{"id":56844,"date":"2023-07-06T15:55:14","date_gmt":"2023-07-06T07:55:14","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=56844"},"modified":"2024-01-30T16:28:19","modified_gmt":"2024-01-30T08:28:19","slug":"personal-financing-dos-and-donts","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/personal-financing-dos-and-donts","title":{"rendered":"Personal Financing: The Do\u2019s And Don\u2019ts Before You Apply"},"content":{"rendered":"

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Personal financing can be a great way to quickly access funds to help you deal with all kinds of financial situations such as paying for an unexpected medical expense or building funds to achieve a financial goal.<\/p>\n

But the mistake that most people make is thinking that personal financing can be a cure-all for all their financial problems.<\/p>\n

Instead, it\u2019s important to look at personal financing as a tool. And just like any tool, there are dos and don\u2019ts that you need to be aware of before you use it!<\/p>\n

<\/span>What is personal financing and how do you apply for it?<\/span><\/h2>\n

Before we get into the dos and don\u2019ts, let\u2019s quickly go through and explain what personal financing is.<\/p>\n

Personal financing is an amount of money that you can borrow from financial institutions for any variety of reasons<\/strong>.<\/p>\n

There are two types of personal financing, secured and unsecured. The difference is that secured personal financing requires collateral whereas unsecured does not.<\/p>\n

When applying for personal financing, it\u2019s always recommended to go for reputable financial institutions and banks that are licensed by Bank Negara Malaysia<\/a>.<\/p>\n

Choosing reputable banks such as MBSB Bank will ensure that you get professional service from a licensed bank to look after your financial needs.<\/p>\n

Did you know? Islamic banking personal financing is open to non-muslims as well<\/div>
<\/p>\n

While Islamic banks such as MBSB Bank offer Shariah-compliant personal financing<\/a>, many often believe that it\u2019s only Muslims that can apply for it.<\/p>\n

The truth is, both Muslims and non-Muslims can apply for Shariah-compliant personal financing<\/strong>. This means that even if you\u2019re a non-Muslim, you can still enjoy the perks and benefits that come with Islamic personal financing.<\/p>\n

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<\/span>What are the Do\u2019s for personal financing<\/span><\/h2>\n

There are some clear Do\u2019s that you should consider before applying for personal financing. That\u2019s because not following them could expose you to financial risks.<\/p>\n

Do use it to consolidate debts<\/h3>\n

If you\u2019re in a position where you are burdened with multiple financial commitments such as paying one or more credit card balances, consolidating those debts with personal financing can be a way to simplify your way of paying them back.<\/p>\n

Instead of paying multiple credit cards with different profit rates, you can put it all under one monthly payment with personal financing. And, depending on the terms and the amount of debt, it might even save you time and money.<\/p>\n

Do calculate your total costs<\/h3>\n

One of the things that you need to keep in mind is the overall costs of getting personal financing. One of the biggest contributors towards your total cost is the profit rate you need to pay from taking on longer payment terms to paying lower monthly payments.<\/p>\n

Other forms of costs that you need to be aware of include processing fees, withdrawal fees, and prepayment charges. While a lot of these fees might seem small in the beginning, they can easily add up if you\u2019re not careful.<\/p>\n

Do check your monthly commitments<\/h3>\n

Before you can even consider applying for personal financing, you need to check what your monthly financial commitments are and whether it allows you to take on another form of financing.<\/p>\n

A quick way to do this is by calculating your debt service ratio<\/strong>, Here\u2019s how:<\/p>\n

Total Monthly Commitments (rent, vehicle financing, etc.) \/ Total Net Monthly Income X 100%= Debt Service Ratio<\/em><\/p>\n

Anything above 60% is not recommended for you to take on an additional financial burden and more importantly, puts you at a higher risk of not being able to make your monthly payments.<\/p>\n

<\/span>What are the Don\u2019ts for personal financing<\/span><\/h2>\n

It\u2019s understandable that when faced with financial difficulties, we tend to overlook details when making financial decisions.<\/p>\n

But if there are certain Do\u2019s that you need to follow, then there are certain Don\u2019ts that you also need to be aware of.<\/p>\n

Don\u2019t borrow more than you need<\/h3>\n

If you\u2019ve come to a point where you require personal financing, always remember to avoid borrowing more than you need. Calculate exactly how much you need and how much you can realistically afford as part of your monthly financial commitments.<\/p>\n

We know it\u2019s tempting to get as much cash as possible, but having more than you need puts you at unnecessary risk that could push you towards an even bigger financial crisis.<\/p>\n

Don\u2019t use it on luxury spending<\/h3>\n

Whether it\u2019s to cover unexpected emergencies, pay for necessary household repairs, or to consolidate your debts, you should always consider why you would need personal financing before applying for one.<\/p>\n

What you should NOT do is apply for it to fund things that are not a necessity like paying for a holiday trip or buying luxury goods such as a new gadget or a smartphone. If it\u2019s not to pay for something that you need, then you don\u2019t need it!<\/p>\n

Don\u2019t miss your monthly payments<\/h3>\n

Paying your monthly payments late, or worse, missing out on the payment entirely will not only mean that you get penalised with extra fees but it could also affect your credit score.<\/p>\n

If you find yourself not being able to make your payments or are on the verge of defaulting, you need to get in touch with the bank or financial institution to discuss possible steps you can take.<\/p>\n

<\/span>Get financial assistance quickly with MBSB Bank Personal Financing-i<\/span><\/h2>\n

MBSB Bank is currently running its Personal Financing-i X-Change campaign for people who need cash immediately to help with their financial situations.<\/p>\n

From now until 31st December 2023, when you apply for MBSB Bank\u2019s Personal Financing-i, you\u2019ll get to enjoy the following benefits:<\/p>\n