Typically, unsecured debts like credit card balances have higher interest rates than secured debts like mortgages.

This strategy is extremely beneficial as you’ll save more on interest charges in the long run by focusing on high interest debts.

Besides, be sure to make the minimum monthly repayments for all your debts to avoid incurring fees or penalties.

3. Early Settlement Penalty

Contact your financial institution or bank to thoroughly check and confirm the terms of the personal loan agreement.

Some loans may have lock-in periods, whereby borrowers have to pay a penalty if they settle their loans within the period.

Even after the lock-in period, some loans may have penalties.

If you plan to settle the loan early, consider applying for personal loans that offer rebates on early settlement.

Read More: Credit Card Debt Malaysia: How to Pay Off Your Credit Card Debt

The Pros and Cons of Settling Personal Loan Faster

While there are clear advantages to settling your personal loan faster, it’s essential to consider your unique financial situation and goals.

Weigh the benefits against any potential early settlement penalties or the need to maintain a financial cushion for unexpected expenses.

Below are some benefits and drawbacks of settling your personal loan faster.

1. Benefits

  • Saves money on accruing interest.
  • Improves debt service ratio.
  • Enhances credit score.
  • Increases loan eligibility for future needs.
  • Reduces total interest charges, leading to more savings.
  • Provides the ability to invest or spend on other necessities.
  • Helps to achieve financial freedom

2. Drawbacks

  • Potential prepayment penalties from financial institutions.
  • Diverting spare income may limit funds for other pressing expenses.
  • Loss opportunity to boost credit score or build credit history through consistent monthly payments.

Read more: Understanding Personal Loans for AKPK Enrolees in Malaysia

How to Settle Personal Loan Faster in Malaysia with Bluebricks (H2)

At BlueBricks, we understand that everyone’s financial situation is unique. Whether you’re a freelancer, salaried employee, or self-employed individual, our expert consultants are well-equipped to assist you in achieving your financial goals.

As a specialised bank loan and debt consolidation agency, we provide extensive services tailored to help you settle your personal loan faster:

Professional Loan Consultancy Services

We are committed to ensuring that you have access to the support and resources needed to settle your personal loan faster, regardless of your employment status.

Our financial experts are committed to helping you navigate through the intricacies of settling your personal loan faster with personalised services, which encompass:

  • The specific loan amount you require.
  • The urgency with which the loan amount is needed.
  • Whether you or your parents own a property that has been held for over ten years.
  • Your income level.
  • Your CTOS score (such as your credit score and credit history).

How to Settle Personal Loan Faster – FAQs

Planning to settle your personal loan faster? Check out this dedicated FAQ section to gain valuable insights on the frequently asked questions regarding how to settle a personal loan faster.

Is it possible to settle a personal loan before the loan tenure ends?

Yes, of course! It’s possible to settle a personal loan before the loan tenure ends. By following strategies such as making extra payments, refinancing, and budgeting wisely, you can pay off your loan faster than the original term.

Are there any penalties for settling a personal loan early?

Some personal loans may have early settlement penalties. Thus, it’s pertinent to check your loan agreement for any clauses related to early repayment.

Some loans may impose a penalty during a lock-in period, while others may have penalties even after the lock-in period.

What are the benefits of settling a personal loan faster?

Settling a personal loan faster offers several advantages, including:

  • Saving money on accruing interest
  • Improving your debt service ratio
  • Enhancing your credit score
  • Increasing your eligibility for future loans
  • Reducing total interest charges
  • Providing a sense of financial freedom
How can I increase my income to settle my personal loan faster?

To increase your income and settle your personal loan faster, you can explore opportunities for higher-paying jobs, take on part-time work, or engage in freelancing or side gigs. Additionally, you can sell unwanted or ‘pre-loved’ items online to generate extra income.

Is budgeting an effective way to settle a personal loan faster?

Yes, budgeting is an effective strategy for settling a personal loan faster. By reviewing and optimising your budget, you can identify areas where you can reduce spending, allocate more funds toward loan repayment, and expedite the settlement process.

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Picture of Wilson Wai Kit

Wilson Wai Kit

Senior Consultant

With extensive banking experience, notably as a mortgage sales officer at UOB Bank, Wilson leverages his understanding of loan applications and approvals to offer financial insights and support to empower individuals to make informed decisions regarding their financial futures.

Feel free to contact him for assistance with your financial needs!

I want to know about bank loans
Picture of Wilson Wai Kit

Wilson Wai Kit

Senior Consultant

With extensive banking experience, notably as a mortgage sales officer at UOB Bank, Wilson leverages his understanding of loan applications and approvals to offer financial insights and support to empower individuals to make informed decisions regarding their financial futures.

Feel free to contact him for assistance with your financial needs!

I want to know about bank loans

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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 loan agency company, we have extensive knowledge and experience in mortgage, personal loans, 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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