Personal Loan Calculator Malaysia

A personal loan is a sum of money that an individual borrows from a particular financial institution such as bank, licensed moneylender, and koperasi with an agreed upon interest rate and duration for loan repayment. Once you receive the funds, you begin repaying the financier on a predetermined schedule until you’ve paid back the loan in full.

There are two types of personal loans available in Malaysia: secured and unsecured loans.

Secured loans required you to to offer an asset (e.g. car, house) as collateral. This means that the lender has a legal right to seize the asset you listed when you cannot repay your loan within the agreed repayment terms. Bigger loans like home loans may also require you to list a guarantor.

Unsecured loans are loans where the lenders are not required to list any asset as a collateral. Instead, they will assess you’re your creditworthiness based on the following criteria among other factors before they decide if they want to lend you the money:

• Your employment status
• Your proof of income (at least 6 months)
• Your credit score

These criteria will also determine how much you can borrow, your personal loan terms and interest rate.

• Interest rate

Most personal loans in Malaysia offer fixed interest rates where the interest rate does not change over the duration of the loan.

For example, you are applying for a cooperative bank loan of RM10,000 from Kuwait Finance House with an annual interest rate of 4.50% and a loan term of 10 years. Your monthly instalment will therefore be about RM120.83.

So, you need to consider if the interest rate being offered suits your financial position. A higher interest rate means that you have to pay a higher monthly instalment.

• Per annum (p.a.)

Interest rate will be charged on a per-year basis which also means per annum. If a RM10,000 loan is at 5% p.a. interest, the interest charge is RM500 per year. Now, if the repayment tenure is stretched to 3 years, the interest will become RM1,500 (RM500 per year x 3 years).

• Principal

The total loan amount you applied for. The interest rate will be calculated based on this amount and added on top of it.

• Repayment / Instalment

Your monthly repayment or instalment is the fixed amount over your loan tenure, you have to pay it every month. It is calculated on the total financing amount then is divided by the total numbers of period (months).

• Early Settlement Fee

Some financiers will charged a fee if you settle your personal loan earlier than the specified date on the loan agreement. This is usually estimated as a percentage of the initial loan amount.

For example, you may be charged RM100 or 1% of your loan amount, or whichever is higher.

• Late Payment Charges

This is the fee that the bank will charge you when you are not able to pay your loan in the agreed time schedule. For Islamic Financing, the borrower has to pay for this additional fee and it is fixed at the rate of 1% per annum or at the rate stated in the agreement for Conventional Loan.

However, try to avoid this as much as possible, as it will negatively affect your credit score.

• Guarantor

A guarantor is someone who agrees to pay your loan if you don't pay your loan. In some cases, the financiers may require a guarantor for your loan to increase your credit application approval.

Anyone can be a guarantor as long as the person can meet the legal requirements to be a guarantor, which are:

• 18 years old or above
• Must not be in the state of bankruptcy.
• Must have the mental ability to fully understand the guarantee document.
• Must have agreed to being a guarantor

• Collateral

A collateral is an asset that you pledge as security for a loan. The asset can be in the form of a house, a car or even the shares that you are holding. With a collateral, you are basically saying to your bank, “I promise to pay you back. You can take my house/car/shares if I don’t.”

If you don’t make your loan repayments, your bank can legally take your collateral and resell it to recover their losses.

Usually, applicants do not need to provide collaterals or assign loan guarantors, all you need are a good credit score and proof of steady income to ensure that you can afford your personal loan monthly instalments.

• Rebate

Some financiers offer rebates for borrowers if they manage to settle the loan fully before the end of the agreed loan term. Generally, a conventional banks in Malaysia calculate rebates based on the ‘Rule of 78’, whereas Islamic loan rebates are calculated using the ‘Ibra’ formula.

• Total interest paid

The total amount of interest you'll have paid over the life of the loan. In general, the longer you take to repay the loan, the more interest you pay overall.

• Handling fee, processing fee & stamp duty

Some institutions do not impose any handling nor processing fee. On the other hand, stamp duty fee is about 0.5% on the loan or in simpler terms, a charge of RM5 is imposed on every RM1,000 of the loan. For example, if your loan amount is RM10,000, the stamp duty will be RM50.

Normally, any charges or fees will be automatically deducted from the loan itself. If you are asked by the financiers to pay a deposit as processing fee, this might be a loan scam. You should always remember that certified loan providers will not ask you for any payment before you accept a loan.

• Insurance/Takaful

Generally, a borrower will receive an insurance coverage to protect from potential loan defaulting as a result of accidents that may cause total permanent disabilities (TPD) or death. This is a way of protecting both the borrower and the lender. However, some lenders do not require their borrowers to get any insurance protection at all especially for short-term loans with loan terms less than 3 years.

Conventional Loan

A conventional loan follows conventional financing principles where lenders lend money to customers and earn profit from the interest you paid on your loan every month.

