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Personal loans

Get your head around personal loans

No tricky insurance lingo here. Just simple articles on complex topics.

FEATURED

15 August 2016
5 Best Tips Before You Commit to a Personal Loan

Here's what you need to know before you commit to a personal loan.

There are many reasons why we acquire personal loans.

Frequently asked questions

Q: What is a personal loan?

A personal loans is a line of credit provided by banks and lending companies in Malaysia to help a borrower ease into investments, consolidate debt, pay for car repairs, home renovation and more.

Q: Am I eligible for a personal loan?

You can get personal loans in Malaysia if you are a Malaysian, typically between 21 and 60 years old.

To qualify for a personal loan/finance you need to be:

  • A Malaysian or a Malaysian permanent resident.
  • Aged between 21–65.

Also, you will need to earn at least

  • RM9,600 per year if you are a Malaysian.
  • RM24,000 per year if you are Permanent Resident in Malaysia.

Some institutions also allow foreigners from certain countries to apply for bank personal loans. An applicant also needs to file documents that prove his residence and identity, or government-issued IDs and clearances.

In addition, proof of employment and income are needed, these details determine the maximum amount of money you can borrow. Banks also want their personal loan clients to have landline phones at home or in the office.

Q: What are the different types of personal loans in Malaysia?

In Malaysia, personal loans are considered as one of the easy loans to apply for because they are usually unsecured, this means that you don’t have to secure a guarantee or put up a possession of yours as collateral for the debt you’ll incur.

However, some personal loans are designated as secured, especially to people who have poor credit history but still need to secure a fast cash loans. For secured personal loans, a borrower can pledge his bank accounts or other valuable belongings as collateral in case of failure to pay back. Islamic loans are also available and follows different banking principles which makes them Shariah-compliant.

Q: Who can get a personal loan/finance?

To qualify for a personal Loan/finance you need to be:

  • A Malaysian or a Malaysian permanent resident.
  • Aged between 21–65.

Also, you will need to earn at least

  • RM 9,600 per year if you are a Malaysian.
  • RM 24,000 per year if you are Permanent Resident in Malaysia.

Q: What are the benefits of a personal loan?

As one of the fast loans that banks and other financial institutions offer, personal loans give borrowers a quick way to get cash. But the borrower can also take advantage of the following extra features:

  • Flexible payment terms that allow you to pay above the required amount for your cash loans, as well as to change the terms of your personal loans, therefore helping you settle your debt faster.
  • A revolving credit line, which is a finance service that allows you to get a certain amount of cash advance for when you need the money, in exchange for paying a commitment fee.

Q: What documents are required for a personal loan/finance application?

1. Photocopy of your NRIC (both sides)

2. If you are a salaried employee, you’ll need proof of your income. Banks accept a variety of documents to verify this, such as salary slips, tax returns, EPF statement or bank account statements. Depending on the bank, they will require a combination of these documents. In addition, if you are applying for a loan only available to Public servants and GLC employees or other special private enterprises, you often need to provide proof of employment letter by your employer. 

3. If you are self-employed, you’ll also need proof of your income. Banks accept a variety of documents such as Business registration certificate, Bank statements (usually 6 months), Tax declarations and EPF statements. Depending on the bank, they will ask you for a combination of these documents

Q: What is the lowest personal loan/finance interest/profit rate?

Banks revise their personal loan rates from time to time. Personal Loan rates usually range from 3.5%–24% per annum. The loan or finance package you are eligible for depends largely on your occupation.

Q: How much can you borrow with a personal loan/finance?

Depending on your employment status you can borrow up to 35x your income. However, this is only applicable for Public Servants and Employees. For regular employees of private companies, the maximum you can loan is up to 25x your monthly income.

Most banks restrict your loan amount to around 10x your monthly income, so you will have a larger selections of loan/finance plans if you lower the loan amount relative to your income. The maximum amount is restricted at RM 400,000

Q: Are there additional bank fees with personal loans/finance?

Some banks charge a fixed processing fee and other banks charge up to 4% of the approved loan amount. According to Malaysian law, there will be a stamp duty of 0.5% imposed on your approved loan/finance amount. Some banks will offer to pay this fee for you. In addition, you can also incur late payment fees (often a fixed 1% p.a. on the balance that is overdue) or early repayment fees.