Have you ever wondered what can you use a personal loan for in Malaysia? From initiating a business journey to addressing unforeseen financial challenges, personal loans are a reliable ally.
In this article, we delve into the diverse applications of personal loans in Malaysia. Rest assured, Bluebrick is here to assist you, whether you’re seeking to:
- Consolidate debt
- Settle high-interest debts like private loans or loans from unofficial lenders
- Renovate your home
- Secure start-up capital for a new business
- Address bad credit history concerns such as AKPK, late payments, Special Attention Account (SAA)
- Manage your monthly overhead expenses
- Covering medical bills
- Financing home improvements and repairs
- Addressing unforeseen financial obligations
How You Can Benefit from Flexible Personal Loans in Malaysia
When it comes to managing your money, having flexibility is crucial. Among the many credit options available, personal loans in Malaysia stand out due to their versatile features.
Here are some of the key benefits of these loans:
1. Usage Freedom
In Malaysia, there are primarily two types of personal loans: secured and unsecured.
Unlike secured loans that are specifically designated for assets like homes or cars, unsecured personal loans offer a refreshing sense of financial freedom.
With no ties to a particular purpose, these loans empower borrowers with the liberty to allocate the funds for just about any financial need.
2. Varied Loan Amounts
The loan amount you can secure depends on many factors, including the specific bank or financial institution you choose and, importantly, your creditworthiness.
This versatility ensures that personal loans can cater to both substantial and minor financial needs, making them an attractive option for a wide spectrum of borrowers.
3. Flexible Repayment Terms
Another key advantage of personal loans in Malaysia is their flexible repayment options, where borrowers can choose a loan tenure that benefits their financial situation.
For instance, longer tenures result in smaller monthly instalments, providing relief to those on tighter budgets.
On the other hand, shorter tenures can save borrowers money on interest payments by paying off the loan more swiftly.
4. Competitive Interest Rates
Interest rates are undeniably one of the primary considerations for any loan.
Fortunately, based on a borrower’s credit history and the specific policies of the lending institution, personal loans can offer competitive interest rates.
These rates often make personal loans a more attractive and viable option for a myriad of financial needs compared to credit cards or other high-interest borrowing methods.
5. Diverse Eligibility Criteria
Unlike some loan types that come with stringent eligibility requirements, personal loans are renowned for their inclusivity.
They are typically accessible to a broader spectrum of individuals, including salaried employees, self-employed professionals, and even those with a less-than-perfect credit score.
These diverse eligibility criteria mean that a broader range of people can benefit from these flexible personal loans in Malaysia, providing a valuable financial lifeline to many.
What Can You Use A Personal Loan for in Malaysia?
Unlike designated hire purchase or mortgage loans, personal loans offer a versatile range of uses. Here, we delve into what can you use a personal loan for in Malaysia:
1. Settling High-Interest Debts
When you’re juggling multiple debts, especially those with high-interest rates like credit card balances, using a personal loan to settle these obligations is a smart move.
By doing so, you can effectively reduce the burden of these high-interest debts and simplify your finances with just one monthly payment.
Moreover, personal loans often carry lower interest rates than other forms of debt, which can lead to potential savings over the repayment period.
As an added benefit, making regular and timely payments on a consolidated loan can boost your credit score over time.
2. Securing Start-Up Business Capital
Starting a new business venture is an exciting but often financially demanding endeavor.
Whether you’re launching a small business, expanding an existing one, or pursuing a new entrepreneurial opportunity, securing sufficient capital can be a significant challenge.
This is where a personal loan can be a valuable resource. It provides an accessible source of funding for aspiring entrepreneurs, helping you turn your business dreams into reality.
3. Repairing Bad Credit History
Say you’ve faced financial challenges in the past that have led to a damaged credit history due to issues like:
- AKPK enrolment
- Late payments
- Special Attention Account (SAA) status
- Trade reference problems
Applying for a personal loan in Malaysia can help!
By handling a personal loan responsibly—making timely payments and adhering to the loan terms—you can initiate the process of improving your credit history gradually.
This positive payment record can contribute to an enhanced credit score, opening doors to better credit opportunities in the future.
4. Covering Monthly Overhead Expenses
Covering monthly overhead involves budgeting for essential aspects of daily life. This includes:
- Your monthly cost of living
- Making monthly bank loan or mortgage payments
- Setting aside funds for a financial reserve
- Paying for children’s monthly school fees
- Addressing various household expenses
Personal loans can offer valuable temporary financial support in such situations, providing a lifeline to help you navigate these challenges and maintain your daily living standards.
5. Home Renovations/Repair
A home is more than just a shelter; it’s an investment. Malaysians looking to enhance the value of their property might consider home renovations.
However, instead of utilising savings, which might be set aside for emergencies, a personal loan can be an effective way to finance these improvements.
Furthermore, certain repairs, like fixing a leaking roof, can’t wait. For such urgent needs, a personal loan can provide swift financial support.
