Cash woes? A personal loan to the rescue!

Best Debt Consolidation Loans for Bad Credit

Personal loans have the potential to be an extremely useful financial tool owing to their flexible terms of use and ease of application in most cases. But, there are plenty of other uses for a personal loan – the stand-out one being debt consolidation. In fact, there are plenty of loan offers in Malaysia that you can choose from to consolidate your debt and improve your overall credit.

 Best Debt Consolidation Loans for Bad Credit in Malaysia

Here’s a list of the best debt consolidation loans in Malaysia at the moment:

Name of the Loan Financing Limit Maximum Tenure Best Rate (Flat Rate)
Citi Debt Consolidation Loan RM150,000 5 years 6.4% p.a.
Standard Chartered CashOne Debt Consolidation Plan RM250,000 7 years 6.99% p.a.
Bank Rakyat Personal Financing-i Debt Consolidation RM100,000 10 years Discount on the existing profit rate of up to 1.2% p.a.
Bank Islam Personal Financing-i RM200,000 10 years Base Rate (BR) + 3.15% p.a.*
Alliance CashVantage Financing-i RM150,000 7 years 8.38% p.a.

*Current Base Rate – 3.90% p.a.

Citi Debt Consolidation Loan

The Citi Debt Consolidation Loan simplifies your finances when you’ve got a number of debt payments to deal with on a monthly basis. In fact, you can use this loan to consolidate up to 5 loan accounts and/or credit cards.

Key Benefits

  • Get a minimum of RM5,000 or a maximum amount of RM150,000.
  • Competitive flat interest rates starting from 6.4% p.a.
  • Flexible repayment periods starting from 24 months and going up to 60 months.
  • Selected existing Citi credit cardholders can get tenures of up to 72 months.
  • Speedy loan application process that involves minimal documentation.
  • Option of an additional cash loan if you need an extra push.

Keep in Mind

  • Minimum age: 21 years; Maximum age: 60 years at the time of loan maturity.
  • Minimum annual income requirement: RM48,000.
  • Malaysian citizens and permanent residents can apply for this loan.
  • Late payment fee is 1% p.a. charged daily on overdue instalments.
  • Early settlement fee: RM200 or 3% of the outstanding balance, whichever is higher. This fee is applicable if you settle the loan in the first two years or before completing half the repayment tenure, whichever is earlier.
  • For new-to-bank customers, the maximum loan amount is RM120,000.

Standard Chartered CashOne Debt Consolidation Plan

The Standard Chartered CashOne Debt Consolidation Plan helps consolidate your unsecured loan accounts into a single payment. This way, you can save more money and simplify your cash flow management.

Key Benefits

  • Consolidate up to 5 unsecured loan accounts and/or credit cards from other banks.
  • Additional cash-out option is available. Once you pay your entire outstanding balance, the amount will be disbursed to your Standard Chartered CashOne Savings Account.
  • Competitive flat interest rates starting from 0.583% per month.
  • Existing customers can choose from flexible loan tenures that go up to 84 months.
  • New-to-bank customers can choose repayment periods that go up to 60 months.
  • Hassle-free and simple loan application process.

Keep in Mind

  • 0.583% per month/6.99% p.a. is the flat rate. Flat rate is provided only for your ease of comparison. Your monthly Standard Chartered CashOne instalment is a fixed sum. However, the bank determines the proportion of the instalment which relates to the payment of the principal amount and the interest amount for each instalment using monthly rest and reducing balance method. The bank does this by calculating the amount of interest payable each month using the effective interest rate on the outstanding principal amount. Financing rate offered may differ depending on eligibility. Other terms and conditions apply.
  • You can settle the loan amount before the term matures. You must give the Bank at least one month’s written notice in advance of your intention to settle the facility. Upon receiving your notification, the Bank will calculate and notify you the early settlement amount payable and the latest date of payment for the amount. The early settlement amount must include all accrued but unpaid interest, fees and charges in connection to the Facility.
  • Late payment fee: 1% p.a. on outstanding arrears and is calculated on daily rest basis.

Bank Rakyat Personal Financing-i Debt Consolidation

The Bank Rakyat Personal Financing-i Debt Consolidation facility is the first of three Islamic offerings on this list that works well for personal financing needs of Muslims and Non-Muslims. You can use this loan to consolidate conventional loan accounts too.

Key Benefits

  • Settle outstanding balances from other financial institutions, credit firms, and cooperatives.
  • Option of settling more than one loan account.
  • Discount of up to 1% p.a. on the profit rate if you’re working in the public sector.
  • Reduction of up to 1.2% p.a. on the profit rate if you’re working in the private sector.
  • Flexible financing tenures starting from 12 months and going up to 120 months.
  • Quick and hassle-free loan application process.

Keep in Mind

  • The minimum settlement amount is RM50,000.

Bank Islam Personal Financing-i

The Bank Islam Personal Financing-i facility is the next Islamic loan on this list that can be used for debt consolidation. You can even use this loan for educational, medical, pilgrimage, or charity purposes. This loan is Shariah-compliant and follows the concept of Tawarruq.

