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Introduction to Personal Loans


Personal loans are a line of credit provided by banks and lending companies in Malaysia to help the borrow ease into investments, consolidate debt, pay for car repair, home renovation and more.


Types of personal loans


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 also exist and have different banking principle which make them Shariah-compliant.


Personal loan features and benefits


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.

Are you eligible for a personal loan?


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


Personal loan interest rates and other fees


Before you sign up for a personal loan, you need to be aware of the interest rates that come with it. Most banks in Malaysia may have an add-on interest rate, that percentage changes depending on the amount you borrow and the time it takes you to pay the borrowed amount back.

Aside from personal loan interest rates, there are other loan-related fees you need to look out for. This fees includes the disbursement fees (applies for every time you cash out money on your loan), the pre-payment and late payment fees (applies when you pay your debt before or past the due date scheduled on your loan terms), and the loan modification fee (applies when you want to change some details of your loan).


Let GoBear help you find the best loans


Here at GoBear, we strive to give you updated information on the terms of each personal loan product offered here in the Malaysia. Our main feature here are GoBear is our comparison tool which generates the most favorable loan product for you, depending on your needs. We also provide tips on how to be a wise borrower, by disclosing important information about personal loan lenders and their products, as well as by alerting you on tips and other useful information via our blog.


Personal loan interest rates and other fees


In Malaysia, we are literally spoilt for choice with the variety of personal loans and credit cards offered by banks and financial companies here. If you are looking to take up a personal loan, both local and international banks offer a variety of personal loan options to suit your needs.

Personal Loan companies include local banks such as MayBank, CIMB, BSN, international banks like HSBC, UOB and OCBC, Citibank and Standard Chartered and corporate companies such as Aeon.
Do you want to find out which personal loan is the best for your needs? Compare personal loans with GoBear using our loan calculator today! Or check out the advantages of the loans offered in Malaysia from the following trusted banks:



*We compare personal loans with a tenure of 6 months to 10 years depending on the loan purpose. The monthly interest rate depends on your personal circumstances and will be between 3.52% and 18%. This is an example of what it may cost: A loan of RM15,000 for at an annual interest rate of 14.43% over 5 years will have a monthly payment of RM 352.38, and a total payment of RM21,142.80 with a total interest amount of RM6,142.80.


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Follow us on Facebook, and learn more about Personal Loans through our blog and FAQs.

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  • 1.What can I use personal loan/finance for?
    A personal loan is an unsecured installment loan that you can use for pretty much whatever you want. You can use it to finance a medical emergency, a family holiday or even that new laptop you’ve been eyeing on. There are more specialized loan products available if you need to finance your renovation or education.
  • 2.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.
  • 3.What is the difference between a personal loan and personal finance-i?
    Personal loan: This is a lending facility which disburses you a certain amount of money, which you will have to repay over a certain tenure with interest based on your Principle amount Personal Finance-i: This is a finance facility that functions according to the principles of the Shariah. Instead of paying interest like a personal loan, you pay a percentage of profit over an asset that the bank has bought on your behalf. Two main Shariah principles that Banks apply is Murabaha and Bai al Inah.
  • 4.What documents are required for a personal loan/finance application?
    - Photocopy of your NRIC (both sides) - 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 - 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
  • 5.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
  • 6.What is my loan/finance tenure?
    The tenures for personal loans/finance can range from 6-months up until 10 years for personal loan. The length of the loan, or tenure in jargon, is an important determinant. The longer the tenure, the more interest you will pay.
  • 7.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.
  • 8.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 This is the Flat interest rate – more importantly, is the effective interest rate, which shows the actual cost of borrowing.
  • 9.What is the Effective Interest/Profit Rate and why is it important?
    The effective interest rate takes into account the fact that you are repaying your principal, but your total interest paid will not be reduced. Sounds complicated right? We’ll give you a short example here. Imagine you borrow $1000 for two years to buy a new mobile phone at a “flat interest rate” of 5%. You will be paying $87.50 per month for one year (effective interest rate of 9.10%). Why is the effective interest rate almost twice as high? Let’s look at the two different calculations: 1. The loan balance is reduced every month. ((interest rate(%)/12) x loan amount) / (1-((1+interest rate(%)/12))(-loan tenure x 12) 2. The loan balance remains the same during the tenure ((Interest Rate x Years)+1)/(years x 12)) x Principal.
  • 10.Why does GoBear not include the Effective Interest/Finance Rate?
    The Effective Interest/Finance Rate is introduced by government agencies to provide a clearer overview of the cost of borrowing. However, banks have some liberty in definition of effective interest rate and include or exclude certain factors to lower these rates. It is mandated by law for banks to notify you on the Effective Interest Rate. When comparing loans of the same tenure, it is easier to look at the total payment you will be making on a loan. At GoBear we include all costs associated with the loan and break it down for you in easy categories so you can see what you are paying at a glance.
  • 11.How does GoBear break down the costs?
    When getting a loan, transparency about costs and repayments is often lacking. To provide you with a better overview, we have broken down all the costs that are associated with your loan: Monthly payment: your monthly payment for the total duration of the loan (this includes interest payments and principal repayment. Total Payment: Includes all interest paid, all principal repaid and loan servicing costs. Interest Payments: All interest that you will pay during the duration of the loan Servicing costs: All non-interest payments such as processing fee, servicing costs or annual fees. The total payment includes all costs that you will pay when taking the loan plus the repayment of the loan.

If you find these answers helpful? Check out our FAQs for other products to learn more.