Personal Loan Interest Rate
The Lowest Personal Loan Interest Rate In Malaysia
Getting the lowest personal loan interest rate in Malaysia is not too difficult. The main thing to do is to spend more time, survey and comparison by your own. A personal advice before we proceed further, consider wisely before applying for any personal loan.
It can be a very good financial leverage (as cash flow) for investments and businesses. When it is used in the right way ya.
As the economy is different every year, banks and other financial institutions always change the interest rate to maintain the market condition.
In year 2020, we need to always pay attention to the interest rate as announced by federal bank to make wise decision. As known, loan interest rate in Malaysia could easily affect your financial stability, as it is closely connected to your financial burden in future (for repayment).
Therefore, choosing the lowest personal loan interest rate in Malaysia is far more important than you could imagine.
For your information, some islamic banks offer slightly lower interest rate which you may called it as pinjaman untuk orang melayu, bumi loan, islamic loan and etc.
We will recommend to you some personal loan with lowest interest rate in Malaysia. First by introducing bank loan to licensed money lender.
For business reader, read this if you are looking for the lowest business loan interest rate in Malaysia, I have prepared something for ya. Business loan involved higher interest rate sometimes even must attach with collateral. Be smart also if you need to apply business loan.
What is Interest Rate?
Interest rate on a personal loan means the amount of money the borrower has to pay to the lender. Then the borrower can have an agreed amount of money to use now. Usually interest rate for personal loan is known as per annum basis (by yearly basis), which also known as annual percentage rate (APR).
In short, you rent an agreed amount of money from someone (bank, money lender, or others), and this agreed amount of money is to be paid in future as rental.
If you are looking forward to the rate as offered by different financial institution, you may always pay attention to our page.
To get the lowest personal loan interest rate in Malaysia is not impossible. We actually provide the interest rate table 2020 for your reference.
How interest rate is calculated?
There are lots of factors affect how much interest rate the lender would charge a borrower. It could be any possible factors which the lender cares a lot. Over here, we cover only some basic factor that a bank would put inside the consideration of interest rate calculation.
- Credit & payment history
- Relationship with the lender
- Individual negotiation skills
What as mentioned above is pretty simple to understand, and you would even know better if you understand “Why bank/money lender is lending you the money?”
First of all, thinking from the perspective of a bank or money lender, the purpose of lending you the money is to earn positive return from you. When a bank offers you a loan, it means the bank strongly believe you are capable to repay the full loan amount together with the interest rate.
So, here’s the question again. What affects the bank in deciding how much interest rate to charge?
Let’s refer back to number 1 to 9. If the lender is more than 50 years old, and work as a construction worker, the risk that he will get injured and unable to pay back the loan is higher.
Hence, a bank may not lend him the money or charge him a higher interest rate even the bank offers the loan.
Background which refers to family, financial, education background and others. If you were born in a wealth family with a very positive education background, the higher the chance you can get a good paid and stable job. The higher the chance you got sufficient income to repay the loan.
Therefore, the bank would more likely to offers you a personal loan with lower interest rate.
To sum up, the higher the risk that you cannot repay the loan, the higher the interest rate would levy. Therefore, any possible factors that could affect the risk of your repayment, it will be as consideration in calculation the interest rate to charge you.
Understand your purpose of borrowing
Right after you understand the relationship between risk of repayment and interest rate computation (would bank charge you lower or higher?), you might want to understand the purpose of your borrowing for decision making (who to choose to borrow from?).
For investment purpose. We always wanted our investment to earn positive return on investment (ROI). If the investment return percentage is “expected” to be higher than your loan interest rate, this loan application is a yes to go for.
However, if the ROI is not as higher as compare to your loan interest rate, forget about the loan. Because you are not going to be able to repay for it.
For business purpose, as long as you got sufficient or stable income from your business (at least the business is not in a loss), you are good to go for the loan. Some traditional business required time to accumulate customer base, so that the revisit rate can be gradually higher by time.
Some people are very smart in which they will loan from another bank to repay current bank loan. This is for a lower interest rate which can save more cost incurred from current bank loan. For example, current housing loan is about 4.8% from Bank A.
Two years later, Bank B offers 4.3% of housing loan (due to economic condition). Therefore, you can refinance from Bank B to repay your Bank A’s loan, so that you can save more from current interest.
For personal matter, as long as your salary is enough for the repayment, go for it and use the money to solve whatever personal matter. The priority of borrowing whether from bank, licensed money lender or a long is always base on the following formula.
“Urgency of the money vs who to borrow from”
1. If it is very urgent and you can’t wait too long for the money, take the highest risk and go for a long. There are actually some licensed money lender provides fast approval personal loan
2. If it is not too urgent and you could wait sometime for the right evaluation, you should enjoy the lowest risk and go for a bank.
3. If it is in between, and you want to get a fast loan but a bank cannot provide better offer, go for licensed money lender. You may refer to the list of licensed money lender
Note: For everyone that’s reading this article, I am not encouraging borrowing from along because of the consequences happened. But somehow there are some personal or family matter which way too urgent and important that you’ve got no choice. Therefore, whoever that go for a loan from a long, take your own risk.
Comparing between banks, licensed money lender and a long
Alright, comes to the crucial part of our article. What’s the difference between three of these financial institutions?
A bank would take longer time to evaluate whatever as mentioned earlier. So that they can choose whether to accept the risk comes with the borrower.
However, if the borrower has a very high risk to resulting in the failure of repayment for the loan, no matter how keen the borrower needs the loan, bank will not entertain.
Fortunately, if a bank offers a loan to the borrower and the borrower is unable to repay, the bank can only follow the standard procedure and regulation as regulated by the Bank Negara for the loan settlement. For example, claim the rightfulness of your collateral or asset (such as house, car, shares and others), if there is any of it pledged in the process of the loan application.
If there is no collateral or asset for the settlement, the borrower has to declare bankruptcy.
Licensed Money Lender
For a licensed money lender, they are almost the same as a bank but comes with a higher interest rate and quicker approval for the application. In other words, the licensed money lender bear higher risk than a bank. By cutting down the time taken for approval at another cost on the borrower, which is higher interest rate. This is why licensed money lender much trustworthy than along.
In case the borrower is unable to repay for the loan, license money lender would appoint legal debt collector for the collection.
Lastly, loan from a long. Lots of us are not so clear how to differentiate licensed money lender and a long. As known, a long is someone or company who are not approved by the Bank Negara that looking for prospect who needs loan in urgent.
For your information, a long does not follow the right procedure to analyze the borrower and offers loan with extremely high interest rate.
If fail to repay for the loan + interest amount, they would do whatever that is illegal to go for the repayment. Most of you guys are very familiar with the tactics they might use which are splashing paint to your house, threatening, taking away your assets and etc.
Refer the interest rate computation here for 3 of these institutions.
Loan Application Process
The application procedures might be very much different for each of the banks, licensed money lenders and a long. However, most of them are the same in a certain manner.
Usually, you will be required to submit a variety of documents, personal information that are able to prove your financial stability, background and such. Other than that, you may find loan application easier than the past because you can apply personal loan through online
For example, government-issued ID, Proof of residence, proof of employment, proof of income. Sometimes if you are not too qualified for the loan, the bank might need additional document such as proof of asset ownership, guarantor’s documents and etc.