Islamic Financing

An Islamic financing follows Shariah financing principles which prohibits Riba (interest-based transactions). Instead, it is based on the concept of earning through the sale of commodities which looks like this:

Deferred Payment: where you will repay the Bank of the Item's Selling Price on deferred basis through monthly payments.

To have a better understanding of what halal financing is, you can read our article about Islamic Personal Loan vs Conventional Personal Loan.

There's a few reason on how personal loan can be a good choice. You can use the money for:

• Pay off credit cards bills
• Consolidate a more expensive loan
• House renovation
• Wedding expenses
• Start or expand a business
• Medical or hospital expenses
• Taking courses or further studies
• Car financing
• Major purchases
• Vacation

Here are 9 common reasons why people apply for a personal loan.

While there are many reasons to get a personal loan, we recommend that you apply for one which can help you generate a return or reduce your debt over time. Some good time to get a personal loan include:

• To better manage your debts through consolidation

If you currently have a few outstanding debts, consolidating your debts into one lower-interest personal loan will help you better manage your debts. Not only will you be able to lower your overall interest payments and fix a monthly repayment, it also a simple way to manage a single repayment as opposed to several.

You also can use the Debt Consolidation Calculator to estimate your savings with a consolidation loan.

• To improve your credit score

Getting a personal loan and paying it off on time shows a bank that you can be trusted with credit (a.k.a borrowed money). Taking out a low-interest personal loan to pay off your credit card bill is an excellent approach to do this. If you make your repayments on time, it will not only saves you money but can also increase your credit score.

• To pay for a medical emergency

Always put your physical health above your financial well-being. If you or your loved one does not have medical insurance when hit by an unexpected health emergency, taking a personal loan is one of the easiest solutions to access the medical treatment needed.

Depending on the financial institutions, you may be able to borrow up to RM350,000 with flexible loan terms from up to 10 years max with a personal loan in Malaysia. The loan amount you are eligible for, however, is also influenced by your income. As a rule of thumb, a borrower can typically borrow up to four times his/her monthly salary. Use our personal loan calculator to estimate the monthly instalment before applying for the personal loan which fits your needs and eligibility.

Three basic requirements for applying for a personal loan in Malaysia:

• You must be between the ages of 18 and 65 years old.
• You must be a Malaysian citizen (some banks will make an exception if you apply in person).
• You must not be bankrupt.

However, each financiers will do have their own requirement based on your employment status, income, and your credit score.

The type of document will vary from financiers to financiers, depending on your employment type. To speed up your loan application process, make sure you have compiled all of the required documents. Here are general documents you need to prepare to apply a personal loan in Malaysia.

• A copy of your NRIC
• Latest 3 months payslip
• Latest 3 months bank statement
• And at least one (1) of these:
• Latest income tax form (Form B or Form EA/EC)
• Any other latest supporting document such as EPF statement, if required

Your creditworthiness will be evaluated by the bank using a DSR (Debt-Service-Ratio) as a tool. It will measure your available cashflow after meeting all your debt commitment.

Banks use the following method to determine if you have the funds to pay your monthly instalment:

Total Monthly Commitments ÷ Total Monthly Income x 100% = DSR
e.g. RM1,500 ÷ RM3,000 x 100% = 50%

There is agreement on the ideal DSR level to boost loan approval chances: your total monthly obligations shouldn't be greater than your entire monthly income.

In the example given above, the total loan commitments are 50% of total monthly income, which means a borrower is allocating half of his/her monthly income on debt servicing alone, with little room to save, spend and invest (if any).

In this case, the bank will often lower the loan amount in this case, which will lower your DSR level.

Therefore, the majority of banks will assess your DSR before moving forward with your loan application. So, to improve your chances of getting a loan approved, perform your own DSR calculation before applying

The Base Rate (BR) plus the stated margin are the two factors that lenders use to calculate interest rates.This number is called the Effective Lending Rate (ELR). For instance, Maybank charges you an interest rate of 3.25 percent since it has a BR of 1.75 percent plus a margin of 1.50 percent.

Annual percentage rates are used to indicate interest rates (APR). This indicates that the interest is computed annually rather than on a monthly basis. Simply divide the APR by 12 months to obtain the interest rate payable each month.

Visit out blog for more information on how the Base Rate works.

Two ways you can apply for personal loans in Malaysia: offline and online.

In person, you may visit the bank location of your choosing, meet with a loan representative, complete the application form, provide your supporting documentation, and submit it.

Other way is by calling up the bank’s customer service contact center.

This offers you a more customized services, but the downside is that you might not have the flexibility of time and money.

You may easily compare personal loans online and apply for it.

You can also use some of the tools to find out your credit score, calculate loan affordability, download statements and many more – all at your fingertips.

At Direct Lending, we have the best personal loan from bank and koperasi and licsence moneylenders that can meet your needs with a fast and easy online loan application. Click here to apply.

The approval process can be as fast as 1 days to a few days, depending on the bank or loan provider. Check out Direct Lending's fast approval loans which can process your application and disburse the loan to you within 48 hours.

