Loans are an important as well as an extremely popular financial product. Loan, by definition means lending of money by one entity to another at a rate of interest and evidenced by a document that has all the specific details to fall back on in case of any dispute or confusion that may stem during the course of lending.
Loans in Malaysia are segregated into a variety of sub-categories so as to clearly lay out all kinds of loans and their associated features as well as terms/conditions. Following are the types of loans that are available based on the end use which the loaned money will be put to:
Buying a home is a dream come true for Malaysians, but given the high expenses involved, purchasing a home can be taxing on your income. A housing loan can take you a step closer towards achieving this dream, offering financial solutions catering to different needs and hopes. A number of banks offer home loans in Malaysia, with Citibank, Maybank, HSBC, Standard Chartered and RHB considered the big players in this circuit. These home loans are traditionally long term loans with a fixed or floating interest rate. Simple documentation and processing makes these loans a great option for millions across the country.
Financial emergencies can arise at any time, impacting the quality of life an individual leads. Certain financial problems can be solved using a simple tool, a personal loan. As the name implies, a personal loan can be used to fulfil any legitimate personal financial requirement, be it money to pay medical bills, marriage expenses, home improvement, a vacation or education. Almost all major banks in Malaysia offer personal loans, which are easy to avail but generally attract higher interest rates.
Islamic personal loans, adhering to Sharia principles can also be obtained in Malaysia.
Gone are the days when a car was viewed as a luxury. Today, a car is a necessity, helping us drive our passions and live a comfortable life. Purchasing a car can be tricky, especially arranging finances. A car loan helps you provide wheels to your dream, helping you buy the car of your choice. This loan can be availed to buy both new and/or second-hand cars/commercial vehicles. Some of the popular banks offering Car Loans in Malaysia are Maybank, AmBank, AffinBank, RHB, etc. These loans tend to attract a higher rate of interest compared to other loans, depending on the amount of finance availed from a bank.
One can also opt for Islamic Car loans which adhere to Sharia principles to buy a car.
Many things go into making a business successful, hard-work, effort, time, dedication, etc. but there is one key element without which no business can survive – Money. A business loan can be extremely useful to tackle financial problems which arise during the course of carrying out a business. All major banks in Malaysia offer business loans, which carry different interest rates based on the type of business the money is being borrowed for and the security/collateral provided. Business loans can be medium or long term and secured or unsecured. Banks offer loan amounts ranging from a few RM to millions, depending on the business. The element of risk associated with most business deals makes these loans costlier in terms of the interest rate.
A property can be a great asset, not only offering protection to you and your family but also having the ability to offer financial assistance. A mortgage loan is a loan which is availed by keeping a particular property as collateral. These loans can be a smarter choice compared to traditional loans, provided one treads carefully. A number of banks offer Mortgage Loans in Malaysia, with Standard Chartered, HSBC, OCBC and UOB being some of the popular ones. Mortgage loans are generally long term loans with medium interest rates. Failure to repay this loan gives a bank the power to repossess the property in question and sell it to recover any dues.
An education is considered as the best investment choice by many, ensuring that returns never dry out. A UTAR loan caters to the aspirations of students who wish to pursue education in Universiti Tunku Abdul Rahman (UTAR). Students can choose from 116 programmes to find one which best suits their needs, utilising the UTAR loan to finance their aspirations. This interest free loan can be used for both foundation and undergraduate courses and is designed specifically for students from financially weaker backgrounds. This loan can be availed directly from the university, eliminating the need to approach banks and other financial institutions for monetary assistance.
The future of a country lies in the hands of its students and a bright future can be a reality if students get the right education. With the cost of education increasing day by day, quality education could be out of reach for many deserving candidates. A student loan ensures that finances do not play spoilsport in achieving an education, helping students concentrate on studies rather than finances. A number of banks offer student loans in Malaysia, with some of the popular ones being Bank Rakyat, CIMB, OCBC Bank and RHB Bank Berhad. These loans can be availed at low interest rates and can be repaid after a student graduates. Most of these loans do not require collateral, offering loan amounts as high as RM 200,000. These loans can also be used to fund studies abroad, ensuring the world is an open road for students.
Banking is not traditionally associated with flexibility, with most rules and products designed rigidly. A flexi loan is a unique concept in banking, offering ease and flexibility while borrowing money from a lender. This loan allows borrowers an option to withdraw additional funds according to their requirements, without having to reapply every time they wish to take additional funds. A borrower has a loan account from which he/she can withdraw money or deposit more, as per his/her needs. In most cases the current account of a borrower is linked to the flexi loan account and instalments are regularly deducted towards loan repayment. Interest rates on these loans vary from bank to bank, with Citibank and Standard Chartered considered pioneers in this scheme in Malaysia. These flexi loans can be used for multiple purposes ranging from home use to personal financial requirements.
