Compare and Find the Best Personal Loan in Malaysia

Below is a list of personal loans provided by different banks in Malaysia. Click on the bank of your choice to learn more about its features and benefits. Once you've made your choice, click on the "Apply Now" button to begin the application process.

Important Information: The interest rates quoted in the table above in some instances represent the respective banks’ general rates. The actual interest rate on your personal loan may vary depending on your individual circumstances.

Personal Loan Explained

Whether you’re looking to buy new furniture, fund your wedding or honeymoon, or even consolidate debts, a personal loan may be the answer to your short-term cash needs.

What is a personal loan?

A personal loan is basically a short-term loan, whose repayment period is shorter compared with a mortgage. Whereas mortgage requires a time-span of 20, 30 or even 40 years, a personal loan usually goes for about one to five years in repayment period.

A personal loan is usually unsecured, which means you can borrow money without providing the lender (the bank) any form of security or asset – such as your home or your car. Even though you’re not providing any security, you’re still obligated to make your regular repayment on time. Missing a payment may attract penalties and fees, and even negatively impact your credit score.

How do personal loans in Malaysia work?

Personal loans are typically available from as little as RM1,000 all the way to RM150,000 or more. How much you can borrow depends on your individual circumstances (e.g. your ability to repay), as well as the terms offered by the lender. If you do want to borrow more than this range, you may find that a secured loan is a better option.

When you take out a personal loan with a bank, you will normally sign a loan agreement that outlines the amount borrowed, the interest rate and the total amount you need to repay each month. It will also specify in detail your loan repayment terms – your monthly payment along with the term of the loan, in years and months. As a rule of thumb, the longer the repayment term, the higher the total amount repayable will be.

There are two types of personal loans – secured and unsecured loans. In Malaysia, personal loans taken out by the general public tend to be unsecured.

Secured Personal Loan: A secured personal loan is essentially a loan where borrowers offer their assets, like a car or a home as forms of security or collaterals for their loan. As such, the cost of borrowing is usually much lower than that of an unsecured loan. However, borrowers should be wary of their financial capabilities of repaying the loan as they run a risk of getting their security assets repossessed should they fail to pay back the loan.

Unsecured Personal Loan: An unsecured personal loan on the other hand, is usually a bit more difficult to obtain as borrowers do not need to offer any form of assets as security. Hence, they would need to convince their lenders of their financial strength or credit worthiness. This is to ensure that the borrowers are able to pay back their loan.

With unsecured personal loans, cost of borrowing is higher as the lenders are taking on a higher risk in providing the loan. Although borrowers do not provide any form of assets to their lenders for their loan, this does not provide them with an escape plan should they end up not repaying their loan in full. Lenders could still take the borrower to court in order to sell his or her assets in order to recuperate any losses.

Personal Loan Interest Rates

The interest charged is often the key determinant of a good personal loan deal. The lower the interest rate, the less you may have to pay on top of the original amount borrowed. In Malaysia, the interest rates on personal loans are typically quoted on a flat interest rate basis. Flat interest rate is a type of interest rate where interest is charged on the original loan amount, regardless of what has been paid off.

What factors should you consider when you apply for a personal loan?

Early Settlement Penalty: Some banks will charge a penalty if you fully repay the loan early (as they will not be earning the interest they expected). This fee can vary, and can be as much as 3 months worth of interest.

Other Fees: Check the terms and conditions throughout your loan agreement for other fees, such as processing fees, stamp duties and other one-time charges (e.g. brokerage fees).

Eligibility Criteria: Many lenders of personal loans have strict eligibility terms such as age and income requirements. In some cases, you may also have to provide proof of asset ownerships and details of other debt liabilities.

Is a personal loan right for you?

A personal loan is great for those who need immediate cash, whether it is for a big ticket purchase or to get through short-term financial difficulties. Before you apply for a personal loan, consider whether there are other financing options available that may better suit your needs. Think carefully about your ability to repay the debt, as well as consider what would happen if you stop generating income.

Common Personal Loan Terms

Collateral: An asset (e.g. a house) that belongs to a borrower, given to a lender, to assure the lender that a loan will be repaid. The borrower risks losing the asset if the loan is not repaid.

Early Settlement Fees: A fee charged by banks for fully paying off your loan early. This fee is usually charged as a percentage of the initial loan amount.

Guarantor: A guarantor is a person who has agreed to take your place and pay off your loan whenever you fail to pay.

Late Payment Charges: A fee charged by the bank if you do not pay your loan instalment on time.

Loan Tenure: This means "period" or "number of years". If a home loan has a "tenure" of 30 years, it usually means it would take 30 years to fully pay off the loan.

Got questions about personal loans? Ask in the comment box below.