No, there are no upfront fees required to apply for a personal loan or to process your application in Malaysia. Direct Lending services are absolutely free to their consumers. If you are required to pay such fees, immediately contact the authorities. Learn more about loan scams in Malaysia by reading this article.

There are a number of factors that affect your chances of being approved for a loan. These consist of:

• Your record of repaying debts and other loans
• The types of other loans and credit cards that you own
• The length of your credit history
• The number of loan applications that you have made over the last 12 months
• Any legal action that has been taken against you
• All of these factors are calculated as part of your credit score. To learn more, read our article on everything you need to know about your credit score.

A credit score, on the other hand, is a three-digit numerical assessment based on borrowers' credit histories that measures their creditworthiness.

A strong credit score might improve your chances of obtaining a loan with lower interest rates and faster loan approval.

A high credit score indicates that you are favoured by the bank, whereas a low credit score indicates that your application may be denied or rejected.

So how can you find out what your credit score is?

Your credit history is stored and tracked by Bank Negara Malaysia (BNM)’s database known as The Central Credit Reference Information System (CCRIS), and they can be accessed by Credit Reporting Agencies (CRA) like Experian Credit & Information Services (formerly RAM Credit Information (RAMCI)), CTOS and Credit Bureau Malaysia to generate your credit score.

Learn more how to check your CCRIS and CTOS report in our blog.

• Make your payments by the due date or earlier. When you're two months or more late, it reflects badly on your reputation.
• Avoid mass credit application. You risk leaving a record of potential rejections. Determine the borrowing criteria and select the one that best fits your financial situation.
• Pay-off smaller outstanding debts in full. This makes it easier for you to meet your current financial responsibilities, which makes you look better to lenders.

To learn more, read our article on how to improve your credit score.

Direct Lending is an online personal lending marketplace, enabling borrowers to find, apply and receive financing that best suit them.

The personal loan products on Direct Lending are tailored for both private sector and civil servants in Malaysia.

For civil servant, we offer bank and koperasi loans that you can obtain from our established and reputable financing partners.

For private sector, you can apply for a safe personal loan from over 15 licensed lending partners in Malaysia to serve your financing needs.

The Direct Lending Personal Loan Calculator is designed to help you estimate monthly personal loan repayment amount. You can use the personal loan calculator to get an idea of how much the monthly payments you can afford. First, enter the loan amount, then enter the loan interest rate and loan period.

Our loan application process is quick and easy. It will only take a few minutes for you to know your loan eligibility and indicative rate immediately. We’ll ask you to provide some personal details, including your employment, monthly income, current loan commitment and education.

You will only be required to provide your identity and income documents if you like your rate and want to proceed with a formal loan application.

Please make sure the information you provide is accurate as the information will be verified.

Step 1: Click apply now and tell us what you need
Step 2: Compare and select the product that best suits you
Step 3: Send us your documents and our friendly consultant will be in contact to complete your loan application

Apply and check your eligibility for 100% free. No hidden charges or processing fees. Click here to apply.

A fast and easy sign up process in 3 simple steps:

Step 1: Fill up our online application form and select the lender you would like to submit application
Just fill up our simple online form with your relevant personal details and tell us how much and for how long you would like to borrow. Then select the lender that is suitable to you

Step 2: Contact by the lender for credit check and verification
Your selected lender will contact you through email or call for more verification if you meet the loan eligibility

Step 3: Submit required documents and sign agreements
Once the verification process is done, you can submit the required documents ie., NRIC, latest 3 months payslips and bank statements, latest EPF or tax declaration form and utility bill (like electricity, water bill & etc) before proceed to lender office to sign agreements.

Apply and check your eligibility for 100% free. No hidden charges or processing fees. Click here to apply.

We are unable to process personal loan applications for expats, we advise you to visit a bank branch to apply.

Same with most banks, we also require some proof of income to get a personal loan. Hence, we’re unable to process the loan application for unemployed individuals.

The minimum age requirement for a personal loan in Malaysia is 18 years old. However, you will need to have a consistent stream of income in order to qualify for a loan. You are eligible to get a personal loan if you fulfill all the criteria below:

• Aged 18 and above
• Have an income slip for at least 3 months, with an employment letter.

You are eligible to borrow if you have worked for at least 3 months, and your contract term ends at least 6 more months.

For civil servant personal financing, the rates start from 2.95% per annum depending on the financing providers selected.

For licensed moneylender and credit community personal loan, the interest rate is not more than 1.5% per month for unsecured financing as stipulated under the Moneylenders Act 1951.

A personal loan is a type of unsecured loan. This means that you do not need to provide any collateral or have any guarantor in order to borrow money.

Yes, you can overlap your loan with a new personal loan. This may help you to reduce your monthly commitment or allow you to get cash in hand without increasing your monthly commitment. For civil servants, if you overlap with the same bank or koperasi, you don’t need to apply for the settlement letter. Use our debt consolidation calculator to estimate your savings by combining your loan into a single monthly installment.