Cash woes? A personal loan to the rescue!

Personal Loan FAQs

Application Process

Q. How long will my loan application process take?

A. The loan application process will differ from bank to bank. Some banks approve loans instantly whereas some take a week to approve. Generally speaking, it would take around 5 to 14 business days for banks to approve your loan as long as you are eligible.

Q. Is it possible to get a personal loan approved instantly?

A. Yes. Some banks offer fast-approval loans. RHB can approve loans on the spot and Hong Leong approves loans within an hour.

Q. What do I need to do get my loan approved quickly?

A. You need to fulfil all criteria imposed by any bank to get your loan approved quickly. Provide full and truthful information. Submit all required documents along with your loan application. Banks will process your loan quickly when you meet all their requirements.

Q. What should I do if my loan application is rejected?

A. Speak to the bank representative who assisted you with the loan application. Find out the reason for the rejection and see whether it is possible to meet the requirement imposed by the bank. If not, the bank representative will offer you financial advice to avoid any loan rejection in the future.

Q. Where should I submit my loan application?

A. Banks offer various methods to submit a loan application. You can apply online or you can visit the nearest branch to apply for a loan. Banks will provide more information on how to submit a loan application on their website.

Q. Can I apply for a loan online?

A. Yes. Some banks provide an online application form that you can complete and submit. You can also attach the required documents along with your application. A bank representative would contact you to assist you with the application process.

Conventional Loans

Q. Which banks offer conventional personal loans in Malaysia?

A. Some banks that offer conventional loans in Malaysia are:

  • Affin Bank Berhad
  • CIMB Bank Berhad
  • HSBC Bank Malaysia Berhad
  • OCBC Bank Malaysia Berhad
  • RHB Bank Berhad &
  • Standard Chartered Bank Malaysia Berhad

Q. How is a conventional loan different from an Islamic loan?

A. A conventional loan will comply with all terms and conditions imposed by Bank Negara Malaysia whereas an Islamic loan will comply with those terms and conditions as well as the principles of the Shariah Law. Some features of conventional loans would differ from the features of an Islamic loan.

Credit Score

Q. Is credit score important to get a personal loan?

A. Yes. All banks refer to your credit score when you apply for a loan. If you have an excellent score, it is easy for you to get an approval on your loan application.

Q. What is a credit score?

A. A credit score represents your creditworthiness. This score is calculated based on your credit report which would be the statement of all your financial transactions for the last 12 months.

Q. Is it possible to get a personal loan with a bad credit score?

A. Most banks do not approve loans if you have a bad credit score. It is imperative for you to close any outstanding debts first and improve your credit score before you apply for a loan.

Q. What factors can cause my credit score to dip low?

A. Multiple existing loans, late payments on credit card or loans, default on loans or credit cards are some factors that will bring down your credit score.

Q. How can I increase my credit score?

A. Pay any credit card bills or loan repayments on time. Be regular and punctual on all payments. Do not have unnecessary multiple loans or cards at the same time.

Q. Can I get a loan without a credit check?

A. No. All banks would refer to your credit history and check your credit score to approve a loan.


Q. What documents should I submit to apply for a personal loan?

A. Some basic documents required would include your identity proof, residential proof, income proof and tax returns. Other documents may vary from bank to bank.

Q. What documents should I produce if I am an expat in Malaysia?

A. As an expat, you need to produce your valid and current passport, a valid working permit and any other document required by the bank.

Q. What if I am not able to provide any one of the required document?

A. All required documents are mandatory to process a personal loan. Your loan application may be rejected if you cannot provide proper and sufficient documentation. You can consult with the bank if required when you have a genuine reason for not providing any document.

Eligibility Criteria

Q. What is the eligibility criteria for age to apply for a personal loan?

A. The basic eligibility criteria for age is 21 years and above. Some banks offer loans for those aged 18 years and above, but require you to be employed for a specified period of time.

Q. What is the eligibility criteria for nationality to apply for a loan?

A. You need to be a Malaysian citizen or a permanent resident to apply for a loan. Most personal loans are not offered for foreigners.

Q. What is the eligibility criteria for income to apply for a loan?

A. Most banks expect your average monthly income to be a minimum of RM3,000. Some banks offer loans if your income is less than RM3,000 each month, but require you to be employed in a particular sector.

Q. What is the eligibility criteria for employment to apply for a loan?

A. Most banks offer loans for employed, self-employed and commission earners. Some loans are specific for particular employment such as private sector or public sector. To apply for such loans you need to meet the requirement imposed by banks. You have to produce proof of your employment such as pay slip or letter from employers.

Fees and Charges

Q. What are the various fees and charges associated with personal loans?

A. Some fees and charges associated with personal loans are:

  • Processing fee
  • Disbursement fee
  • Stamp Duty
  • Insurance fees
  • Late payment fees
  • Early settlement fees &
  • Any miscellaneous charges

Q. Do I have to pay a penalty charge if I settle my loan early?

A. Some banks charge an early settlement fee when you settle your loans early and some banks do not. It depends on the bank from which you have borrowed a loan.

Q. What is the fee for late payment?

A. Generally, banks charge 1% p.a. on the total outstanding amount, calculated on a daily basis until you have settled all outstanding dues. Banks may also impose a specific amount which you need to pay if that amount is higher than the 1% of our outstanding dues.

Q. Do all banks charge a disbursement fee?

A. No. Some banks charge a disbursement fee. It is based on the type of loan you are borrowing. Most banks do not charge a disbursement fee.

