At least once in an adult’s lifetime, we get a loan for to buy things, pay bills, or even set up a business. Personal loans are a great option if you need quick cash with little collateral and only a few questions. Sometimes your personal loan application is approved almost immediately.
While some lenders claim to be able to approve loan applications in as little as 5-30 minutes, others can take up to five business days or even a week to process them.
These personal loans are not for everyone. These people lose money and end up in bigger debt than they gain. This can lead to financial and home problems as well.
However, not all of the errors we make when taking out a personal loan can lead to bankruptcy or bigger financial problems . Some are minor enough to cause problems, such as slow application processing.
These are the costly errors that you should still avoid:
1. Where should I apply to a personal loan
There are many ways to apply for loans. However, you should only do so from a bank or financial institution licensed by Bank Negara Malaysia. Unregulated interest rates and practices could lead you to further debt.
You should instead choose a bank that is reliable and can provide you with great service.
2. What is the maximum amount I can borrow for a personal loan?
First, learn how to calculate your Debt Service Ratio to see if you can afford it. Here’s how it works:
Total Monthly Contributions / Total Monthly Income X 100 = Debt Service Ratio
To maximize your chances of getting approved for a loan, it is best to keep your debt service ratio under 60%. Keep in mind, however, that interest rates may be calculated by banks based on your credit score, loan tenure, and total loan amount.
Banks will typically allow you to borrow three to four times your monthly income when you apply for a personal loan. This is to make sure you don’t exceed your financial resources. Personal loans are also available at most banks in Malaysia. The amount you can borrow will vary depending on your credit history, debt service ratio, and monthly income.
3. What are some ways to save interest?
You should know how banks calculate interest rates on personal loans. This includes the total amount, tenure, and credit score. To save interest, you could choose a shorter loan term with larger monthly instalments.
You don’t have to look for low interest rates to get the best personal loan deal. If the personal loan offers cashback on interest, it would mean that, for example, if you take a personal loan with an interest rate at 10%, you would receive 20% cash back on the interest. This would be equivalent to repaying the bank at 8% interest rates.
Keep this in mind as you can save hundreds of Ringgit by checking out the deals offered by banks.
4. What documents are required for my personal loan application?
Personal loans are subject to approval by banks. This means that you must have all of your documents. This will prove you are able to meet all requirements and reduce the amount of back and forth between the bank and you. These are the documents that you will need to submit. The exact list varies from bank to bank.
- Your NRIC (MyKad).
- Your latest EPF Statement or
- The latest 3 month salary slips
5. What speed can I get my personal loans approved?
These days, the approval process is faster. You can get your personal loan approved in 48 hours or less. To speed up the approval process, bring your MyKad along with any documents that the bank may require.
CompareHero.my helps you find the best personal loan for your needs. You can click the link below to see a variety of personal loans that you can choose from right now: