• Loans in Malaysia

    Loans are an invaluable asset that can help tide over expenses and bridge financial gaps. There are numerous loans available, both in Islamic and conventional banking formats. Loans offered range not just in terms of purpose but also only in terms of loan amount available, tenure offered or profit/interest rates charged.

    Let’s have a look at the pointers below to know more about the loan or financing facilities offered in Malaysia:

    Personal Loan

    A personal loan is a financing product that helps in fulfilling your personal monetary needs. A personal loan can be obtained for miscellaneous reasons that can include vacations/holidays, medical expenses, marriage, or any other event/affair that requires funding. Through Islamic banking, you can get a personal financing plan based on the Shariah-compliant concepts such as Tawarruq. In Malaysia, a number of top banks offer personal financing by Islamic guidelines.

    Home Loan

    Home loans are among the most popular products in the country as they provide borrowers with the required financing to purchase their dream home. A home loan is offered with a fixed or floating interest rate and you can get a financing tenure of up to 35 years, in Malaysia. Most of the top banks offer a home financing facility with competitive interest rates that can range from 4.45% p.a. (AmBank) to 10.50% p.a. (Bank Muamalat). The facility may come with a lock-in period of up to 5 years, however, some banks also offer a waiver on the lock-in period. Offering a loan tenure up to 35 years or until the borrower attains the age of 70 years, a standard home loan plan can offer a margin of finance (MOF) of up to 100%.

    Car Loan

    A car loan or a hire purchase facility in Malaysia provides you with the funds required to buy a personal or commercial vehicle. You can obtain a brand new car or a used vehicle through this type of financing. Interest/profit rate charged against a car loan can either be fixed or floating wherein the rate is pegged to the Base Rate (BR) offered by a bank. You can acquire a hire purchase facility on a flat or floating rate basis ranging from 2.53% p.a. (BSN) to 12% p.a. (RHB).

    Mortgage Loan

    A mortgage loan can fulfil your dream of owning a property. Offered with fixed rate as well as flexi rate financing approaches, you can also obtain a mortgage loan offered by Islamic principles by various top banks in the country. In a mortgage loan facility, you have to keep an asset (e.g. a house, a piece of land etc.) as a collateral to a bank or financing institution to get a loan against it. If you fail to make the repayments for that loan, the bank can seize your pledged property and sell it off to recover the losses.

    Student Loan

    A student loan is offered to assist students in paying for their studies and academic expenses. In Malaysia, you can get a student loan through banks, financial institutions, or via government aided programmes.

    You can get financial tenures of up to 20 years for a student loan facility with a margin of financing of up to 50% of your academic expenses. A student loan can be a secured or unsecured type of loan and depending upon a bank’s policies, you may or may not need to provide a guarantor for it. Interest rate can range up to 9% p.a. for these schemes.

    Fast Approval Personal Loans

    In comparison to personal loans, fast approval personal loans are approved and disbursed in a short span of time provided the borrower meets the required eligibility criteria. Some loan schemes, such as RHB Easy-Pinjaman Ekspres can be approved and disbursed within 10 minutes of making an application. These types of loans require lesser documentation work and most of the plans do not ask for any collateral. Based on your credit score, you can get up to RM150,000 through a fast approval personal loan scheme.

    Loans for Bad Credit

    Credit score is one of the major criterias that is responsible for approval or rejection of a personal loan application. It is very difficult to get a loan if you have a bad/negative credit score. However, some banks or financing institutions do offer loans in this situation. If you have a bad credit score, a bank can also ask for a guarantor while providing you the loan facility. You can also consider a secure credit loan or payday loan to satisfy your monetary requirements.

    FAQs

    Q. Can I get a student loan if I am below 18 years old?

    A. Few banks provide student loan plans for the candidates who are below 18 years of age. In this case, the bank may ask you to provide a guarantor. The guarantor must be your guardian, parent, spouse, or a sibling.

    Q. What is the age criteria to apply for a home loan facility in Malaysia?

    A. You must be minimum 18 years old while applying for a home loan scheme and your maximum age should not exceed 75 years at the end of the financing tenure.

    Q. While getting a home financing facility, can I choose to have more than one joint applicants?

    A. Yes, you can apply for a scheme that offers more than one joint applicants on your home loan facility.

    Q. What concept is an Islamic car loan/hire purchase offered on?

    A. Islamic car loan schemes operate on Islamic banking principles like tawarruq and AITAB (Al Ijarah Thumma Al Bai’). The profit rates of such schemes are dependent on base lending and base financing rates of the lending institution.

