(This article was originally published on the 12th August 2017 and updated on the 25th Mac 2021).
Why do people apply for personal loans? One obvious answer is because they require cash that they do not have on hand. In fact, some people do have cash on hand but still prefer to borrow. And you might be wondering why? One of the main reasons is that applying for a personal loan or Koperasi personal loan may be faster or easier to access financing than liquidating their assets and getting the cash that they need.
So, how do personal loans work?
Most of the personal loan in Malaysia offers a fixed interest rate. This means that each month you would pay the same amount of installment. Another plus point of a personal loan is that it is unsecured. This means that a personal loan does not require the borrower to provide any collateral. With this flexibility, many borrowers turn to personal loan as the ‘quick-fix’ to solve their financial worries.
Once your personal loan is approved, the funds would be credited into your bank account as fast as 24 hours or up to weeks depending on the respective financier itself. When your personal loan is disbursed, you will start paying up your monthly installments. Now, let’s take a look at some of the common reasons why people apply for a personal loan.
If you find yourself in need of quick cash to cover emergency situations such as paying off medical bills, major car repairs, or sustaining everyday expenses due to a sudden loss of income, an affordable personal loan can be a major source of financial support.
Koperasi Loan is relatively easy to apply, even for those with negative CCRIS, CTOS record, or listed under AKPK and SAA. Some koperasi in Malaysia do accept borrowers with such credit records as the repayment scheme is done through salary deduction via ANGKASA. The final approval of the loan also depends on the circumstances of the borrower’s credit report.
2. Debt Consolidation
How debt consolidation works is by combining all of your existing debts into one cheaper personal loan. With a low interest rate personal loan, you can reduce the amount of interest you are paying and also the amount of time to pay off your debt. For example, if you have any outstanding credit card debts with an interest of 18% per annum, you can consider using a cheaper personal loan to consolidate and pay off these expensive debts.
With the new personal loan, you can focus on paying one installment, so that you would not miss out on paying your monthly bills. In addition, many borrowers would also apply for a personal loan to pay off their overdue debts to clear their negative CCRIS/CTOS records. Read our article for a more in depth view on debt consolidation.
3. Buying an Automobile
Conventional auto or hire purchase loans may not provide for cars that are older (10 years or more) such as vintage or collectible cars. These types of acquisitions could even be considered an investment as it is one of the few times that a car actually appreciates in value.
A personal loan or koperasi loan can help you buy an aged or vintage car, or alternatively a motorcycle if you would prefer. In some cases, buying a motorcycle with a personal loan is much cheaper than a hire purchase loan due to the affordable interest rate offered by personal loans.
If you have a solid business plan or your current business is growing, but you do not have the necessary funding. Hence, you are going to need a third party financing. Taking out a loan with low interest rates can help you to chase your business dreams. You can start to pay back the loan from the income and profits of your business.
Warren Buffet once said, “The best investment you can make is in yourself”. Upgrade yourself by building your knowledge and skills. It could be from getting a Bachelor’s degree to signing up for an online training course. Regardless of what you choose to improve on yourself, most educational programmes would cost you money.
Tertiary courses and even professional training can run into tens of thousands. Getting a personal loan can help you cover the cost of your programme and repay the balance within your means.
6. Deposit for a New Home
Often, the biggest barrier to home ownership is paying a down payment or deposit to secure the purchase. While zero deposit loans do exist for budding homeowners, there are certain restrictions such as higher interest rates and lower margins of financing that might not make this type of loan a viable option.
In these instances, you can opt for a personal or koperasi loan to help cover the down payment on a house and later secure a conventional home loan (preferably with a spouse or relative) to complete the purchase.
Finding your soulmate and getting married is a dream come true for most but what if you do not have enough money to pay for your wedding? Weddings can be quite costly these days. Taking out a small loan with flexible repayments and low interest rates can help pay for the most special day in your life without depleting your account and leaving you saddled with heavy debt.
8. Home Renovation
Expectedly, properties require upkeep for it to be in peak condition and to retain (or increase) its value. Still, renovation costs can be hefty if you do not have the option to pay in cash or if you do not want the hassle of cash out refinancing.
Using a personal or koperasi loan might be an easy way out for you. If you are having doubts on the processes of doing so, read our step-by-step guide on how to use personal loan for home renovation.
Many Millenials may or may not have the goals of travelling to X number of countries before hitting the age of 30, for example. However, some of these vacation plans will cost you a lot in order to make that happen.
In situations whereby sometimes what you saved is not enough and you are still short of a small amount of money. To fulfil your dream, applying for a personal loan might be a good idea. You can use these loaned funds to set off to your dream vacation and pay for it through affordable instalments.
Things to Do Before Borrowing
Here are a couple of important reminders before you apply for a personal loan:
- Decide on an amount that is sufficient and which you can comfortably repay.
- Find out about the terms of your loan such as the tenure, repayment flexibility as well as how quickly you can receive approval and the cash.
- Check if the loan provider is legal to avoid being a fraud victim.
If you require extra financing, don’t hesitate to apply through Direct Lending. We are an online personal lending platform that provides safe and affordable bank and koperasi personal loan. Check your eligibility for free and we can help you to find, apply and receive financing that best suits you. Receive funds in your account as fast as 2 working days.
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