Deep, deep dive
A personal loan is a way for you to borrow money from a bank or financial institution. Think of it as a more general type of loan where you won’t have to provide the bank with any form of collateral, like a house or a car. You have the freedom (and responsibility) to use the money you get from the loan to pay for whatever it is you need to pay for.
Primary cause of bankruptcies in Malaysia
Personal loans are the #1 cause of bankruptcies in Malaysia. If you don’t ABSOLUTELY need to get a personal loan, don’t get one!
If you’re getting a personal loan to help pay your other debts, go to Agensi Kaunseling & Pengurusan Kredit (AKPK) first and get some financial counselling. This is so you don’t make yourself worse off than before!
Always check the interest rate
Interest rates on personal loans are often lower than credit cards, but they can still be as high as 18% per year! If you absolutely need a personal loan, make sure you’re choosing the right one with the lowest interest rate.
Beware of personal loans from unlicensed money lenders
Newspaper reports tell us that going to unlicensed money lenders is dangerous and can get you into financial trouble. Make sure you know which lenders are licensed and which ones aren’t, and DO NOT go to an Ah Long!
(Bankruptcy is the legal status that indicates that a person is unable to pay off their debts to their creditor(s). You are declared bankrupt after you go through bankruptcy proceedings and a judge declares you bankrupt. Simply not paying off your debts does not make you bankrupt, instead it makes you insolvent. You need to owe at least RM50,000 to your creditors in order to be declared bankrupt.)