Hey everyone. I'm a bachelor who started working in the private sector recently for about 4 months. I earn RM 3k per month with no liabilities to be paid, just the usual KWSP and SOCSO.

I would like some advices on Personal Loans. I have googled a bit around a found a few banks offering pretty low rates. However, then it dawned on me. I have absolutely no idea how loans work

I did find one plan, the Alliance Bank CashFirst Personal Loan which offers a low fixed interest rate of 6.9% per annum.

I am planning to borrow 10k. Based on the calculation i did at Personal Loan Calculator it says for 10k = 36 months x RM 308.73.

Sounds affordable, with all their benefits listed on this website Here.

My question is, is there more to this than meets the eye? I'm worried about hidden charges, difference between fixed rates and effective rates etc. As I'm kinda noob in these things would anyone please explain to me how personal loans works in general?

Your explanation is greatly appreciated

it fixed...no hidden charges...just dont make late payment once late payment you are doomed...hahaha..no la...just u have pay penalty thats all...

make sure your loan are for good thing and worth for your time to pay that 36 month....

i always make easy payment or balance transfer for my cc...it all the same...

As per my understanding, the 6.9% is "as low as". Meaning you could end up with higher interest rate if you apply. Better check with the bank before you engage.

Also, if you do not have any credit cards or any loans before, then you might have difficulty in applying a personal loan. Because they need credit bureau to score your loan size and interest rate.

Would you please elaborate on this matter? I thought that since I'm debt free its easy for me to apply for a loan.

As for the reason, my younger siblings started entering universities this year and the next so i need some cash to get them started before the PTPTN kicks in (tuition fees, laptops etc.). Me and my elder sister only have a few K between us to spare so we thought a short term loan is the way to go.

Before any banks to approve a Personal Loan (PL) to you, 1st they need your credit background to check if you can pay them back. They have a credit policy to score you.

And where do they get your credit background? Via CCRIS which is the most common one.

Since you do not have any loans / credit cards, your CCRIS are blank for them to rate your score, hence, your PL will most likely rejected due to NO scoring.

Know exactly your situation, my suggest to you is to get a credit card 1st from any local banks, and you may pay your siblings fees with the credit card and service the credit card well to get a good scoring.

Then you may apply for a PL to settle your credit card outstanding by then and enjoy lower interest rate compare to credit card.

You might as me why bank can approve credit card without scoring but not PL, this is purely their policies..

as much as i understand the need to support your younger sibling, i do hope that you explore other options, say save more, spend less kind of approach before you opt for personal loan. you don't want this to be a habit and also you don't want to be paying for personal loan after less than a year of working.

Also to highlight, they are two types of interest rate that banks uses, which is confusing to most layman. One is the effective interest, one is known as the flat interest. When using the calculator you have used, you need to key in the effective interest and not the flat interest. Now the 6.88% you saw on alliance bank website is the ‘flat interest’.

which you should use the calculator below.

loan calculator for personal loan

so 10k, 36 months, 6.88% flat rate, is effective rate 12.62% and repayment is RM335.

Again, before you say affordable RM335 is affordable, please take a wholistic view.

1. you only get 3%+ to 4% from banks vs the 12.62% you are letting the bank earn.
2. you borrow 10k, you have to return 12k to bank in total.
3. 6.88% is relatively on the low side... 8% and above is more realistic.

long story short, please please think twice about personal loan. and consider my good deed done for today by spending some of my work time to type this.

This post has been edited by adele123: Oct 7 2015, 06:55 PM

Thanks for your time and explanation. Now I understand the difference of flat rate and effective rate.
Gonna discuss this with family on how to approach this dilemma. I understand now that personal loan might not be the best option after all.

Thanks guys. Really Appreciate it.

If you going to get credit card as suggested by davelkh, then you can choose Alliance Bank You:Nique card, there are 3 types and go for the Rates. Instead of the conventional effective rate of 18% P.A., it is 9% which lower than the fixed rate of 6.88%.

By having the credit card, you can pay for family expenses and slowly pay back with the 9% effective rate. Must pay minimum payment every month, otherwise will get penalty.

Yeah I saw theirs its quite lower compared to the rest. About credit cards, lets say i used about 1k. At the end of the month I need to pay at least 100 since its 9% interest to avoid getting penalties?

What if I dont have any charges for the credit card for that month. That means i havent used it. Do i need to pay anything (service charge, fee etc.)

Dun so naive. 6.88% is for basic salary rm10k above with Low risk customer .

If ur salary rm3k
Lowest 8.88% if ur scoring get low risk

Medium risk 10.38%
High risk 11.88%


If for siblings study fee, good bro good sister .

Give u liked.

This post has been edited by theanswerL2: Oct 21 2015, 12:06 AM