1. Do not be fooled by unreasonable offersTo attract borrowers, some companies offer 'attractive' deals such as interest-free financing or lower-interest financing which sounds way better than the benefits offered by the private finance companies and conventional banks.
Even worse, some also offer personal financing to CTOS or CCRIS blacklisted borrowers! For your information, if you are blacklisted by CTOS or CCRIS, no licensed bank or loan company will approve your personal financing application. Who wants to provide financing to those who have problems with repayment anyway? Even if they do, it will come at a high price.
For example, a personal financing application from Yayasan Ihsan Rakyat (YIR) or Yayasan Dewan Perniagaan Melayu Perlis Berhad (YYP) will NOT be approved if you have an outstanding credit balance of more than RM45,000 or those who are blacklisted on CTOS or CCRIS.
READ: Everything You Need to Know About CTOS and CCRIS
These are some of the tactics that are widely used among personal finance frauds and if you find yourself struggling to obtain financing from the conventional banks, it’s advisable to avoid applying for personal financing from any suspicious companies, as you are at risk of being deceived.
2. Do not forget to do your own due diligenceBefore applying for personal financing, we advise you to do some research about the type of personal financing that you need and the options available out there. All you have to do is to surf the net and ask your friends or family members who have made the loan that you want. If you need more accurate information, contact the company directly to avoid misunderstanding and not get caught up with the agents/officers' sweet-talking.
Some of the things that you need to know are like loan eligibility, interest rates, repayment terms, required documents and funding approval periods.
3. Please make sure of the amount of financing that is required
As a borrower, the most important thing to make sure is the amount of funding required to avoid any problems in the future such as long repayment terms with mind-boggling interest rates!
You need to calculate and review the Debt Service Ratio (DSR) on the number n of deductions in the payroll statement after deducting the total revenue. It's a set of rules for government employees and statutory bodies to make sure that your DSR is within 50 - 60%.
Some agents/officers will try to persuade you to get the maximum amount of funding. For example, if you want to apply for RM10,000 personal financing and you are offered a maximum of RM13,000, you can still opt to apply for RM10,000. Avoid being influenced by their persuasive plea and always refer back to the Product Disclosure Sheet (PDS) and FAQ to prevent yourself from getting stuck with unnecessary financing predicament.
For instance, if you're applying personal financing from Yayasan Ihsan Rakyat (YIR) or Yayasan Dewan Perniagaan Melayu Perlis Berhad (YYP) via its agent/officer and he/she is making such suggestion, do refer back to the refer PDS for both YIR and YYP and their FAQs so that you're more well informed. Such information is publicly available via their website.
4. Understand and pay close attention to the loan application processOnce you are satisfied with the amount offered and having gone through PDS, the agent/officer will send your application to a personal financing company for review. Take note that there might be other charges like processing charges which some agents/officers do not share, so this is something that you have to ask and be aware when applying through an agent/officer.
Other charges include processing fees (cost of the application process) and stamp duty (payment to Inland Revenue Board of Malaysia (IRBM)). Both of these charges are depending on the personal financing companies and not all charge both of these charges.
So carefully read every document and PDS provided by the company or agent and go through the processes such as credit research, employer and customer verification. Make sure the information you and your company provide is true and valid to prevent your personal financing application being denied.
5. Avoid borrowing from an unlicensed personal agent or financing companyMore often than not, most people fall for personal financing fraud because they do not check the status of the company allegedly providing personal loan services. To avoid the same things happening to you, you should check the status of the personal financing company of your choice.
It's important that the agent/officer contacting you for personal financing claims to be the agent/officer of the financing company. Contact the company through the registered telephone number on the website and ask whether the personal financing company has appointed an agent/officer to deal with you.
6. You shouldn’t make any payment to get financingOne of the fraud’s modus operandi that's related to personal financing is to ask their victims to deposit some amount of money for certain costs. In fact, some agents even requested the borrower to deposit money into different bank accounts before ‘releasing’ the loan to the borrower in order to ‘process’ the loan.
In fact, there are few who pretended to be the agents/officers of the leading personal financing company, bank officers, Bank Negara Malaysia (BNM) officials and also members of the Royal Malaysian Police (PDRM) for the following purposes:
- To request a personal financing deposit before missing in action.
- To request personal information such as bank account information and credit card before applying for a personal loan. This technique is known as 'spoofing'.
If you are dealing with the party that's requesting payment before the loan is granted, it's advisable not to proceed with the personal financing application of the company and immediately inform/highlight to the financier directly. For YIR and YYP, you may write to firstname.lastname@example.org and email@example.com to log your complaint and to prevent other innocent customers from falling prey or being cheated by these unethical parties.
Be a wise borrower and consumer!As discussed earlier, you are strongly encouraged to ask questions and keep asking until the information you need is sufficient to make the right decision. Failure to realise your rights can cause irresponsible parties to take advantage of you.
You are also advised to carefully understand and read the documents before signing it to avoid any unwanted predicaments. If there are any doubts and suspicions, please express your thoughts without hesitation.
As a responsible Malaysian citizen, if you know individuals who apply for personal financing from a dubious party, share this article with them to avoid becoming one of the victims of fraud. In addition, to know if you are on the right track, we recommend you to make personal financing comparisons for FREE at Loanstreet.
If you work with a government body or GLCs, do know that you can get exclusive financial assistance from the Yayasan Ihsan Rakyat (YIR) or Yayasan Dewan Perniagaan Melayu Perlis Berhad (YYP) for faster approval - within 2 working days. In addition, they also offer profit rates as low as 6.50% - 9.99 per annum depending on your credit scoring like the criteria required such as your payment history on loans and credit cards, total debt and the amount owed and length of credit history.
And, if you are interested in personal financing from YIR or YYP and have any questions, you can refer to YIR FAQ and YYP FAQ.
In the meantime, if you deal with any questionable private financing company or loan agents/officers, share it with us in the hope that it will be a lesson to the public.