Earning Less Than RM2,000 per Month? Here Are 4 Loan Options to Consider
Can you get a loan on a low income?
While lower incomes do not necessarily disqualify you from getting a loan, it’s not always easy to find an attractive loan package with a very low salary.
This is especially true if you are earning less than RM24,000 annually or RM2,000 per month, as most banks (not all) regard it as the minimum income level required for a personal loan.
But the good news is – there are awesome loan options available to you even if you are earning a very modest income!
Check out these affordable and safe routes to obtain the financing you need:
1. Low-Income Personal Loans
Often times a personal loan from a bank can be the easiest way to access fast and secure financing.
Best of all, many personal loan products offered by banks cater to low-income earners as well.
Though income requirements varies with banks, even those earning at least RM1,500 per month (or RM18,000 annually) – and sometimes even lower – can apply for financing.
Another benefit of a personal loan from a bank is that almost anyone can apply, even the self-employed.
Moreover, the borrowed money can be used for almost anything. That is, it isn’t restricted to just business use, etc.
But is a low-income personal loan any different from a ‘regular’ personal loan? It depends.
Certain financing offers for those with lower incomes may include a smaller loan limit, shorter repayment periods and higher interests; though this is not always the case.
In fact, your credit rating will likely play a bigger part in determining your interest rate and borrowing amount than your earnings alone.
What about the promptness of loan processing and cash disbursement for low-income personal loans?
This again varies with banks, but the process is generally comparable to a regular personal bank loan.
This will improve your chances of discovering the right kind of financing, with the lowest rates and the most flexible terms for your income level and needs.
Check out our top picks for the three best low-income personal loans on offer!
| See also: Can Retirees and Pensioners get a Personal Loan? |
If you are looking to finance a business venture or need cash to operate your business, then a microloan might be a good option to consider.
But just what is a microloan?
A microloan is a small loan offered through government schemes, by banks and other institutions for business purposes (this is where it differs from a personal loan).
Also, since it is a micro-loan, the amount one can borrow is generally lower.
You’ll find that most microloan products offer financing amounts of RM1,000 to RM50,000 or more, depending on the lender and the borrower’s credit rating.
Who can borrow? Well, this depends on who is lending.
Certain government schemes for instance, may lend only to borrowers from specific sectors and there may be other restrictions imposed as well.
Generally, your business would have to be classified a microenterprise with a sales turnover of less than RM300,000 or less than five employees to qualify for a microloan.
For example, under Bank Rakyat Micro Financing-i, only those who are members of cooperatives, the self-employed, and owners of microenterprises may apply.
However, there is a further stipulation that the applicant’s business falls within the agricultural or services sector.
Now if a microloan is the right type of loan for you, check out this list of loan schemes (for microloans and others) available in Malaysia.
3. Special Civil Servant Loan Scheme
If you are earning a low salary but also happen to work as a civil servant in a government-linked company or approved agency, then this one is for you!
You may be able to take advantage of special loan programs offered by participating financial institutions.
What’s best, these loans are often offered with low minimum income level requirements, on average from RM12,000 to RM24,000 annually.
They also typically come with competitive rates for government employees and loan amounts can be quite flexible as well.
For instance, Direct Lending offers loans with financing amounts that range from RM2,000 to RM250,000.
However, the maximum borrowing amount is still subject to your credit rating, income level, etc.
One thing to consider is that loans for government employees usually entail a compulsory salary deduction via Biro Perkhidmatan Angkasa.
Still, the repayment periods are usually comfortably flexible, with most participating banks and agencies offering repayment periods from two to ten years.
4. Licensed Money Lenders
The term ‘money lender’ inspires all sorts of negative feelings in Malaysians because of its assumed link with the dreaded ‘Ah Long’ or loan shark.
However, there’s a clear distinction between a licensed money lender and an illegal one.
For one, a licensed lender has an actual license!
It’s only granted to qualified lenders who must be free of criminal convictions and are generally deemed to have a reputable background.
In addition, a licensed money lender is not allowed to extend loans at cutthroat rates.
They must instead adhere to apply reasonable interest rates of 12% per annum for secured loans and 18% per annum for unsecured loans.
Also, remember that a licensed lender is not allowed to intimidate or harass you for payments.
Thus, it’s a much safer way to borrow!
Do note that money lenders are not allowed to advertise their services without an advertising permit.
Thus, the thousands of posters, banners and buntings that line lampposts, exterior walls of shops and even road signs, are most definitely illegal, so don’t even bother.
You can check out JCL, a licensed moneylender that lets you directly apply online and that promises quick processing within two days (if your docs are in order, etc.).
Where can you find a legit, licensed money lender though?
Try this list provided by the Ministry of Urban Wellbeing, Housing and Local Government (KPKT) to discover licensed lenders in your area.
You can also check out JCL, a licensed money lender that lets you directly apply online and that promises quick processing within two days (if your docs are in order, etc.).
On a separate note, do be careful of fraudulent money lenders who claim to be licensed.
A recent press release by Bank Negara warned the public about scam lenders displaying fake licenses.
If you have concerns about your lender, do contact the KPKT helpline.