6. Car Repair
Owning a car in Malaysia is often a necessity for daily commuting and mobility. Nonetheless, unexpected breakdowns or repairs can occur at any time, leaving you with unexpected expenses.
Whether it’s addressing urgent issues like engine or transmission problems or ensuring the safety and longevity of your vehicle, personal loans offer a structured way to cover repair costs.
They help you preserve your mobility, manage your budget effectively, and prevent disruptions to your daily routine, ultimately safeguarding your car for both immediate and long-term needs.
Read More: Understanding the Loan Disbursement Process in Malaysia
When You Should Not Apply for A Personal Loan in Malaysia
In Malaysia, personal loans can be tempting due to their relatively easy approval process and the freedom they offer in terms of usage.
However, there are certain scenarios when taking a personal loan might not be the wisest decision.
1. Buying A New Car
While personal loans in Malaysia can be used for various purposes, purchasing a new car might not be the wisest choice. Instead, a hire purchase loan is a more appropriate choice.
Hire purchase loans are specifically tailored to finance vehicles, typically offering better interest rates and terms than personal loans.
Plus, one significant advantage of hire purchase loans is that the vehicle itself acts as collateral.
This results in a decreased risk for the lender and a more favourable interest rate for the borrower.
Furthermore, cars are notorious for their swift depreciation. If you were to use a personal loan, you might find yourself still paying off the debt long after the car’s value has plummeted.
2. Paying for Your Vacation
Although vacations offer unforgettable experiences, financing them with a personal loan could lead to long-term debt, and this is not a financially advisable approach.
Ideally, you should aim to enjoy your holiday without lingering financial worries. It’s better to consider saving for your vacation in advance or explore travel-specific savings plans or offers.
In Malaysia, many travel agencies and credit cards offer vacation packages that can prove to be more cost-effective alternatives.
3. Expected Major Expenses
In situations where major expenses are predictable, borrowing might not be the best approach.
For instance, if you’re planning a big life event or considering a substantial investment, saving in advance is smarter.
Not only does this approach shield you from the accumulating interest of a loan, but it also ensures that you’re financially prepared without incurring debt.
Specific expenditures also have tailored loans available; for example, mortgage loans are generally more suitable for property purchases compared to personal loans.
4. To Consolidate a Loan with a Higher Interest Rate
One common reason for consolidating debts is to reduce the overall interest rate and simplify payment arrangements.
Therefore, applying for a personal loan with a higher interest rate would defeat the very purpose of debt consolidation.
However, there are unique situations where someone might still consider a higher-interest personal loan for consolidation:
- Career Promotion
In certain industries or companies, an employee’s credit score can directly impact their chances of career advancement.
A poor credit history might be perceived as a sign of financial irresponsibility, potentially hindering professional growth.
- Business Joint Ventures
In business partnerships or joint ventures, individuals or entities may scrutinise each other’s financial credibility.
A poor credit score can be a deterrent in such critical business dealings.
- Maintaining Personal Secrecy
Some individuals might find themselves in situations where they prefer not to disclose their financial hardships to their family or spouse.
In these cases, even if it means taking a higher-interest loan, they might consider it to maintain their financial facade or to avoid familial conflicts.
Read More: Medical Fees Malaysia: How to Prevent & Overcome Serious Medical Debt
How Bluebricks Can Help You Decide What Can You Use A Personal Loan For
BlueBricks is not just your average financial services provider; we’re your go-to bank loan and debt consolidation agency in Malaysia.
We offer a diverse range of financial solutions to cater to your specific needs, for example:
- Personal loan services
- SME loan rejected services
- Mortgage loan rejected services (for buying a new home, refinancing and cashback purposes)
- Collateral loan services
Customisable Loan Consultancy Service
At Bluebricks, we understand that everyone’s financial situation is unique, and a one-size-fits-all approach may not always work.
Therefore, our experts are equipped to recommend the most suitable loan product based on individual circumstances. Factors they consider include:
- 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).
What Can You Use A Personal Loan For – FAQs
We’ve gathered a collection of FAQs to offer further insights and advice to help you better understand what can you use a personal loan for in Malaysia.
Once you know what can you use a personal loan for in Malaysia, there are many things you can try to increase your savings. Examples include:
- Home Improvements
By taking a personal loan and investing it in upgrades that boost your home’s market value, you can ask for a higher selling price if you decide to sell in the future.
- Starting a Busines
With a well-researched business plan and a clear strategy, using the loan for initial capital, inventory, or marketing can help your business grow and become profitable.
Other than the examples of what can you use a personal loan for in Malaysia listed above, you can generally use a personal loan for almost any purpose.
However, most financial institutions do have certain restrictions. During the loan application process, they might inquire about the intended use of the funds to ensure it’s not for a prohibited purpose.
When you secure a personal loan, the funds are typically deposited directly into your savings account. From there, you can then determine what you can use the personal loan for.
