Never seen any salesmen in here showing the effective rates of Ploans yet depending on how many tenors one is choosing.

Most of the time is fellow forumers whom advised on it...


Anyway, with BNM tightening on Credit Card regulations; we predict the next to come would be on Ploan. BNM and the government are already concern on the rising debts. Thus the word is BNM is coming up with a guideline to request banks to take full documentation of income proves as well as calculation of DBR.

Card's business is the 1st to hit where BNM had requested for full income documentation and verification. Last time it's just applying 1 card then you can get many more from other banks. Now you can't. Thus the next to hit sure is Ploan.

So good luck to all the sales. I know Citi is one that is moving away from Ploan where they have developed another product similar which is a mixture of cards, ploan and OD. Cards because it's revolving. ploan because one can have term payment as well by converting the balance. OD because it's daily rest interest and there's a checking facility.

Some countries like Singapore Citi is using this product as a saving account as well which gives interest upon saving into the same account. Not likely to see it in Malaysia yet. But think that's their concept in coming out with an all-in-one kind of product.

Why would they be fliers if it's borrowing from friends and families?
It's just an agreement stamped for legality.

As far as I know, there's no such ruling in MY on a cap of 20%.

Even for some bank loan facilities, effective interest rate can go above 20% p.a - OD for instances.

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Added on October 5, 2011, 1:09 pmAfter he fully settled, request for a release/settlement letter. Use that as a prove.
Then after that it's the bank's discretion whether or not to lend based their underwriting policy. Some might lend with a higher interest rate because of past default history. Some might reject still.

This post has been edited by b00n: Oct 5 2011, 01:09 PM

Your statement shows the lack of understanding on scoring methodologies as well as characteristic used for a score card.

Before everyone get's confused, the term scoring is not widely used in Malaysia yet. Not every banks in Malaysia has credit scoring as a baseline for approving loans. Even when some banks do have some sort of methodology to do scores it doesn't mean that it will be applied to all products. Most would have a score card for Credit Cards as a qualifier to weight whether to approve or rejects but not necessary for the other loan products. Reason being to develop a score card, one needs a sound historical data for calculating statistics and probability of accounts going bad. Why credit cards is more widely used is because most banks has a large base of credit cards thus justifiable for using a score card as a qualifier and more statistics ti drill down.

However personal loans is still considered young in the market and the base is also considered small to most banks. Thus most banks I knew of doesn't really have scoring applications to qualify customers. Even if they do, a lot would still by pass the score parameters and do judgmental approval instead.

And no - scoring is not based on "if fail this, cut 1 mark, fail that, cut 1 mark". To keep it simple it's more like if I pass this I would have "X" score, if I pass another criteria I would have "Y" score etc... and the score adds up to see whether or not you pass. Like taking an exam.

However, it's not a simple objective exam where correct is 1 mark and wrong is 0 marks. It's more towards a subjective type of exam. To illustrate, let's take payment in arrears as most banks would definitely looks at it. So if one person has 0 payments in arrears, meaning prompt paymaster; he would get full mark for that say 10 is the full mark. If he missed 1 payment, then maybe the mark would become marginally lower e.g. 8. If missed 2 payments, eg his marks might go down to 4. And if he missed 3 and above; maybe the score is 0 for that criteria. Thus it's not the logical I fail this, cut 1 mark; fail another level, cut 1 mark. The level of how the marks are arrived at depends on statistical analysis, thus like my example; if we want to use the "cut" methodology, then it's 1st level cut 2 points, 2nd level cut 4 points etc....

Take another example. i.e. Income. If income is above RM10k per month, say 10 point full mark. If income is between 9k to 10k then 9 points, if income is between 8k-9k then 8 points...However if income is below the threshold set by the bank say RM1.5k then it would be an outright reject which doesn't even go through score.

In our local context, scoring looks at customer's demographic as well as customer's bureau details. In more advance country like US, there is a credit bureau score widely available to the banks which they can use as another layer for approvals besides looking at own internal scores based on customer's demographic. In countries like Hong Kong and Australia where bankruptcy is high, there's even score developed to predict probability of customers going bankrupt known as bankruptcy score.

To sum it up, score is just another tool for profiling and qualifying. And no, it's not only used for approving or rejecting loans alone. There's a wide usage towards it which Malaysia is still at a young age in using scoring methodology.

This post has been edited by b00n: Oct 11 2011, 05:15 PM

Banks nowadays relies heavily on past credit records which is easily accessible via CCRIS. Thus for people without any facilities in CCRIS meaning to say they didn't even own a credit card, it's difficult for the banks to judge the profile of the customer. However usually they do do look at additional customer demographics for example age. i.e. if one is 30 years old and above, the assumptions is hardly one will be without a credit card as credit card is already viewed as common. Also hire purchase loan.

Thus for someone whom doesn't have any credit facilities out there, and their first application is personal loan; usually the bank would be more cautious since personal loan is viewed as high default rate as well as for people whom are more credit hungry.

It is illegal:

I personally think that if the advertisement is being forwarded to BNM or KFH, the said person of that site might get a hell from both party especially on mis-presentation. Don't think any sane banks would allow such advertisement without being vett through by their legal unit to clear of any legal implications.

Cash advance is charged at 18%p.a. daily compounded interest. No bank can escape that.
Unless you're talking about "unsecured" loans given to the customers riding on the Credit Card's term and lines.

Why does ppl always thinks that by borrowing a PL is a better way to settle CC outstanding?

If one really wants to settle CC outstanding, just pay the minimum due of 5% timely every month and don't spend further. It is the same commitment and discipline as paying a PL installment.

