“I Do” - Citibank Installment Loan
You might have seen it already - the ‘I do’ advertisement on personal loan by Citibank.
The ad is a great stopper, most people would probably pause for a while and smiled at that loving young couple. The advertisement gave a strong hint that this loving couple will start a happy new life together. But if the cynics believe “marriage is the tomb of love”, then for the realist, take up a huge personal loan to get marry is just like taking a vow on ’till debt we apart.’
How it works
- Load period: Minimum2 years, maximum 5 years
- Interest rate: Variable fixed interest rate. For loan tenure of 2 to 3 years, the interest rate is 7.6% p.a; for a 4-year loan, 8.0% p.a and for a 5-year loan, 9.0% p.a.
- Fees: RM100 processing fee and 0.5% of loan amount as stamp duty
- Early settlement fee: 3% of outstanding balance excluding interest rate if the loan is settlement within the first 3 years.
Interestingly, for those wage earners, the bank also required the latest original EPF statement for the purpose of verifying monthly pay slip. Such requirement probably reflects a stricter credit screening to minimize loan from being default.
The caveat
As reviewed earlier, personal loans are easy to get but difficult to get rid of. The reasons - the minimum loan period and early settlement penalty. Firstly, the minimum of 2 year seems to be the standard for all personal loans offer by Malaysian banks. Essentially this is a 2 year lock-in period designed to ensure the banks have a reasonable chance to make some profits to compensate the risk they took. Some would say 2 year loan is not a bit deal but if you start to add up car and housing loans, and along the way comes a baby (as suggested by the advertisement), you would perpetually servicing the loan and face a cash flow crunch.
Secondly, Unlike the car loan where you get some cash discount for early settlement, for personal loan, you have to pay more for your way out. If you settle the loan before the loan period mature, you not only have to pay the outstanding amount interest in full, but also a 3% penalty of the that outstanding amount.
Bottom line
The Citibank personal loan/installment loan offer is on par with the market. The 3-hour super fast approval process is however a double edge sword. If you are in the hurry, it works for you. On another hand, it may also push you to make a hasty decision - it ‘compresses’ the critical time you need to ’second guess’ or evaluate your decision making.
Depending on you needs, a personal loan is a good financing option despite its steep price. But if getting marry is about starting a new life, adding a new debt to it definitely not a good way to start.
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