Q. What are insurance fees?

A. This fee is for insurance on your personal loan. Some banks expect you to take up mandatory insurance on your loans such as Islamic banks. In such cases, the total premium for the insurance would be deducted from the approved principal amount and then the loan would be disbursed.

Q. What does the processing fee involve?

A. The processing fee includes any fees or charges for legal document or service required to process your loan.

Financing Amount

Q. What would be the minimum amount I need to borrow for a loan?

A. The minimum amount for a loan varies for different loans and different banks. If you are interested in a particular loan, you can find out the minimum loan amount from the bank website before you apply for it.

Q. Is there a maximum loan amount imposed by banks?

A. Yes. All banks impose a maximum amount for loans. The maximum amount would depend on the terms and conditions of each bank, and on your financial history and income.

Q. Does the financing amount affect the interest rate?

A. Yes. A higher financing amount would gather more interest when compared with a low financing amount.

Interest Rates

Q. What are the different interest rates offered on personal loans?

A. The two types of interest rates offered for personal loans are fixed interest rate and variable interest rate.

Q. What is fixed interest rate?

A. The interest rate for your loan would remain fixed for the entire loan tenure. The interest rate and your monthly instalment amount would be determined during loan application and informed to you. You have to pay a fixed monthly instalment amount each month until you repay your loan in full.

Q. What is variable interest rate?

A. A variable interest rate is also called as a reducing balance rate. A portion of your monthly instalment amount would be paid towards your principal amount. The interest would be calculated on your reducing principal amount each month. As your principal amount decreases each month, your interest would also decrease.

Q. Is it possible to get loans with low interest rates?

A. Yes. You can get loans for low interest rates. You need to have an excellent credit score and a stable income to qualify for such loans.

Q. What are some reasons for high-interest rate loans?

A. The interest rate for some loans will be high based on the financing amount and tenure. The interest is more when you borrow a huge amount. Interest rates for long-term personal loans are high when compared to short-term loans. At times, if you have an average credit score, then you may have to pay high interest on your loan.

Q. What is the average interest rate for a personal loan?

A. The interest rates range from 4% p.a. up to 14% p.a. Usually, Islamic banks offer loans with lower interest rates.

Islamic Loans

Q. What are Islamic personal loans?

A. Islamic loans are offered by Islamic banks across Malaysia that work on Shariah-compliant concepts.

Q. Are the terms different for Islamic loans?

A. Islamic loans are always based on the Shariah law. Some features of Islamic loans would be different from traditional commercial loans.

Q. Which banks offer Islamic personal loans in Malaysia?

A. Some banks that offer Islamic loans are:

  • Alliance Islamic Bank Berhad
  • Bank Islam Malaysia Berhad
  • HSBC Amanah Malaysia Berhad
  • Kuwait Finance House Malaysia Berhad
  • OCBC Al-Amin Bank Berhad
  • Public Islamic Bank Berhad

Q. How does profit rate differ from interest rate?

A. Profit rate is the same as the interest rate on Islamic loans. As interest is prohibited as per Islamic laws, Islamic banks do not use interest rates. As Islamic banks work on buying and selling transactions, profit rates are used instead of interest rates.

Q. Do Islamic banks offer low interest rates on loans?

A. Yes. When compared to conventional loans, Islamic loans carry a low interest rate.


Q. What can I use a personal loan for?

A. You can use a personal loan to renovate your house, fund your wedding or education, pay off medical bills or even travel on a vacation.

Q. Is it good to take out a personal loan?

A. Personal loans are useful especially during a financial emergency. As long as you can afford the interest and have the ability to repay your loan in time, a personal loan will prove to be beneficial to you.

Q. What type of collateral do banks require for secured loans?

A. Banks require collateral that would cover your loan amount. Such collateral could be your fixed deposit certificates, land or property or your unit trust certificates.

Q. Who can be a guarantor for my loan?

A. You need to present someone who has a stable financial history and income. Your guarantor would be responsible to repay your loan if you are not able to repay it under any circumstances.

Q. What can happen if I am not able to repay my personal loan?

A. If you default on your loan, you may face severe financial consequences. Banks would impose a late payment fee which would be a burden on your finances. Your loan may be revoked where you would be expected to pay the entire outstanding amount immediately. Banks may even pursue legal action against you for defaulting on your loan. It is wise to take out a loan only if you are sure to repay it.

Tenure Period

Q. What is the average tenure for personal loans?

A. Personal loan tenures usually start from 12 months onwards. They can go up to 10 years.

Q. What are short-term loans?

A. Any loan tenure that is 3 years or less is known as a short-term loan.

Q. What are long-term loans?

A. Any loans offered for more than 3 years is considered as a long-term loan.

Types of Loans

Q. What are the different types of loans?

A. Personal loans are categorised as secured and unsecured loans.

Q. What are unsecured loans?

A. Any loan that does not require a collateral or a guarantor is an unsecured loan. Most personal loans are unsecured loans.

Q. What are secured loans?

A. Any loan that requires you to present any collateral or a guarantor is a secured loan.

Q. What is a revolving loan?

A. A revolving loan is similar to an instalment loan where a bank would approve your loan amount. But you cannot use the entire loan amount at once. You can withdraw smaller amounts as per your need. You would pay interest only for the amount you withdraw.

Q. What is an overdraft loan?

A. An overdraft loan is when you withdraw money from your bank account even if you have exhausted your credit limit. Overdraft loans come with high-interest rates.

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