Islamic Housing Loan
In today’s fast paced world it is often easy to get caught in the whirlwind race of life, forgetting and forgoing certain values which we grew up with. Banking is often practiced under modern terms, with an aim to make profit but Islamic Banking still adheres to certain rules and principles, setting it apart. Islamic Housing loans follow principles of Sharia law, ensuring that one can avail the benefits of a loan without breaking any religious tenets. These loans do not have an interest component and aren’t even true loans in a strict sense. Under such schemes the bank purchases a home on behalf of a customer and resells this same home, keeping a profit margin. A customer pays instalments to cover this new cost, thereby eliminating the concept of interest. The home can either be under the name of the bank or the customer, depending on the contract agreed upon, with ownership changing when the amount is settled (in case the initial ownership stood with the bank). There are a number of banks which offer Islamic Home loans in Malaysia with Bank Islam, Maybank, Alliance Bank and AmBank being the popular options.
Buying certain commodities can be financially taxing, pushing us to borrow money from sources to complete such purchases. Hire Purchase, as a term is similar to a vehicle/commodity loan and is essentially a contract between two parties wherein individuals can buy certain products by taking financial assistance from a financier. The ownership of the product is transferred after all instalments have been paid. This method is generally used to purchase vehicles in Malaysia and can be considered as a car loan with a twist. The interest rate charged towards these instalments are lower than traditional interest rates, with an option to choose between a fixed or variable rate. Some of the most popular banks which provide an option for hire purchase in Malaysia are BSN, Public Bank, CIMB Bank, Alliance Bank and AmBank.
The BBazaar Edge:
Amidst a host of loans available in the market with different banks and financial institutions, it becomes difficult for a customer to zero down on the best suited loan. Through BBazaar.my you can browse through various loan options, compare them online and then select the most suitable loan for you.
Also, you can choose to use the various online calculator tools like the Loan Calculator,to know your loan EMI beforehand. These online tools give you a fair idea about the loan you wish to apply for and also help you in planning your finances accordingly before you decide to go for a particular loan option.
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News About Loans
Bank Negara Malaysia cut the OPR to 3 percent
BNM unexpectedly reduced OPR to 3% citing the risk from Britain exiting the European Union. This revised rate will make the lending rate lower and consumers can avail loans at a cheaper rate, but it also means the saving rates will go down. The ceiling and floor rates for OPR are at 3.25% and 2.75% respectively.
The main driver for growth is the domestic demand in Malaysia, and the private consumption will be supported by employment and growth. The OPR adjustment is intended to remain consistent with the policy stance to ensure that the domestic economy will continue to grow steadily and the inflation remains stable.
15th July 2016
Overnight Policy Rate cut is negative for Malaysian Banks
The cut in OPR will be negative for banks as the margins will be pressured. This results in the decline of the base rate and the benchmark lending rates. This also means that the deposit rates offered will also decline. The Bank Negara cut the OPR by 25 basis points. This is the first rate cut since 2009. The lower interest rate will stimulate loan growth. Domestic demand is the main driver of growth in Malaysia.
Private consumption is supported by growth in employment, income, and measures that are implemented by the Government. Central Bank says that the exports will remain weak due to the subdued demand from the key trading partners of Malaysia. The weak external factor and the weak global demand are the major reasons for the rate cut. The domestic consumption will be supported by growth in employment and income and will ensure the domestic economy stays strong.
15th July 2016
Bank Negara Malaysia may keep it benchmark rate unchanged.
Bank Negara Malaysia (BNM), also known as the Central Bank of Malaysia, may not change its benchmark rate. It may maintain 3.25% as benchmark interest rate. According to analysts, the central bank may stick to this rate considering the complicated global environment.
In his first interest meeting, Muhammad Ibrahim, the new Governor of Bank Negara Malaysia talks about how to provide more motivation to a slowing economy accompanied by political tensions and currency volatility.
25th May 2016
Malaysia becomes the global leader in IBF superseding Iran
According to Global Islamic Finance Report (GIRF) 2016, Malaysia has received the top position and emerged as the global leader in Islamic banking and Finance (IBF). This is the first time the country has received the 1st leadership position in Islamic banking and finance (IBF) by overtaking Iran in Islamic Finance Country Index (IFCI). It was Iran that continuously begged the 1st global leader position in IBF from the time IFCI was established in 2011. Recently, Malaysia reported an IFCI of 77.77 which is higher than what Iran received in 2016. Iran received a lower IFCI of 77.39 this year.
