An FAQ to Personal Loans

Ever since we added a personal loan calculator and aggregator on our site, we’ve had many questions from interested readers about these loans. The questions appeared similar so we decided to compile the most commonly asked questions about personal loans by Malaysians here with our list of answers!

Question 1: I earn less than RM1500; can I still apply for a personal loan?

Personal loans that allow for salaries below RM1500 are very limited. Only two thus far have RM1500 as a minimum monthly salary and another two do not stipulate a minimum and base the application on overall credit availability but these loans come tied to high interest rates.

However, if you do earn less than RM1500; you might want to reconsider taking on a personal loan. Minimum income ranges are there for a reason: to ensure you will be able to afford to repay them. Do weigh your options carefully. An income less than RM1500 will make it difficult for one to repay after considering EPF deductions and other necessities.

Question 2: How much of a loan can I take on my salary?

How much of a loan you are able to take will depend on your salary, credit report, commitments and of course, the discretion of the bank. Although many ‘best practices’ abound, the truth remains that approval will in the end be dependent on how ‘attractive’ an applicant you are to the bank. You may have a large income but if you are riddled with unsecured debts (such as credit cards and personal loans), these make you an unattractive customer.

Rule of thumb for commitments allowed on your salary is a maximum of 60% of net salary. To calculate this; take all the monthly repayments you have (loans, credit card minimum payments, etc) and add them up. If this is less than 60% of your net salary; the remaining amount will be the available monthly commitment you can take on further. If the repayments exceed 60%, any further loan or credit applications will most likely be rejected.

Question 3: Will I get the full amount I applied for?

The answer to this is unfortunately, no. But how much lesser you receive will depend on two factors. The first being whether you are a high or low risk customer and the second is tied in to the bank’s processing fees and administrative charges.

Whether you are high or low risk will depend on how much you earn; how much debt you currently hold and if you have been a good paymaster. Low risk customers will likely be approved for the amount they’ve applied for or at least 80% thereof. There are also degrees of high and low risk and how much you receive will be based on where you fall on the risk bar. Again, this will also depend on the bank’s internal processes of calculating risk.

Let’s say Ahmad has been decided by the bank to be a low risk customer and his loan was approved for 90% of the sum he asked for. From that sum, Ahmad will still be charged stamp duty fees (compulsory for all loan documentation) and any processing or administrative fees the bank may charge. Always ask the bank about any fees before applying.

If Ahmad was found to be a high risk customer; depending on how high a risk he is found to be, the bank will either reject his loan or offer a much lower amount. Ahmad can then either agree to take the loan or not.

Question 4: How long can I take a loan for?

Bank Negara set the maximum number of years for personal loans at 10 years but many commercial banks will not allow this much. The usual number is between 7-8 years. However, if you are able to, it is always better to pay of your loan quickly as personal interest rates are very high.

Question 5: Can I apply for a loan on your site if I am blacklisted on CCRIS?

You can apply on the site but as we are not a bank or lending agency; whether you receive the loan or not is still dependent on the bank. We are not agents nor do we provide loans. We provide information on banking products and help link you to the banks to apply for the loan of your choice. As the approval will still come from the bank and as is standard banking practice; a blacklisted CCRIS customer will not likely be approved for anymore loans.

This was brought you by DIANA CHAI from RinggitPlus.com. RinggitPlus compares credit cards, personal loans and home loans to help Malaysians get more for their money.