4 Alternatives to a Personal Loan

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It is not uncommon for people to start looking up personal loan packages offered by banks when the issue of borrowing cash comes into play. While that remains a very viable option, you should be aware of other ways you can explore to obtain extra money.

What's covered in this article?

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 use this facility.

Pros	Cons
Flexibility Ease of application Convenience of use (e.g oversea usage) Offer a variety of benefits.	High interest rate Annual maintenance fee

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.

Pros	Cons
Flexibility No fixed repayment Interest charge only on the utilised amount	High interest rate This may affect your DSR even if the 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.

Pros	Cons
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 o the mortgage refinancing cash out policy.

4. Licensed money lenders

Yes, we can see how this option of borrowing money will raise many eyebrows.

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. Some names in the industry include: Gsmaju, Kim Seng Heng Enterprise, F.K Capital, etc.

Pros	Cons
Customized loan packages Fast disbursement of funds Ease of application and approval	High interest rate Unorthodox modes of operation.

There's a lot to choose from!

While each avenue has its own set of pros and cons, you must choose the right product that fits your needs.

If you wish to apply for a loan from the banks, use our personal loan comparison tool to examine which loans in the market are the best fit. Also, our article 8 Key Things to Look for When Choosing a Personal Loan should give you a better understanding of personal loans in Malaysia.

Remember to read up and make the best-educated decision!

*The above article is intended for informational purposes only. Loanstreet accepts no responsibility for loss that may arise from reliance on information contained in the articles.

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Team Loanstreet

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