A personal loan is defined as a type of short-term loan with short repayment period relatively to other loans like mortgages. Personal loans in Malaysia are designed based on Sharia law and principles which are applicable to all Islamic banks offering personal loans. Whatever the end result or goal for taking a personal loan which might be similar, they all obey different forms of principles at the time of application as well as the sanctions for defaulters.
In Malaysia, personal loans amount start as low as RM1000 and can be accessed up to the RM200000 amount. The amount of the personal loan that can be accessed is dependent on the needs of the individual and the ability to repay the loan on time in order to avoid penalties in some cases. The types of personal loans offered in Malaysia can be broadly divided into secured and unsecured personal loans.
A secured loan is basically defined as a type of loan where an applicant tenders his or her assets in a form of security or as collateral to get access to the loan. A secured loan relatively comes with lower interest rates. However, caution should be taken because failure to repay the borrowed funds might lead to the loss of the assets used as collateral. For an unsecured loan, the acquisition of this type of loan might be a little tedious because there is no requirement for guarantor or collateral. The credit score and financial value of an individual will be used in determining the approval of an unsecured loan. In case a borrower fails to repay the funds by the end of the loan tenure, such individual is taken to court and the sale of properties might be the only way out.
List of Banks
Some of the banks that offer personal loan in Malaysia include:
- Bank Rakyat
- HSBC Bank
- Public Islamic Bank
- BSN Bank
- May Bank
Terms and Conditions
- The applicant must be a citizen of Malaysia with the minimum age of 20 years although some banks have provision for foreign citizens
- The applicant must be a permanent and full-time employee working under a company in the banks’ approved list with proof from the employer or self-employed with good savings account statement or credit record
- The applicant must have a minimum income of RM3000 per month on average and this amount may vary from bank to bank
- There is a fee for late repayment of loan; most of the time the individual will pay 1% of the borrowed funds per annum
- Personal loans offered in Malaysia come in various packages and plan with competitive interest rates and flexible repayment which can span up to 10 years and this makes personal loan so attractive to potential borrowers
- Interest rate on personal loan varies from bank to bank and also the type of personal loan scheme being applied for
- In general, the interest rate on personal loan in Malaysia ranges between 4.49% to 13.75%
- Loans that are applied for by individuals working in the government sector or some notable corporate organizations come with cheaper interest rates
Please take note that the required documents may vary from bank to bank. However, below is a list of the required documents that are currently required by the banks.
- A photocopy of your MyKad for front and back
- Latest tax receipts and tax returns
- Confirmation letter stating your personal details from your current employer or Head of Department
- Latest savings account bank statement
- Latest savings or current account bank statement if you are a self-employed
- Latest and current Employee Provident Fund (EPF) statement
- Other required supporting documents that are requested by the banks