    Q. Is it compulsory to have a savings or current account with the bank from which you are getting a car loan?

    A. No, it is not a mandate to have a savings or current account with the bank to which you are applying for a car loan/hire purchase facility.

    Q. What is the car loan or hire purchase variable rate based on?

    A. The variable interest rate is based on the Base Lending Rate (BLR) and any fluctuation (increase or decrease) in the BLR, will affect the monthly instalment or the tenure of your car loan.

    Q. What is the last date of application for a UTAR loan scheme?

    A. You need to submit the application form within two weeks after the commencement of a new trimester. By this time, you must complete the whole procedure and also need to submit all mandatory documents.

    Q. Can I use a personal loan to settle my credit card debts?

    A. Yes. A personal loan does not require you to use the financing amount for any specific purpose and can be used for a wide variety of purposes.

    Q. Can I obtain an Islamic home loan scheme if I am not a Muslim?

    A. Yes, you can obtain a home financing scheme that functions as per Islamic principles of banking if you are not a Muslim.

    News About Loans

    • Banks Are Seeing Upward Growth in Loans Sector: Nomura

      In a recently conducted research by Nomura Securities Malaysia Sdn Bhd, the banks in Malaysia are showing a steady growth in their loans sector in the year 2018.

      To elaborate further, the research mentions the financial development report (monthly) released by Bank Negara Malaysia indicating a growth in the banking industry’s loan divisions by 0.4% in March, 2018 in comparison to 0.3% increase in February in the same year.

      Stating that in 2018, a 5% loan growth can be anticipated in the loans sector, Nomura analysts said, that considering 2017’s 4.1% growth in the sector, it is possible to reach the target this year.

      However, Nomura specified that non-residential mortgages and auto loans are witnessing very slow growth and these sectors might be the hurdles in reaching the double figure target of the industry’s growth in coming 2 years’ period.

      BBazaar Malaysia

      2 May 2018

    • Saturated Loan Growth Rate: A Good Sign

      Many Malaysian Banks could not reach their growth targets in 2017 and as such have plotted more practical growth targets for the year 2018. The outstanding financing growth in 2017 was 4.1% whereas, in 2016, it was 5.6%. However, Jose de Luna-Martinez, Financial-Sector Specialist, World Bank makes a contrary statement saying that the stability in loan growth rates is a good sign. Therefore, the banking sector must move its focus to the other segments and improve them rather than focusing on the loan segment, as it has already reached saturation.

      A research economist, Ata Can Bertay, says that the banking sector has been making its way back to its original structure in the recent times, recovering from the financial crisis faced during 2008. Though Martinez thinks that the sector is going to witness unpredictable variations in the near future, he assures that the sector is going to be better capitalised in the long-run.

      Martinez also says that the country’s banking sector to be a mature marketplace and therefore, he says further growth in the market is difficult. He says that a limit will be set for any growth and growing beyond the limit would lead to risks. He also highlighted the opportunities available in the regulated crowdfunding and peer-to-peer lending sectors.

      Another challenge in the banking sector is the management of over 1,500 cryptocurrencies available in the market. Martinez gives an alert saying small companies have been using digital currencies as a fundraising platform.

      BBazaar Malaysia

      16 April 2018

    • Malaysian Banks Adopts Cautious Footing to Set Reasonable Loan Growth Target

      Following the decline of the loan growth target for the financial year 2017 (FY17), Malaysian banks are increasingly setting a moderate target for this year.

      To begin with, Maybank has set a target of 4% for this year as it did not succeed to meet the 6% target last year. Hong Leong Bank Berhad is also following this cautious footing as it has revised its target for 2018 to 3% - 4%, a decline from 6% last year. The reasons cited by the bank officials are slow growth rate and feeble business sentiments.

      RHB Bank also missed its 5% loan growth target for 2017, yet it has set this year’s target to an optimistic 6%.

      Meanwhile, according to the opinion of Datuk Abdul Farid Alias, Maybank’s CEO and group president, the shortfall in FY17 growth occurred due to the corporates who preferred to obtain funds from the bond market rather than the loan market.

      BBazaar Malaysia

      7 March 2018

    • Banking Sector’s Loan Growth Continues To Improve

      Malaysia’s banking sector’s loan growth continued to improve this year. Overall loan growth rose to 4.2% in January 2018 from 4.1% in December 2017.

      This development is reportedly triggered by a strong demand in the household loan sector. Stronger demands for credit cards, personal loans, and purchase of securities have contributed to the overall growth in the household loan sector.

