Personal loans are unsecured loans provided by banks (or other financial institutions) to individuals. Since they are normally extended in the form of unsecured loans, borrowers normally are not required to pledge any collateral (property or asset that a borrower offers to the lender as a security for repayment of a loan). Unlike mortgage loans or business loans, personal loans normally have a shorter repayment period.

Generally, you are eligible to apply for a personal loan as long as you are:

• Aged 18 and above
• Currently employed
• Has a good credit score
• Has minimum 1 year of CTOS/CCRIS record

Most banks would require a minimum of RM3,500 gross monthly income to qualify for a personal loan. Depending on your credit profile, some banks do extend a personal loan to applicants with a monthly income as low as RM800.

Personal loans can be used for almost any purpose. Some of the common funding purposes include:

• Debt consolidation (combining several outstanding loans/credits into one loan)
• Credit card payment (to avoid high interest costs of late-payment)
• Buying a home (downpayment, legal fees, renovation, etc)
• Medical emergencies
• Wedding expenses

The typical financing amount for a personal loan ranges from RM5,000 to RM200,000.

Personal loan interest rates vary widely depending on factors like your credit score, loan amount and loan tenure. It ranges from as low as 2.5% to 25%. You may browse through the list of personal loan deals in LOANPANDA to compare the interest rates and terms prior to a loan application.

You can use LOANPANDA personal loan calculator to do the math and work out the amount for you. Just key in your loan amount, the number of years you plan to borrow, and your monthly income. It will display the list of personal loans applicable to you together with the monthly instalment.

Islamic vs Conventional Financing Islamic financing is Shariah-compliant. It functions in the way that the bank will buy the asset or commodities on behalf of the borrower and sell it following Islamic principles. The loans do not have a fixed or floating interest fee. Conventional financings, on the other hand, are loans given out to borrowers with interest charged at a prescribed rate. Secured vs Unsecured Loans Secured loans are loans in which the borrowers pledge collateral (such as property or vehicle) to the lender as a security for repayment of a loan. If the borrower fails to repay the loan, the lender has the right to sell the property or asset to pay for the outstanding amount of the loan. Unsecured loans are loans in which the borrowers do not provide any form of collateral. The loans are given out upon assessment of the borrowers’ creditworthiness.

You can browse through the list of personal loan deals in LOANPANDA, to understand the available financing options, as well as comparing the interest rates and terms from multiple lenders prior to an application. Most importantly, understand your budget and affordability. You can either submit a loan application via a banker or to several banks via a financial consultant. The latter will normally give you a better option to compare and find the best personal loan deals.

Most banks in Malaysia do not extend personal loans to foreigners. However, you can still walk in to a bank branch to seek assistance.

We recommend you read our education loan section here.

Most banks require applicants to have a steady stream of income to qualify for personal loans. Even if you get approved, the terms and interest rates may not be as good as applicants with proof of income.

Your banker will guide you as to the documentation required to apply for a personal loan. Generally, they will need your:

• IC photocopy
• Latest payslip
• Employment letter (or SSM for self-employed)
• Latest EA form
• Latest income tax submission with the official tax receipt
• Latest 3 to 6 month’s bank statement (payslip matching with salary banked in)
• Latest 3 to 6 month’s EPF statement (payslip matching with EPF amount)