(This article was originally published on the 8th October 2017 and updated on the 18th November 2019).
In our previous article, we discussed about the features of Koperasi Loan and how it is different from a personal bank loan. We would like to highlight the benefits or mainly 3 reasons why you might want to consider getting a Koperasi Loan.
1. An alternative for Unsuccessful Applications from a Commercial Bank Loan
Generally, a Koperasi Loan is more lenient in its approval process as compared to a commercial bank. This is mainly because of the repayment which is made via salary deduction (through Angkatan Koperasi Kebangsaan Malaysia Berhad (Biro ANGKASA) or the Accountant General’s (AG) Department). Many Koperasi (Co-operatives) accept borrowers with no credit history or with a negative CCRIS or CTOS record (e.g. Special Attention Account or more than 3 months overdue loan payments).
Koperasi Loan will also approve loans to those with a relatively high financial commitment. However, to ensure responsible lending, Koperasi Loan can only be extended where the salary deduction in the payslip is not more than 60% of the borrower’s gross income.
2. Removing Negative CCRIS / CTOS Records by Settling Overdue Loans
A poor repayment history of your loan or any loan guaranteed by you will result in a negative credit record. If this happens, it is highly unlikely that a bank will approve your home loan, car loan or credit card application.
In this case, it makes sense to apply for a Koperasi Loan and use the proceeds to settle any overdue debts. This will get rid of your negative CCRIS / CTOS records and provide the financial flexibility that you need. Of course, it is always better do stay disciplined and pay off all your commitments and loans on time to maintain a good credit record.
3. Consolidate Credit Card Debts with Low Interest Koperasi Loan
Even with good credit history, a Koperasi Loan might benefit you in terms of reducing your debt burden. If you have any outstanding credit card debts with an interest of 15 to 18% per annum or a personal loan with a high interest rate, you can consider using a Koperasi Loan to consolidate and pay off these expensive debts.
For example, Koperasi Ukhwah offers up to 10 years of loan tenure with an interest rate of only 4.99% per annum. Before you apply for a personal loan, consider the option of a Koperasi Loan for its benefits of a lower interest rate, easier approval process and flexibility to clear CCRIS/CTOS negative record.
Another tip is to always research about the details of a financial product by considering the interest rates and loan tenure. Take into account of your personal financial situation and you might find that Koperasi Loan could help to solve your financial problems.
This article is prepared by Direct Lending, an online personal lending platform with the mission to provide simple, safe and affordable financing to all hardworking adults. We help borrowers to find, apply and receive financing that most suit them. Our service is 100% free.