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[TEST] “The interest is too high!” 6 Misconceptions About Personal Loans M’sians Should Stop Believing

Over the years, the stigma around personal loans has been ever-growing. However, this is because many Malaysians are misinformed about the topic, hence the many misconceptions. In fact, if you dig deeper, you’ll find that personal loans can serve many benefits. You can utilise it to pursue your dreams, upgrade your lifestyle and even as a safety net during rainy days. It’s true!

So, in order to give you a better insight on the topic, here are the most common misconceptions about personal loans that you should definitely STOP believing!


1. Those who have existing loans cannot apply for personal loans

Most Malaysians prefer to apply for loans to pursue their studies or when buying cars and houses. Which is why some people would think that if you’re currently paying off one of these loans, you won’t be able to apply for a personal loan anymore. In reality, the exact opposite is true!

When banks are considering loan applicants, they’d usually look at the applicant’s repayment capacity as well as their repayment history. As long as you maintain a steady repayment history and you also have the capacity to take on additional loans, then you have nothing to worry about!


2. It’s not worth it because the interest rate is way too high

For this one, it’ll usually depend heavily on which bank you’ll be applying with. However, the misinformation behind the interest rates of personal loans has definitely been exaggerated over the years.

Contrary to what people believe, the interest rate for personal loans is lower than you’d think! The current starting interest rate for a bank in Malaysia is averaging at about 6% per annum and the highest starting interest rate is not more than 10.50%. This has made personal loans become much more manageable.


3. You’ll just be trapped in debt for a long time

This is probably the biggest reason why many are so intimidated by loans but the good news is, it is definitely a myth!

Fortunately, banks nowadays have allowed much more flexible payment terms where you have the option to choose the tenure period of your loan. In Malaysia, you can find banks that offer tenure periods of up to 120 months! However, in order to be smart about your finances, we’d recommend going for a period of about 24 to 60 months to make your repayment process much more manageable.


4. The application process is long and tedious

This may have been true years ago but thanks to technology, we no longer need to worry about this since most applications can now be done online! However, the processing time would depend on which bank you go to. With certain banks, you can get pre-approved instantly with just a few simple steps!


5. It can heavily damage my credit score 

It will only damage your credit score IF you’re not able to handle the repayments. However, if you keep a steady repayment history every month, this can actually help improve your credit score instead!

The same misconception also applies to credit cards. People tend to view credit cards negatively due to reckless users who don’t manage their spending well and would occasionally max out their credit cards. When in reality, credit cards are fairly harmless as long as you make your repayment on time.

In fact, credit cards can also act as a safety net during emergencies or as a way to earn extra rewards with every spend! For example, if you’re a Citibank credit cardholder, you can take advantage of the many promos they are currently having such as:

  • Citi Cash Back Card: Get up to 10% cashback on Grab, groceries, dining, petrol and food delivery when you meet the minimum monthly total spend.
  • Citi Rewards Card: Get 5x Citi Rewards points when you shop on Taobao, Lazada, and Amazon or at supermarkets and departmental stores. New-to-bank customers can also get a welcome offer of up to RM350 in TnG e-wallet credit.

If you’re eager to find out more about the rewards offered by Citibank, simply visit their website.


6. Loans are only meant for big-ticket items like a house or car

Another very common belief is that Malaysians would prefer to apply for a loan for specific reasons such as buying a car or a house. But unlike those other loans, the special feature about personal loans is that it offers you a lot more freedom with how you choose to spend the money. This way, it can also give you a chance to improve your finances!

You might be thinking, “won’t personal loans just damage my finances even more?” If there’s anything we’ve learned so far it’s that personal loans are not as bad as people make them out to be. In fact, there are many things you can use personal loans on, such as:

  • Pursuing post-graduate studies
  • House renovation to upgrade your lifestyle
  • Managing credit card or loan debt
  • Emergency health cases

And many more! In case you’re still curious (but hesitant), we’d recommend you find a bank that offers attractive promos with their personal loans in order for you to get the best terms and ensure a smooth repayment process. While you’re at it, you could check out this promo from Citibank!

From June onwards, Citibank is introducing a new flat interest rate that will start from as low as 5.33% per annum on their Citi Personal Loans!

[client to provide KV]

Not just that, their personal loans also come with several other perks including:

  • Loan amounts ranging from RM5,000 to RM150,000 (up to 10x your monthly gross income)
  • Low repayment tenure from 24 to 60 months
  • No processing fee
  • No guarantor/collateral required

Who knew personal loans could be this convenient! Moreover, the criteria are also pretty minimal. You just need to make sure you meet these requirements:

  • A Malaysian citizen or a Permanent Resident
  • Aged 21 to 60 years old
  • Minimum income of RM4,000/month
  • Holding any bank’s credit card/home, personal or car loan/overdraft for more than 24 months

And that’s it! Interested? If you meet the requirements, you can make your application online and get approved with just three simple steps!

  1. Go to this page and fill in your contact details.
  2. Proceed to fill up your personal details and upload an image of your ID.
  3. Fill in your employment details.

If everything’s in order, you’ll get your in-principal approval instantly! From here, you just need to confirm your loan terms and upload other necessary documents, and that’s it! 🥳

Sounds simple, right? As we mentioned earlier, personal loans can definitely be a huge help to your life if you know how to utilise them correctly. So if you’d like to know more regarding the Citibank Personal Loan, head on over to their website here.

What other misconceptions about Personal Loans have you heard before? Share them with us below!

Source: Freepik
Source: iStock
Source: Freepik
Source: iStock

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