After Malaysia, Saudi Arabia ranked third with a score of 66.98, United Arab Emirates ranked fourth with 36.68 and Kuwait ranked fifth acquiring an IFCI score of 35.51. Over the years, Malaysia has witnessed a growth of 47.77 points. The most important factor that has helped Malaysia’s to be at the top of IFCI is the support offered by the Malaysian Government by including IBF as a significant part of its economic agenda and policy.
16th May 2016
Bank Negara Malaysia announces Launch of New Mobile Apps
Bank Negara Malaysia (BNM) launched three new mobile applications to help consumers in making informed financial decisions. The mobile apps are MyBNM, BNM MyLINK and MyTabung.
Consumers are expected to also receive updates on the monetary and financial policies of BNM via the app.
The mobile apps are available in both Bahasa Malaysia and English. They are downloadable for free from Apple’s App Store as well as the Google’s Play Store for Android users.
BNM made a statement which said that introducing these apps is intended to “provide members of the public with the latest development and updates on financial matters, as well as tools to plan and manage their finances and exercise their rights as financial consumers”.
27th November 2015
Loan growth to shrink to average of 6% to 8% in 2016
Growth of loans for the year 2016 is projected to shrink further to an average of 6% to 7% from the previously estimated 8% to 9% due to the Malaysian Banking sector experiencing stronger headwinds.
Banks are preparing themselves for a tough year ahead due to the softening of the global economy. OCBC Bank (M) Bhd country chief risk officer Jeroen Thijs says the estimated loan growth will be in single digits and the prime factor affecting loan growth among individuals will be due to tighter underwriting criteria. For corporates and SMEs, the slowdown will be due to the weakening ringgit which will affect large foreign currency borrowings and the cutback on expenditure by oil majors.
He also says that non-performing loans will continue to see an uptrend. The loan applications fell by 2% and loan approvals fell by 15% y-o-y this September. Even though tough times lay ahead for the banking sector, growth will come from infrastructure through project specific financing contracts and trade deals for manufacturing sectors.
11th November 2015
Business loans to get slower in Malaysia
Business loans in Malaysia have seen a growing trend in the past few months, but they are on a tendency to get slower since many businesses and companies are cutting down expansion plans due to the challenging economic situation. Even banks are being cautious towards lending.
The total growth for loans year on year for August 2015 stood at 10.2% in comparison to July 2015 - 9.7%. The sectors that showed growth for business loans, were retail and wholesale trade and real estate and these are the sectors that are facing lots of headwinds.
16th October 2015
No more fees for real time instant transfer
Interbank Funds Transfer services from the Malaysian Electronic Payment System Sdn Bhd and their member banks will no longer need to pay fees for their real time instant transfers from 1st October - 31st December 2015.
The zero is applicable on mobile and internet channels for banking transactions from the member banks. Earlier this year in June 2015 the interbank network provider inflicted a fee reduction of 50% - 88% which ended up having a ceiling fee of 50 sen ATMs and for mobile and internet channels .
1st October 2015
Banks in Malaysia rightsizing staff numbers
With the current economic crisis looming too close and large, banks in Malaysia are taking a close look at their costs. In order to shield themselves from the adverse effects of market fluctuations, banks are trying to cut down on the number of employed people. This will help reduce costs for the banks which in turn will up their profits. The decision to cut down on the number of employees is being taken as an urgent step considering the current market situation and the slower loan growths.
A lot of banks had entered mergers and acquisitions in recent years in order to increase market share and have hence landed up with a huge employee base. These banks too are planning to cut down on the number of employees in order to survive the market situation.
22nd September 2015
Lifestyle switch crucial to avoiding the looming economic crisis
Governor of the central banks of Malaysia, Bank Negara's Tan Sri Dr Zeti Akhtar Aziz has pointed out that the country is not yet in the middle of a severe economic crisis, nonetheless lifestyle changes are a must in order to cruise through this difficult financial state.
The Bank Negara governor went on to say that the current continued weakening of the ringgit as against dollar and other major currencies is an indication that the spending habits of Malaysians need to change for better. Currently, the country has a huge personal debt chunk which signifies the overspending habit. That young Malaysians are getting used to. Zeti affirmed that Malaysians need to cut down on expenses and look for better avenues that promote overall economic growth of the country, for example, looking for better education opportunities in the country itself instead of going abroad.
21st September 2015