1) Credit cards
Credit cards are one of the most common credit facilities. Besides swiping your card at merchant stores, you can also use it to garner immediate cash flow. However, unlike personal loans the amount you are eligible for is usually reflected by your credit limit. Just call up the corresponding bank of your card to find out how you can make use of this facility.
Ease of application
Convenience of use (e.g. overseas usage)
High interest rates (13% - 18%)
Annual maintenance fee
Credit cards can also offer a variety of benefits. To find out more about which Credit Card is suitable for you have a look at our article choosing the right credit card.
2) Overdraft facilities
Overdraft (OD) is a facility that allows you to withdraw more than what is available in your current account. This is usually capped at a set credit limit.
No fixed repayment
Interest charge only on utilized amount
High interest rate
May affect your DSR even if line of credit is not utilized
Banks can recall the OD facility or change the credit limit at any time
Important to note that under Bank Negara's new regulation, a commitment fee of 1% will be charged on the unutilized amount at the end of each month. Learn more about overdrafts here.
3) Cash out refinancing
Cash out refinance is simply to extract equity from your home. Read here for more details on that.
Low and reducing balance interest rates (e.g. 4.4%)
Larger cash out amount
Collateral is needed
Slower release of funds
Higher legal fee involved
Here are a few tips on refinancing and check out our home loan refinancing comparison tool. Also, be aware of the 10 year limit on mortgage refinancing cash out policy.
4. Licensed money lenders
Yes, we can see how this option of borrowing money will have many eyebrows raised. Money lenders are governed by the Ministry of Housing & Local Government under the Money Lenders Act 1951. So while they are not banks, they have the license to give out loans to the public at large. Some names in the industry include: Gsmaju, Kim Seng Heng Enterprise, F.K Capital and etc.
Customized loan packages
Fast disbursement of funds
Ease of application and approval
High interest rate
Unorthodox modes of operation
While each avenue has its own set of pros and cons, it is essential that you choose the right product befitting your needs.
If you wish to apply for a personal loan from the banks, do make use of our personal loan comparison tool to examine which loans in the market is the best fit. Also, our Getting a personal loan in Malaysia write-up should give you a better understanding of personal loans in Malaysia.
Remember to read up and make the best educated decision!