Things To Consider Before Applying Personal Loan

Not enough money for home renovation? Has your car been in bad condition recently? Or do you have to pay for a mass wedding ceremony? No matter what your needs, personal loan can be a lifesaver in narrow times.

There are many attractive personal loan offers out there, so do not know which one to choose? You may feel confused about choosing the loan that best suits you. Why don’t you read the following for consideration before applying for a personal loan?

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Do I really need a personal loan?

Getting a personal loan may seem like the best option at the moment, but have you really tried other ways to earn that money? Perhaps you can borrow from your parents, relatives or friends and save yourself from paying for the benefits that come with personal loans. Or maybe you can make a payment with your credit card. With a credit card, it’s easy and gives you the flexibility to pay the entire amount of debt in a shorter time.

However, you need to make sure you plan your payment plan to handle it and not allow the higher interest rates to drag you deeper into the debt. The last step, if you do not have a credit card and you run out of ways to find additional money, then it’s time to see if applying for a personal loan is the answer.

How do I know if I am eligible for a personal loan?

Most personal loans in Malaysia have the same requirements as below:

  • Aged 21 and up Malaysian
  • Citizens or persons of Permanent Resident status
  • A paid worker or self employed person with a working bank account

There is also a minimum monthly or annual income requirement, but this varies from bank to bank. Additionally, if you are a government employee or a government-related company employee, there are specific personal loans for you. Do not forget to check your credit history too!

What about the interest rate and how much will I pay for it?

Personal loans in Malaysia usually come with a flat rate of interest. Interest is levied on the amount you borrowed over the loan period, and not on the reduced principal amount. This means you will pay the full amount of interest calculated at the beginning of the period for each year.

For example, if you take a loan of RM10,000 with a flat interest rate of 9% per annum, the interest charge is RM900 per year. Therefore, for a period of six years, your total is RM5,400.

Any fees and charges I need to know?

Find out if the loan has any processing fees and stamp duty, and if it will be deducted from the loan amount. If so, this fee will result in a lack of loan amount if you are applying for the right amount. Another important thing to note is a late payment if you fail to pay a monthly instalment before the expiration date. Also, check if there are penalties involved if you plan to pay all the payments in advance.

All in all

Personal loan can be a fast solution when you need extra money. It’s also a huge responsibility, so be sure to carefully consider all of the above before you sign the loan form.

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