Basic Guide to Personal Loan
Approval criteria
- Minimum gross annual income: RM18,000
- Age between 21 to 55
- If any existing loan/debt such as credit card debt is not settle, application is likely to be rejected (debt consolidation will usually be rejected)
- Owned a credit card that has a good credit history will help approval, same goes if you work for government (Public bank’s personal loan is only offers to those work in government sector)
Documentation:
Ic/My card, 3 months Pay slip*, Latest EPF statement*
*Varies from bank to bank, some won’t required. Loan amount
Loan amount
- Minimum RM5,000
- Maximum : 4- 5x of monthly income or RM150,000 which ever is lower
Loan period
- Minimum: 12 months, average is 24 months
- Maximum: 60 months
Interest rate
- Flat interest rate from 8.5% to 12% (pending on loan amount and loan period)
- Comply with Islamic banking principle
- See “Bank Rate” on personal loan interest rate table
Fees
- Processing fee – averaging RM200 deducted from the loan amount
- Stamp duty – 0.5% of loan amount
- Late payment charges – 1% of the monthly outstanding
- Early settlement penalty – from none to 3% of outstanding loan amount. Check with the bank
Understand what you are signing for
Pay attention to the minimum loan period. Personal loans interest rate comes in many sizes and shapes, and lowest interest rate does not means it is the ‘cheapest’. Most personal loans have a minimum lock-in period of 2 years and should you decided to settle the loan earlier, you will have to pay a hefty early settlement penalty.
Look at the total cost of loan, not just the monthly payments. The cost of the loan includes processing and stamp duty fees, late payment charges and early loan settlement fees.
Look for any hidden charges. Get the loan officer to explain each of the items thoroughly. Check carefully if the bank reserved the right to change the interest rate at it owns discretion.
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