Collateral and guarantors are required when you apply for any secured personal loan in Malaysia. Such loans are approved and disbursed by banks only when you present a collateral or a guarantor. In such cases, banks will approve the loan as these are less risky from the bank’s viewpoint.
Secured loans would come with a lower interest rate when compared to unsecured loans. It is also possible for you to get a higher financing amount when you are eligible for this loan and when you present a valid collateral or guarantor.
Collateral would refer to an asset or a property that you would offer to the bank to secure a loan. Collateral would include your property, land, fixed deposits, share or bond certificates etc. The collateral you present should be not only be acceptable but also have a sufficient value in order to secure the desired loan amount.
Proper and adequate collateral means that you can borrow larger amounts for a longer tenure. Sometimes, the tenure for such loans can go beyond 10 years. Also remember that not all properties can be presented as a collateral. Some banks may require that you own a house before taking out a loan.
If you default on such loans, then the bank would seize any collateral you presented to recover all sustained losses. Keep in mind that if a secured loan tenure is quite long, then you may have to pay interest for all those years.
Guarantors would include family members, relatives and close friends who are willing to be the collateral for your loan. They would be responsible to pay off your loan if you are not able to pay for any reason.
A guarantor must be someone whom you trust and moreover, someone who trusts you. Not everyone can sign in as your guarantor. A guarantor must have a good credit score and a stable financial history. Banks will have the final say as to whether they will accept the guarantor that you present for your loan.
Risk of collaterals and guarantors
Do remember that if you are not able to pay your loan on time, you will lose the asset that you presented as a collateral. In case of a guarantor, it would cause unnecessary financial burden for your guarantor who didn’t need a loan in the first place.
It would be better to take up a life insurance plan along with your loan. If in case of death or total and permanent disability, the insurance policy would cover your loan repayment. Most of the banks and financial institutions have already made an insurance plan compulsory for personal loans.
Best Secured Personal Loans in Malaysia
|Personal Loan||Collateral/Guarantor||Interest/Profit Rate|
|BSN MyRinggit-i Sandaran BSN SSP||BSN SSP Certificate||3% to 4% p.a.|
|Bank Islam Personal Cash Line-i||Bank Islam Fixed Deposit, Structured Investment or Unit Trust||6.85% to 15% p.a. based on tenure|
|Agrobank Hartani-i||Land||7.70% p.a.|