The only 3 reasons you need a personal loan in Malaysia. Otherwise, avoid it!


Have you been called by a bank or a bank agency or just a financial expert who offers you a personal loan? Did you come across an ad that offers you a personal loan at very low interest?

Avoid if possible

When it comes to personal loans, banks and many financial institutions these days are offering them very easily. They make application easy, approval fast and disbursements of funds very quickly. Within days, you will have tens of thousands in your bank account. As the name implies, a personal loan is when the bank lends an amount of money to you with interest that you have to pay back within an agreed term.

When do you need a personal loan?

There are many reasons why anyone would apply for a personal loan. You could be in need of cash to get married, have your home renovated, going for a vacation or just get into a shopping spree. Different people would need additional funds for their own specific reasons. So, when does it make good sense for you to get one? We list out a few.

  • Debt consolidation – This is the most common reason why many people take a personal loan; that is to pay off their other loans. This might not be the most ideal reason but it would be a way to solve your other debt problems if you need to. The important thing to do here is to be able to navigate this properly. Otherwise, you might incur more debts! Consolidate the final amount you own in your credit cards and other personal loans, take another loan to pay them off and then service just one loan. After that, you want to stop taking any more loans and ensure that you finish paying this new one.
  • Maintain your credit standing – This is with regards to your current record with Bank Negara Malaysia. If you are issuing cheques and want to avoid bounced cheques, then you might need a loan to ensure you have enough funds in your account. This is to avoid having a record pop up in the DCHEQS or Dishonoured Cheque Information System. In another context, it can also improve your credit score since you will be paying a fixed amount per month, making it easier to pay your debts. If you are raking up debts on your credit card, it is harder to pay because of the compounded interest.
  • Emergency purposes – This is most useful if you have a sudden payment you need to make and it is the most justified. If you really have no choice and a medical emergency occurred, then you might need to get a personal loan. This is most distressing in situations when you or your family member do not have any form of medical coverage which makes it very difficult to pay for expenses hospitalization and such.

Ultimately, you should only take a personal loan if and only if there is a necessity to do so. Otherwise, you should not be entering into a term loan which you would end up with debts and a never-ending commitment.

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