Type of Personal Loan in Malaysia

Type of Personal Loan in Malaysia

As a technical classification for personal loans, there are conventional secured loans, unsecured loans, and consolidation loans.

Here is the Type of Personal Loan in Malaysia

Type of Personal Loan in Malaysia

Guaranteed personal loan

Secured personal loans are provided with collateral support, such as fixed deposits or unit trust accounts in the same bank. It also requires the guarantor to be responsible for your loan. This loan is less risky than the financier's perspective and if you are eligible it will usually bring lower interest rates than unsecured loans. It can also facilitate more loan amounts.

It is important to note that with secured loans you are at risk of losing the assets you have placed on the collateral if you can not repay due to death or disability. A great addition to your personal loan is an insurance scheme to protect the loan and the assets in question with the majority of lenders having made this mandatory feature.

Unsecured loans

Unsecured loans do not require collateral or a guarantor to support a loan and are the most common type of personal loan on the market. Of course, they come with a higher interest rate than secured loans.

Approval and repayment of these loans can be as fast as the hour but faster, the more you pay through the high-interest rates. As unsecured loans are riskier for financiers, approval is strongly on the applicant's eligibility, given their credit history, employment and income.

Consolidation loans

This type of personal loan helps you consolidate your debts (mostly from credit cards) and pays them all together with funds raised from personal loans. Why do you want to take one loan to pay another? Intuitive counter sounds, but if done correctly, you can pay off the debt more effectively and free up cash flow to use to avoid violent cycles to meet the needs.

Consolidation loans also often offer lower rates than 18% credit cards but keep in mind that personal loans work on a fixed scale while credit cards work on the reduction of balances.

Personal loans also come with a one-off fee usually accompanied by stamp duty and other bank charges, so consider also to see if you're really out by merging your debt after this deduction.

Should You Take a Personal Loan?

Personal loans are a very useful tool for improving your finances - and because advertising ad loads for a personal loan will tell you, it will finance your dreams. But dreams can quickly turn into a financial nightmare if you're not ready to make a refund.

To determine whether you should take a personal loan; consider the following questions:

1) Is it the best way to assist you in certain situations or will a credit card be enough?
2) How much do you want to borrow?
3) Can you complete the monthly installment payment?
4) Is the amount of interest paid due to the utilization of the loan (ie, is it worth it)?

If, however, you really need funds and you expect to be sure (as much as possible) that you will have the income to pay for it, then you should consider it one possible way towards personal financing. The wise words: personal loans may look identical in form but may not all have the same features.

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