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What are the Differences between Koperasi and Licensed Moneylender?

Most of the personal loans in Malaysia are offered by banks, cooperatives (Koperasi) and Licensed Moneylender. There are some misconceptions stating that Koperasi is categorised under Licensed Moneylender or vice versa. Before we discuss about the differences between Koperasi Loan and personal loan by Licensed Moneylenders, let us first understand about the general concepts of the aforementioned.

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What is a Koperasi (Cooperative)?

In simpler terms, Koperasi Loan is primarily offered to civil servants. The repayment of Koperasi Loan is done through a salary deduction repayment scheme via Biro ANGKASA. Most of the Koperasi Loans are Syariah compliance. For more info about Koperasi Loan, read our article on “What is Koperasi Loan & How is it Different from a Commercial Bank Loan?

What is a Licensed Moneylender?

Licensed Moneylenders are lenders licensed under the Moneylenders Act 1951 and regulated by Ministry of Housing and Local Government (KPKT).

Usually the perks of borrowing from Licensed Moneylenders are fast approval and disbursement. As compared to commercial banks, Licensed Moneylenders are less stringent with their credit assessment. Read here to find out more about the differences between Licensed Moneylender and Ah Long.

What are the main differences between Koperasi vs Licensed MoneyLenders?

The table below depicts the differences between Koperasi and Licensed Moneylender.

KOPERASI (COOPERATIVES) CRITERIA LICENSED MONEYLENDER WHO COMPLIES WITH MONEYLENDERS ACT 1951
Cooperative Commission of Malaysia (SKM). Governed and Regulated By Ministry of Housing and Local Government (KPKT).
Licensed under Cooperatives Societies Act 1993. Licensing Licensed under Moneylenders Act 1951.
Civil servants and selected staff members working under the federal or state government, municipal workers, statutory bodies, government-linked agencies and others. Eligibility Civil servants, private sector employees and self-employed.
Typically from RM1,000 to RM100,000-150,000. Some Koperasi can offer up to RM250,000. Loan Amount Typically from RM100 to RM10,000. Although some Moneylenders can offer higher amount with collateral.
Maximum up to 10 years. Loan Tenure Maximum up to 5 years.
Typically from 4.9% to 10% p.a. (unsecured loans). Interest Rate Maximum 12% p.a (secured loans) and 18% p.a (unsecured loans) as stated in Moneylenders Act.
Mostly unsecured. Collateral Requirement May require collateral for higher loan amount.
Depends on Koperasi, from 2 working days to 3 weeks. Turnaround Time Typically fast turnaround, from a day to a week.
Depends on Koperasi, some Koperasi accepts negative CTOS record, high outside commitment, ‘Special Attention Account (SAA)’ in CCRIS, registered with AKPK. Credit Criteria Depends on Moneylenders, some Moneylenders accept negative CTOS record, high commitment, ‘Special Attention Account (SAA)’ in CCRIS, registered with AKPK.
Automatic salary deduction scheme via Biro ANGKASA or Account General’s (AG). Repayment Auto debit or manual cash bank-in.
Mostly Islamic loan. Conventional or Islamic? Mostly Conventional loan.

Should I get my personal loan from Koperasi or Licensed Moneylender then?

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In general, if you are eligible to get a bank loan, this should be your primary choice given the lower cost.  In case you are not eligible, both Koperasi and Licensed Moneylender is an option to you, depending on your circumstances and also the loan package offered by the financiers.

You should select a loan that best suits your needs. For example, if you are a civil servant, obviously applying for a Koperasi loan would be beneficial in terms of cheaper interest rates, less stringent credit assessment and convenient repayment scheme provided. However, if you need a small amount of borrowing within a short amount of time for emergency purposes (e.g. to receive money within a day), a micro loan from licensed moneylender could be the solution.

Always make sure you are clear of the borrowing terms – interest rate, loan tenure, monthly repayment, cash in hand and also penalty in case of late repayment. All legal lenders will provide these information transparently before you agree to take up the loan and the terms will be clearly stated in the agreement.

Lastly, we would like to remind our readers to always remember that a legitimate lender will not request for any payment from the borrower or take your ATM card. If and only if there are transactional fees involved in the loan, then the amount would be deducted from the loan sum. A legitimate lender would not ask for any fees or payment upfront.

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. 

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