      Banks also witnessed a steady rise in the average lending rate (ALR) and base rate (BR) that increased to 5.27% and 3.76% respectively. The hike in overnight policy rate (OPR) by 25bps has significantly contributed to this development. On the other hand, the base lending rate (BLR) rose from 6.68% to 6.74%, a significant increase from the previous month.

      Stability in gross impaired loan (GIL) ratio, which stands at 1.5%, has brought balance in the industry’s impaired loan formation, with a marginal improvement in net impaired loan (NIL) – 0.92% against 1.1% in the previous month. According to reports, the loan loss cover has improved to 97.5%.

      Capital market witnessed a surge in funds raised by the private sector – RM6.83 billion. Higher bond issuance and sukuk continues to keep the market active.

      BBazaar Malaysia

      7 March 2018

    • Maybank and CIMB expect growth in loan facility in 2018

      Malaysia’s two top banks, Maybank and CIMB are looking for a greater demand for loan facilities in their consumer and corporate sector.

      According to a news report, CIMB is targeting a better loan growth this year in the regions including, Singapore, Thailand, and Indonesia. The bank has seen a 0.2% dip in the estimated target growth of 7% last year. Hence, it is expecting a boost in these regions to make up for the dip.

      However, domestic loan growth has increased by 6.5% for CIMB and 5% for Maybank, resulting in a boost in overall loan growth for both the banks.

      On the net profit front, CIMB has marked a 24% increase in the fourth-quarter, whereas Maybank has suffered a cut of 10% in the fourth-quarter net profit.

      BBazaar Malaysia

      28 February 2018

    • Malaysian Government Approves Loan under Kojadi Scheme

      The Malaysian Government has recently approved a whopping RM107 million towards loans through the Koperasi Jayadiri Malaysia (Kojadi) Loan Scheme.

      Datuk Seri Dr. Wee Ka Siong revealed that the loan has helped more than 500 small and medium enterprises (SMEs) in the country. According to Dr. Wee, 2018 will witness more such loan applications and so the Government has decided to roll out RM50 million for this year. The funding will help the SMEs to further their businesses and scale new heights. So far, SMEs from different sectors including manufacturing, commerce, business services and constructions have benefitted from this scheme.

      Since its inception, Kojadi has received about 1,751 loan applications, out of which more than 600 has already been approved.

      BBazaar Malaysia

      13 February 2018

    • ABM Dismisses CAP’s Claims; Says Banks Are Strict In Approving Loans

      The Association of Banks in Malaysia has denied reports stating that easy credit access is leading to a staggering rise in bankruptcy cases. Responding to a recent statement issued by the Consumers Association of Penang (CAP), ABM said that their member banks are quite stringent when it comes to approving loans.

      The response comes after Consumers Association of Penang (CAP) president, S M Mohamed Idris, stated that financial institutions often don’t carry out a proper background check of the applicant while approving loans.

      Dismissing the claim, ABM said that a rigorous verification process is carried out every time the member banks receive a loan application. The association even said that verification process involves checks with Central Credit Reference Information System (CRIS), among other procedures.

      Earlier, CAP had raised a concern on the growing trend of bankruptcy cases in Malaysia.

      BBazaar Malaysia

      22 January 2018

    • ABM: Banks Strict In Approving Loans

      Banks follow a strict and rigorous verification procedure while approving loans, according to Association of Banks in Malaysia (ABM). Any loan application is examined minutely and discreetly along the lines of the concerned bank’s internal rules and regulations, ABM said in a statement.

      ABM said that the loan applications assessed by its member banks are done in a careful manner so as to make sure the applicant meets the bank’s internal criteria for approval. This includes verifying with CCRIS and the applicant’s financial condition, among other factors.

      Responding to an online article, ABM said that this is done to avoid higher credit risks – both for the applicant and the bank. The member body also said that banks are wary of fraud and if at all an application comes under the radar of falsification, the bank would take necessary steps and cancel the application.

      The association also urged the public not to spend beyond their financial capabilities to avoid any sort of hassle.

      CIMB expects the on-year loan growth to stabilise in December 2017.

      BBazaar Malaysia

      22 January 2018

    • Bank Pembangunan To Roll Out Up To RM4.5 Billion in Loans

      Bank Pembangunan Malaysia Bhd (BPMB) is set to roll out RM4.5 billion in loans in 2018, reports suggest. The loan to be disbursed is RM4 billion higher than the loan amount disbursed last year.

