If you are looking for some extra cash to fund your personal needs, you might be considering applying for a personal loan in Malaysia. A personal loan is a type of unsecured loan that does not require any collateral or guarantor, and you can use it for various purposes such as education, home renovation, medical emergency, wedding, etc. However, before you apply for a personal loan, you should avoid some common mistakes that could affect your chances of getting approved or cost you more in the long run.
Here are some tips on how to avoid the most common mistakes when applying for a personal loan in Malaysia and the requirements to apply for one.
1. Know your credit score and history. Your credit score and history are important factors that lenders look at when assessing your loan application. A good credit score and history show that you are a responsible borrower who pays your debts on time and does not default on your loans. A bad credit score and history, on the other hand, indicate that you have a high risk of defaulting or missing payments, which could lower your chances of getting approved or result in higher interest rates and fees. Therefore, before you apply for a personal loan, you should check your credit score and history from the Credit Bureau Malaysia (CBM) or any other credit reporting agencies, and make sure that there are no errors or discrepancies that could affect your credit rating. If you have any outstanding debts or overdue payments, you should clear them as soon as possible to improve your credit score and history.
2. Compare different lenders and loan offers. There are many lenders and loan offers available in the market, but not all of them are suitable for your needs and preferences. Different lenders have different eligibility criteria, interest rates, fees, repayment terms, and features for their personal loans. Therefore, before you apply for a personal loan, you should compare different lenders and loan offers based on these factors, and choose the one that best suits your needs and budget. You can use online tools such as loan calculators or comparison websites to help you compare different loan options and find the best deal for you.
3. Read the fine print and understand the terms and conditions. Before you sign the loan agreement, you should read the fine print and understand the terms and conditions of the personal loan. The fine print contains important information such as the interest rate, fees, charges, penalties, grace period, prepayment options, early settlement fee, late payment fee, etc. that could affect your total cost of borrowing and repayment obligations. You should also be aware of any hidden or additional costs that could increase your loan amount or monthly instalment. If you have any questions or doubts about the loan terms and conditions, you should clarify them with the lender before signing the agreement.
4. Borrow only what you need and can afford to repay. One of the biggest mistakes that borrowers make is borrowing more than what they need or can afford to repay. Borrowing more than what you need could lead to overspending or wastage of money, while borrowing more than what you can afford to repay could lead to financial difficulties or debt trap. Therefore, before you apply for a personal loan, you should assess your financial situation and determine how much money you need and can afford to borrow and repay. You should also consider your income, expenses, savings, existing debts, and future financial goals when deciding how much to borrow. As a general rule of thumb, your monthly loan instalment should not exceed 30% of your net income.
5. Make timely repayments and avoid defaulting on your loan. Once you have obtained a personal loan, you should make timely repayments and avoid defaulting on your loan. Making timely repayments will help you maintain a good credit score and history, avoid late payment fees and penalties, reduce your interest charges, and improve your chances of getting better loan offers in the future. Defaulting on your loan, on the other hand, will damage your credit score and history, incur additional fees and charges, increase your interest rate, affect your legal status, and jeopardize your financial well-being. Therefore, you should always pay your monthly instalment on or before the due date, and if possible, pay more than the minimum amount or make extra payments to reduce your loan balance faster.
Requirements to apply for a personal loan in Malaysia
The requirements to apply for a personal loan in Malaysia may vary depending on the lender and the type of loan that you choose. However, some of the common requirements are:
– You must be a Malaysian citizen or permanent resident (PR) in Malaysia
– You must be aged between 21 to 60 years old at the time of loan maturity
– You must have a minimum monthly gross income of RM3,500 or more
– You must have a good credit score and history
– You must have a bank account with the lender or any other bank
– You must provide your identification card, income proof, bank statements, and any other documents required by the lender
To apply for a personal loan in Malaysia, you can either visit the lender’s branch or website, or use online platforms such as MAE app or Maybank2u website. The application process is usually simple and fast, and you can get your loan approved and disbursed within a few days or hours, depending on the lender and the loan amount.
What’s the difference between getting a personal loan from a traditional bank and a digital bank?
Traditional banks are financial institutions that have a physical presence, such as branches and ATMs, where customers can access their banking services. Traditional banks offer personal loans through various channels, such as online, phone, or in-person applications.
Traditional banks may have stricter eligibility criteria, higher interest rates, and longer processing times for personal loans, depending on the borrower’s credit history, income, and collateral.
Digital banks are financial institutions that operate entirely online, without any physical branches or ATMs. Digital banks offer personal loans through their mobile or web applications, where customers can apply, receive approval, and access funds within minutes.
Digital banks may have more flexible eligibility criteria, lower interest rates, and faster processing times for personal loans, as they use advanced technology, data analytics, and artificial intelligence to assess the borrower’s creditworthiness, risk, and affordability.
In April 2022, Bank Negara Malaysia (BNM) announced the successful selection of five applicants for digital bank licences, which are expected to commence operations by 20241. These digital banks aim to address the needs of underserved and unserved customer segments, such as the unbanked, underbanked, micro-SMEs, and gig economy workers, by offering more accessible, affordable, and inclusive financial services23.
The main difference between getting a personal loan from a traditional bank and a digital bank in Malaysia in 2024 is the level of convenience, cost, and customer experience.
Digital banks may offer more convenient, cost-effective, and customer-centric personal loans, as they leverage on digital technology to streamline the application, approval, and disbursement processes, reduce the operational costs, and tailor the products and services to the customer’s needs and preferences.
However, traditional banks may still have an edge in terms of trust, reliability, and security, as they have more established reputations, regulations, and safeguards in place. Ultimately, the choice of getting a personal loan from a traditional bank or a digital bank depends on the customer’s personal circumstances, preferences, and goals.
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