Personal loans are short-term loans that have shorter repayment periods than mortgages. Where a mortgage requires a repayment period of 20, 30 or 40 years, the repayment period of a personal loan usually extends from one month to ten years *.

Unlike home loans, personal loans are usually unsecured, which means you can borrow money without giving any form of security or assets to a lending company such as your home or car. This is subject to the terms and conditions submitted. Even if you do not make any guarantees, you are still responsible for making your repayments on time. Penalties and fees will apply if you fail to make a payment, and will negatively affect your credit score.

Personal loans can generally be as low as RM1,000 to RM150,000 *. The amount of your loan depends on your eligibility (for example your ability to repay the loan), as well as the terms offered by the lender. If you want to borrow more than this range, then a secured loan may be a better option for you.

When you take out a loan with your bank, you will sign a loan agreement outlining the amount you borrow, interest rate and monthly repayment amount. This agreement will also list your loan repayments - your monthly payments and your loan terms in the year and month in detail. As a guide, the longer your repayment period, the higher your payment amount.

There are two types of loans, secured and unsecured loans. In Malaysia, the most frequently requested personal loan is unsecured personal loans.

Secured Loans:
Secured loans are loans in which borrowers offer their assets, such as cars or homes as security or collateral for their loans. Therefore, the cost of the loan is usually lower than the unsecured loan. However, borrowers need to be careful about their financial ability to repay the loan. Failure to repay the loan will result in their security being withdrawn.

Unsecured Loans:
Non-secured loans are more difficult to obtain because borrowers are not required to offer any kind of asset as collateral. Therefore, they need to assure lenders of their financial ability or credit stability. This is to ensure that the borrower is able to repay the loan.

With unsecured personal loans, the cost of lending is also higher as lenders take higher risks when providing loans. Although borrowers do not provide any form of collateral to their lenders, this does not mean that they can fully repay the loan. The lender has the right to bring the borrower to court with the intention of acquiring and selling the borrower's assets to compensate for any loss suffered.

Interest rates
Interest rates are often the key determinants of a good loan agreement. The lower the interest rate, the smaller the payment amount over the original loan amount. In Malaysia, the interest rate usually charged is based on the interest rate. An interest rate is a rate at which interest is charged on the amount of the original loan, regardless of the amount paid.

Terms & Conditions
Review the terms and conditions of your loan agreement to find out the other fees involved, such as processing fees, stamp duty and other charges (for example, a licensee's lending fees).

Eligibility Criteria:
Many lenders have stringent eligibility requirements such as age and income status. Sometimes you may also need to provide proof of ownership of your assets and other details of your debt obligations.

Personal loans are important for those who need instant cash, whether it's a big ticket purchase or to deal with short-term financial problems. Before you apply for a personal loan, determine whether there are other financing options that may best suit your needs. Carefully consider your ability to repay debt, as well as scenarios of what will happen once you stop generating income.

If you are facing any bank or financial company's arrears and do not know how to solve it, you can come to find us, we have professional team that can provide you with the most professional advice to help you solve your current financial problems.