Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
10 Things to Know About Koperasi Loans
1. What is a Koperasi loan?
A koperasi loan (or a Cooperative loan) is a type of credit service from Cooperatives or Foundations (Yayasan) that’s available only to civil servants working in the government, local municipal councils, as well as selected government-linked bodies. Credit cooperatives are registered with the Cooperative Commission of Malaysia (SKM) and regulated under the Cooperatives Act of 1993.
2. Who runs koperasi loans?
Cooperatives in Malaysia offer credit facilities by using their own funds or borrowed from other sources. These sources are usually limited, therefore they are also dependent on a steady flow of funds from local financial institutions.
Many mainstream banks in the country are playing their part in funding the cooperatives. Examples are CIMB Koputri, RHB Islamic IDSB, Public Islamic Bank’s BAE AG Personal Financing-i and many more.
3. Who are eligible to apply for Koperasi loans?
Only civil servants and selected staff members who work for federal or state governments, municipal workers, statutory bodies, government-linked agencies and others.
Each cooperative loan will have a list of employers who are eligible to apply; for example this includes members of organisations such as PKNS, SYABAS, TNB (Tenaga Nasional Berhad), public universities, and many more.
Koperasi loan providers may also require that civil servants be employed for at least six months at said government body.
You can apply for a koperasi loan if you are 21 (some providers have a lower minimum age of 18), up to 58 years of age.
A monthly wage of RM1,500 is usually set as the minimum required to be eligible to apply for a koperasi loan. Private sector employees and those who run their own businesses are not entitled to apply for koperasi loans.
4. What are the credit criteria to fulfil when applying for a koperasi loan?
It is less strict compared to conventional bank loans. Cooperative loans tend to set a slightly lower credit approval criteria as loan repayments are directly deducted from the borrower’s salary by Biro Perkhidmatan ANGKASA (via SPGA – Sistem Potongan Gaji BPA) or the Accountant General’s Department.
Koperasi loans are attractive to civil servants because those with a less-than-stellar CTOS records, blacklisted in CCRIS (with a Special Attention Account) and even registered with AKPK are still eligible to borrow.
Furthermore, loan applicants with high payment commitments or debt service ratio (DSR) will also be considered by koperasi loan providers, unlike conventional loans.
5. How does the repayment work?
Monthly repayments are conducted via an automatic salary deduction scheme by the National Cooperative Movement of Malaysia, or better known as Biro ANGKASA as mentioned previously. Likewise, some koperasi loans also accept deductions via the Accountant General’s (AG) Department.
The Public Services Department imposed a rule that loan instalments plus other deductions cannot exceed a set limit of 60%; this was designed such that the borrower’s take-home pay is at least 40% of his or her gross salary to ensure that a decent standard of living is still possible.
6. What are the loan tenures available?
Koperasi loan tenures are up to a maximum of 10 years, as stipulated by the government. Conventional bank loans on the other hand, usually only reaches seven years.
| See also: Can You Apply for a Personal Loan if You Have Been Blacklisted? |
7. How high are the interest rates and the payouts available?
Interest rates (or profit rates, if they are Islamic-based) are also lower than most banks; expect as low as 3.88% per annum from selected koperasi loan providers. You will also need to take into account of the potential loan payout available to you.
One can borrow up to RM250,000 or the maximum instalment amount that can be deducted from the borrower’s pay. However, it is important to note that the loan sum disbursement is rarely 100%, and you can expect anything between 70% to 98%. This is dependent on the koperasi loan provider chosen.
Therefore it’s important to first work out how much the monthly repayment will be before signing up for the loan.
8. What are the documents requested?
- Photocopy of NRIC, verified by employer
- Latest three months’ pay slip
- Verified letterhead from the employer
- Bank statements
- Copy of a utility bill (Tenaga, ASTRO, etc)
- Photocopy of Bank savings account book (could vary depending on the underwriter of the loan)
Different providers would request for a combination of documents for your application, but it’s best to prepare these in advance. Keep in mind that multiple copies of these documents are often requested for, so remember to keep additional copies at hand when forwarding your application.
9. What can I use the loan for?
Weddings, unexpected bills, vacation, renovation, emergency situations, almost anything. But of course, Finder expects you to be a savvy spender – a wise one always sets out to plan and manage his or her finances for the future.
10. How else is a cooperative Loan different from your regular commercial bank loan?
The majority of cooperative loans are Islamic-based and therefore Shariah-compliant. Being grounded on Islamic banking and finance principles such as Tawarruq and Murabahah means that the sale and purchase of commodity is payable by instalments or deferred payments.
Many koperasi loans also come with compulsory takaful insurance protection to ensure that any outstanding amounts in the circumstances of death or total permanent disability can be accounted for.
Finder tip: Legitimate loans (be it koperasi loans or conventional personal loans) will not request for ANY payment, upfront or not. Should there be any transactional fees, they will be deducted from the loan sum instead of making an advance payment.
More guides on Finder
-
Buy now, pay later (BNPL) stats
The Finder Buy Now, Pay Later (BNPL) report looks into the biggest regrets people have using BNPL services in 23 countries.
-
Should You Consider a Microloan for Your Financing?
Is a microloan right for you? Find out how this type of financing can help you get started on your small business goals!
-
#SayNoToAhLong: 5 Ways to Get Safe, Fast Cash
You know that Ah Longs are a no-no, but what other choice do you have? Well, many! Here are 5 options for quick, safe financing!
-
5 Things to Know Before You Apply for a SME Business Loan
Before you go all trigger-happy on your SME Business Loan applications, check this list to see if you know everything you need to know!
-
Conventional Loan Vs. Islamic Loan: Which is for You?
Are you familiar with the differences and how conventional and Islamic loans operate? Understand the different terms used and what it means to you as a borrower
-
7 Things You Should Know about Personal Loans in Malaysia
Confused by all the personal loan ads you’re seeing? Don’t worry, the Bear will help you cut through the clutter and focus on seven of the most important points you need to consider when applying for one
-
5 Things You’ve Always Wanted to Know About Personal Loans – Answered!
Do personal loans confuse you? Let us untangle those lies, misinformation, and half-truths right now and set the record straight before you apply!
-
Can You Get A Personal Loan With Bad Credit
Did you know that poor credit doesn’t automatically mean you will be rejected for a personal loan? Find out about fixing your credit score and how the bank assesses you when applying for a personal loan with ‘bad credit’
-
The Ultimate Guide to Credit Score in Malaysia
When you’re applying for a credit card or a loan from the bank, chances are they’ll look into your CCRIS and CTOS credit reports. Find out what your scores mean and what you can do to further improve them
-
Can You Apply for a Personal Loan If You Have Been Blacklisted?
Need fast cash? Most folks would look to personal loans, but what if you’ve been blacklisted? Should you even bother applying for one? Read on to find out!
Ask an Expert