In any given situation where money is involved, precautions must be taken seriously in order to avoid unnecessary negative outcomes such as losing your hard-earned money. When applying for any sort of loan, especially during an emergency, there are fraudsters out there ready to take advantage of your vulnerability by using their sneaky scamming procedures; this is why keeping a lookout for these certain aspects is crucial.
1. No upfront cash payment is required at any time, even after the loan is approved
Any legitimate loan offering will never ask a borrower to pay anything before receiving the loan. Any insurance cost, advance payment, stamp duty, legal cost or processing fee will be deducted from the loan instead of you having to find the money to pay for it first. There is never a need for a borrower to make an upfront payment before receiving any loan.
Many koperasi (co-operative) distribute their personal loans through a network of agents. All authorized koperasi loan agents, like Direct Lending, receive their commissions directly from the koperasi when the loan is disbursed, and they are prohibited from collecting any payments/fees from the borrowers. Walk away if the agent you are dealing with asks you for your ATM card or to pay him/her for a commission or fee after your loan is approved.
2. Be clear about the payout and fees deducted from the loan proceeds
When applying for a koperasi loan, make sure you ask and understand what fees the koperasi deducts from your loan amount to arrive at the cash amount you receive (the loan payout).
The most common fees will involve:
- stamp duty
- an insurance premium coverage that protects you from non able servicing the loan in case you have an accident, and
- 1 to 2 months of advance payments, as the Biro Angkasa deduction in your payment will usually take place 2 months after you have received the loan.
Also, ask if there is any membership fee required for the loan. There are a number of koperasi that charge a RM25 to RM30 membership fee per month for the first loan with them. This is deducted from your salary together with your monthly repayment and is not refundable. Koperasi loan that does not require membership fee includes Yayasan Ihsan Rakyat and Public Islamic Bank – MCCM.
As of the date of writing, the koperasi loan in the market typically has a payout rangin from 80%+ to 98%, after deducting all the fees mentioned above. That means that for every RM1,000 loan, you receive cash in hand of RM 800+ to RM 980. Make sure you understand the payout and feel comfortable with the cash amount you will receive before proceeding.
3. Know the interest rate and the loan payout
When applying for a koperasi loan, do not just focus on the interest rate but also the payout. The payout also indicates the cash you will receive in hand.
Let’s look at these two koperasi loans: Loan A offers only a 6.5% interest rate with an 80% payout, while Loan B offers a 7% interest rate with an 88% payout. Let’s see which loan actually has a lower cost for you as the borrower:
|Koperasi Loan A||Koperasi Loan B|
|Interest rate||6.5% p.a.||7.0% p.a.|
|Tenure||10 years||10 years|
|Monthly loan repayment||RM137.50 per month||RM141.67 per month|
|Cash in hand||RM8,000 (RM10,000 x 80%)||RM8,800 (RM10,000 x 88%)|
|Total payment made after 10 years||RM16,500 (137.50 x 120)||RM17,000 (RM141.76 x 120)|
|Total cost incurred for this loan||RM8,500 (RM16,500 – RM8,000)||RM8,200 (RM17,000 – RM8,800)|
Loan B actually costs you less despite the higher interest rate as you get more cash on day 1. So, make sure you do this comparison before deciding which loan best suits you.
4. Does it sound too good to be true?
There are many different koperasi offering such personal loans, and each and every one of them has different requirements. Typically, products with low-interest rates and high payouts have stricter requirements compare to those with high-interest rates and low payouts. That’s fair, right?
See below for selected koperasi loan products available and their requirements:
|Public Bank||4.90 – 4.95% p.a.||Up to 98%||
|Koperasi Koputri||5.50% p.a.||Up to 95%||
|RCE Yayasan||From 7.99% p.a.||Up to 81%||
*SAA = Special Attention Account
Therefore, watch out when you are offered a very fast koperasi loan with an interest rate of only 3.99% or 4.99%, a 90%+ high payout and that accepts your application even if you have bad CCRIS and CTOS records. The actual result would be far from it when the koperasi is doing the “akad” call with you.
5. Don’t wait until the last minute
If you foresee a need to borrow for any reason, such as a renovation, education or a major purchase, don’t wait until the last minute and always plan ahead. This allows you to find the best deals. In the worst case, if the agent you are dealing with is dishonest and you find out that the actual loan details are not the same as what you were told before you applied, you have the right to cancel the loan and move on to find a better deal.