Can You Increase A Loan You Already Have?

Can You Increase A Loan You Already Have?

“Can I increase the loan I already have?” Maybe this is a question that you would never ask yourself. However, it’s a perfectly normal thing to wonder. After all, having the additional flexibility of an increased loan can be a game-changer, especially if you are saddled with some unexpected expenses.

There may come a time during your financial journey that you find that your initial loan amount that you borrowed is insufficient, falling short of your current needs. The real answer to that question is a little more nuanced than a simple yes or no. It will depend on various factors and guidelines laid out by different financial institutions.

How to increase loan amount in Malaysia

All that being said, there are a few ways to increase your loan amount in Malaysia. The two main methods are to top up an existing loan and consolidate debt.

Top up an existing loan

A top-up loan is an additional loan on top of the previous loan amount based on the appreciated market value of the borrower’s collateral. It is especially helpful for borrowers who require an immediate cash-out.

Many banks in Malaysia offer customers the option to top up an existing loan. In essence, choosing to top up your loan means that you will be refinancing your current loan and altering the original terms based on the bank’s criteria and your financial situation.

However, do keep in mind that top up loans are most commonly associated with increasing home loans. Personal loan top up facilities do exist, but are generally less common. For example, authorised money lender, JCL Credit Leasing Sdn. Bhd., offers loan top ups after certain criterias are met. It also differs from refinancing, which is the act of credit payments by lowering interest rates.

Debt consolidation

The second way to increase your loan amount is to seek out debt consolidation options. Debt consolidation refers to the act of taking out a new loan or credit card, to pay off all your previous existing loans and credit cards. Collecting all your separate loan payments under a single loan that is preferably easier for you to pay off.

With debt consolidation, you could potentially secure a loan that has a higher loan amount than your previous one, has a lower interest rate, and a longer loan tenure. It is also possible to streamline your finances and manage your repayments more efficiently as you will have a smaller number of loans to juggle.

Just so you know, debt consolidation does not mean you are reducing the amount you owe. You are simply compiling your loans into one big chunk and a more favourable interest rate, allowing you to hopefully pay your debts off faster and at a lower monthly cost.

If you are not sure about how debt consolidation works, or if it is the right option for you, you can check out our article on the issue to help you decide if it is the right move for you.

Things to consider before increasing your loan

Increased monthly payments

Higher loan amounts may not always mean you will be paying the same amount each month. If you are fortunate enough, you might be able to score a lower interest rate, but more often than not, you might face higher monthly repayments. Make sure that your budget can handle these changes beforehand.

Extended loan tenure

Once you have negotiated a higher loan amount, you might be faced with longer loan tenures. Longer tenures means that you will spend more time paying off your loan, which translates to paying more interest over the long-run.

Early repayment charges

Some loans do come with penalties for early repayment. As such, you might want to check for any such charges on your original loan before opting for any loan increase facility.

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