What logic is that?!

Does that meant you get PL you don't have to pay?!

And always remember card is on reducing interest whereas PL is on flat interest.

Assuming RM30k balance the min pay is 5% i.e. RM1500. So if one is committed to pay the RM1500, one can pay up within 2 years.
If go by the same logic of PL for 2 years with interest rate of 10%. Monthly repayment is lower at RM1,500. But interest is RM6,000 vs RM1,536 if you pay promptly RM1,500 per month.

Although cards you see the interest rate is 15% (if you pay promptly for 12 months).

You are assuming I am mad. However I am not. Since we are in Financial Discussion forum, we have the obligation to "advise".
The equation is as what I have stated. So how committed you are all depends on yourself.

Are you seriously in sales? 5% of RM30k is RM1,500 as the min payment. Min payment of RM50 only applies for those balance RM1,000 and below. But obviously if your balance outstanding is less than RM50, then you have to pay the full amount.

If you want to argue, you can basically argue based on the fact that once your paid the initial RM1,500 min pay then the subsequent month min pay will be lesser. But then again if one is committed to pay RM1,500 monthly installment in PL, why not their cards?

To make it work, then the PL installment will need to be lesser than the min pay i.e. same example, but you cannot afford to pay RM1,500 monthly. Hence you need a lower repayment. But the flip side will be longer tenure and ultimately the total repayment is higher than what you will owed in cards.

Do you have credit cards? If yes, then most camera shops offers installment plan via credit card purchase.

That just proved you cannot afford the camera as well as your lifestyle.
Pls move on.

You did notice your previous similar post was gone. It is because we are in finance section and we are meant to talk about sensible and responsible finance. i.e. getting a ploan to settle credit card just for the purpose of buying a camera is not one of them. Unless the obvious is you are a professional photographer whom relied on cameras for livings.

He can pay by committing himself to pay at least the minimum payment or more. Or paying the same amount he is committed to pay for a personal loan. So why does he need a personal loan? To pay off the card so he can immerse himself more in card debts with additional PL debt?

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Added on October 18, 2012, 1:41 pmIt is indeed a personal loan as I believe the bank has no right to collateralize the property towards his additional 30% margin. That also explain why the high interest rate. I believe this must be OCBC.

Why the additional 5k for cards?! Why is everyone thinking of using PL to cover card's debt? Read my explanation few pages back.
If you are committed to pay off the RM5k PL within one year, then use that money to pay down the card. RM5k for renovation I would understand, but for card repayment.... it is always not advisable.

One have to remember PL for short tenure and low amount usually comes with higher interest rate. If big amount or longer tenure, then the interest rate will be lower. That is the nature of PL business.

This post has been edited by b00n: Oct 18 2012, 01:41 PM

Give me an example and calculation to convince me.
CC interest rate is 13.5% if one is prompt payment and is on reducing balance. Some banks even gave lower than 13.5% interest.

PL interest rate is how much? Say example the RM5k in 12 months?

This post has been edited by MilesAndMore: Oct 20 2012, 09:14 AM

CC example by your logic of committing to pay RM458 every month:
1st example using the highest interest rate i.e. 17.5% per annum:

Month Bal interest Payment Interest
1 5,000 17.50% 458 66.24
2 4,608 17.50% 458 60.52
3 4,211 17.50% 458 54.73
4 3,807 17.50% 458 48.85
5 3,398 17.50% 458 42.88
6 2,983 17.50% 458 36.83
7 2,562 17.50% 458 30.68
8 2,135 17.50% 458 24.45
9 1,701 17.50% 458 18.13
10 1,261 17.50% 458 11.71
11 815 17.50% 458 5.21
12 362 17.50% 458 -1.40

You can finish paying by 11th month and total interest is only RM400. Total Payment RM5,400

Using 13.5% per annum:

Month Bal interest Payment Interest
1 5,000 13.50% 458 51.10
2 4,593 13.50% 458 46.52
3 4,182 13.50% 458 41.89
4 3,766 13.50% 458 37.21
5 3,345 13.50% 458 32.48
6 2,919 13.50% 458 27.69
7 2,489 13.50% 458 22.85
8 2,054 13.50% 458 17.95
9 1,614 13.50% 458 13.00
10 1,169 13.50% 458 8.00
11 719 13.50% 458 2.93
12 264 13.50% 458 -2.19

Same thing, finish by 11th month and interest paid is only RM302. Total payment RM5,302

So, your point again?

Like I mentioned before, read back a couple page back on my post.

Car loan interest is lower than ploan and both are flat rate. So why the need for a ploan?!

Ooopppss... Me still stuck at the old tiering. nonetheless my example got onterest rate of 17.5%.
But for one to be charged at tier 3 just makes me wonder whetherr or not he should be taking a ploan since he can't even afford to be prompt and disciplined in payment. Tier 3 meant missed more than 2 times in last 12 months.

Btw, for credit card debts.... Wouldn't balance transfer be a smarter moves than ploan?

This post has been edited by b00n: Oct 18 2012, 11:09 PM

Like I mentioned a couple of pages back, it will work only when the monthly repayment of the ploan is lower than the monthly repayment for the cards. If it is the same, then no point taking up ploan to settle cards.

Hence looking at previous example quoted, it makes no sense to take up ploan. But your scenario is different. However if this type of scenario same like ur example occurs, I think this guy really needs to learn financial management.

Btw, some banks now do internal restructuring in converting card balance into sort of installment plan. Hence one can always explore that possibility as well. Some balance transfer program offered by banks also go by that logic with interest rate lower than ploan rate.

As far as I know, Citibank doesn't have PL anymore.