      Shaharuddin Zainuddin, the President/group chief executive officer of Bank Pembangunan said that a lump sum will be injected into the infrastructure sector. The other portions will be allocated to other three mandated sectors – oil and gas (O&G), maritime, and technology.

      Speaking to the media, Shaharuddin said that for the next 15 to 20 years, the nation has massive requirement in the infrastructure sector. This is one of the major reasons why the bank is committed to focus on Sabah, Sarawak, and other projects in Peninsular Malaysia.

      According to reports, 70% of the loans will be put to work in the infrastructure sector. This will be followed by the oil and gas segment, which stands at 10-15% of the allocated loans. The rest of the loan amount will be distributed between technology and maritime sectors.

      BBazaar Malaysia

      17th January 2018

    • Young and Bankrupt; Malaysian Youths Saddled With High Loan Debts

      Ms.Hawa Adnan (name changed on request), a 37-year-old former teacher, had quit her job in 2009. She had a personal loan, car loan, and credit card debts to pay off, all at a time when she had no income.

      Three years later she received a notification from the bank stating that her overall debts have reached RM120,000. Confused with the entire situation, she didn’t know how to handle the proceedings. After a month an official letter was handed out to Ms.Hawa that declared her bankrupt.

      According to reports, from 2013 until October 2017, 4,062 civil servants have been declared bankrupt. In 2016, 1,093 civil servants were declared bankrupt. About 719 civil servants witnessed the same fate from January till October 2017.

      According to the Insolvency Department, cases of female bankruptcy is also on the rise. About 30,220 women were declared bankrupt from 2013 till October 2017.

      Ms.Hawa said that the personal loan culture is quite common among civil servants because it’s easy to qualify for one. She believes that it’s time the society starts recognising the issue of bankruptcy seriously.

      BBazaar Malaysia

      10th January 2018

    • Banks Loan Sector Expected To Hit 5%, Says CIMB CEO

      CIMB CEO, Tengku Datuk Seri Zafrul Aziz Abdul Aziz, said that the banking sector might witness a loan growth of 4% to 5% in 2018. Speaking at a press conference, Zafrul said that the overall gross domestic product (GDP) growth in 2017 surpassed expectations, which will eventually contribute to a stronger loan growth in 2018.

      The CIMB CEO said that the projected loan growth is stronger than how it was last year. In 2017, loan growth was relatively low because of the corporates. This year, based on the corporates already lined up, loan growth in the banking sector is expected to hit the 5% mark.

      Zafrul also revealed that CIMB is on course to meet its T18 target by the end of this year.

      BBazaar Malaysia

      10th January 2018

    • Saudi Telecom Receives an Islamic Loan of RM1.51 billion

      Saudi Telecom Co (STC), through its Malaysian subsidiary, has successfully acquired an Islamic loan accounting for RM1.51 billion. STC is recognised as the Gulf’s largest telecommunications network based on its market value.

      Malaysia is a popular market for Islamic banking system and its principles. The loan borrowed by STC is based on the Commodity Murabaha principle under Shariah contract. The deal was made easy as Bank of Tokyo-Mitsubishi UFJ (Malaysia) has taken the role of investment agent to handle the cash flows. Additionally, other banks such as HSBC Amanah Malaysia and Standard Chartered Bank Saadiq have worked hard to arrange the deal.

      Zed Zaidi reports that when artistes hide themselves, Ah Long would utilise their ATM cards and use such accounts to deposit money made through illegal activities such as online gambling or misuse the data and personal information of such artistes.

      Based on reports, STC will use the loan amount to clear the loan borrowed to buy a stake in Maxis, a Malaysian mobile phone company.

      BBazaar Malaysia

      8th January 2018

    • Unemployed Artistes Borrow from Loan Sharks

      Zed Zaidi, President of Persatuan Seniman Malaysia says that one-fifth of the artistes in the entertainment industry have a regular income while the rest of them struggle with maintaining a steady flow. Persatuan Seniman Malaysia also reported that 300 of such artistes had turned to loan sharks due to the scarcity of job offers.

      Usually, artistes borrow a sum in the range RM5,000 to RM10,000. When they begin falling back on their interest payments, they go into hiding.

      Zed Zaidi reports that when artistes hide themselves, Ah Long would utilise their ATM cards and use such accounts to deposit money made through illegal activities such as online gambling or misuse the data and personal information of such artistes.

      As a possible solution for this situation, Seniman is willing to help the artistes to find job opportunities says Mohd Hafiz Mohd Nafiah, Secretary General, Seniman.

      BBazaar Malaysia

      8th January 2018

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