The profit rate for this financing facility is calculated based on a fixed rate or a variable/floating rate.

Key Benefits

  • Minimum financing amount is RM10,000 and the maximum amount is RM200,000.
  • Flexible repayment periods starting from 12 months and going up to 10 years or your retirement age, whichever is earlier.
  • Optional takaful cover for financial protection.
  • The fixed flat interest rate for a loan with takaful cover is 4.99% p.a. for all eligible tenure options.
  • Floating interest rate with takaful cover:
  • 1-3 years – Base Rate (BR) + 2.25% p.a.
  • 4-10 years – Base Rate (BR) + 3.15% p.a.
  • No guarantor is required to apply for this loan.
  • No processing fee, deposit, or hidden charges.

Keep in Mind

  • You should be at least 18 years of age.
  • The minimum income requirement for this Islamic financing plan is RM24,000 p.a.
  • The fixed flat interest rate for financing without takaful cover is 5.99% p.a. for all eligible repayment tenures.
  • Floating interest rate without takaful cover:
  • 1-3 years – Base Rate (BR) + 3.25% p.a.
  • 4-10 years – Base Rate (BR) + 5.15% p.a.
  • Wakalah fee of RM50.

Alliance CashVantage Financing-i

Whether you need money for a new business venture, for personal use, or consolidate other banks’ unsecured loans into a single payment, the Alliance CashVantage Financing-i plan is a viable option. That’s not all; there is no processing fee or early settlement fee.

Key Benefits

  • Consolidate up to 4 credit cards or unsecured loan accounts from other banks into a single payment.
  • Flexible repayment periods that start from 1 year and go up to 7 years.
  • Borrow a minimum of RM5000 or a maximum of RM150,000.
  • Competitive flat interest rates starting from 8.38% p.a.
  • You don’t need a guarantor or collateral to apply for this loan.
  • Facility for easy repayment through IBG/IBFT.

Keep in Mind

  • Minimum age: 21 years; Maximum age: 60 years at the time of loan maturity.
  • Minimum income requirement: RM36,000 p.a.
  • Late payment fee: 1% p.a. on outstanding arrears from due date to settlement date.

Being in debt can feel awful. But, being financially smart can work wonders for you starting with getting you out of debt to a more secure financial situation. In such times, getting a debt consolidation loan should be the first step you take to simplify your finances. You can also compare other loan offers and sign up for the one that suits your requirement.

FAQs

Q. Which type of debts can I consolidate? Why should I consolidate when I can pay them separately?

A. You can consolidate unsecured loans, such as personal loans, credit card outstanding balances, student loans, and more.

You can pay the debts off separately. However, when you already have a bad credit, having multiple lines of credits unserved will further deteriorate your score. In this case, it would be good to consolidate your loans and show one line of credit. It will help in keeping your credit score up.

Q. Can I get a debt consolidation loan with poor credit?

A. There are possibilities for you to get a debt consolidation loan with poor credit. For this to happen, you must be able to convince a bank/financial institution that you will promptly repay the loan instalments. You can do this by providing a guarantor or collateral, pledging an FD certificate, showing a steady income source in order to assure regular repayments.

Q. Where can I get a debt consolidation loan for bad credit?

A. Banks do not specify that they provide loans for bad credit. However, there may be banks/financial institutions that accept and approve your loan application when you approach them and convince them about your ability to repay and necessity of the loan.

You can visit the bank’s branch where you have been transacting for a long time and talk to the staff about your situation. If you have had a good relationship with the bank for a considerable period of time, the bank may agree to provide you a debt consolidation loan.

Q. What are the alternatives for a debt consolidation loan?

A. Instead of a debt consolidation loan, you can choose one of the following alternate ways:

  • Credit Card: If your debt is the outstanding balance on your credit card, you can find another credit card that comes with a 0% interest on its balance transfer facility. In this way, you can save on interest payments and get a tenure of 6months-12 months to repay the outstanding balance.
  • Home Equity: Home equity is determined by loan-to-value ratio. If the property value has increased over time and if there is a good margin between the loan amount and the current property value, you may get an overdraft on your home loan. You can use this sum to consolidate your debt. This means you need not take a new loan and still clear the debts that are bothering you.

Q. How to make a bad credit better?

A. There are several ways to make your bad credit better as given below:

  • Check your Credit Report: Retrieve your credit report at regular intervals of time and check if all the information provided in the report are correct. If there are any discrepancies in the report regarding your name or any other transactions, you can raise a flag to get this corrected. This may help in uplifting your credit score.
  • Pay on Time: Start paying your monthly instalments by the due date. This means you are managing your finances well resulting in improving your credit score.
  • Keep the Amount you Owe to Minimum: Try to pay off as many debts as you can and keep the amount you owe to a minimum. Regular payments help you to reduce the total debt over time and build your score.
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