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7 Personal Loan Myths – Debunked!

“Personal loan? Aiya, so troublesome. No need lah.”


Many of us have probably had such a thought before, especially at the mere mention of personal loans – and with good reason. Loans that are poorly managed or handled can spell ruin, after all, and some of them can be incredibly difficult and tedious to obtain.

If you take a closer look at personal loans specifically, however, you may realise that there is more than meets the eye when it comes to these financial instruments. In fact, once you cast some of the more popular myths surrounding personal loans aside, you might just find them to be excellent allies to have on your side in your quest for good financial health.


Here, GoBear smashes through seven such myths and shows you why personal loans might just be far better for you than you think.


1. Personal loans are a lifetime commitment

Why isn’t this true? Personal loans are definitely not lifelong financial commitments.

Many of them actually have tenure periods that last far less than 10 years, with Maybank’s Personal Loan requiring a maximum tenure period of only six years and CIMB’s Cash Plus Personal Loan needing a maximum tenure period of only five years, for example. This means that you will not have to worry about repaying your loan for the next 20 or 30 years!


2. Personal loans require spotless credit reports

Why isn’t this true? Personal loan providers generally do not require the credit reports of their applicants to be perfect.

While a good credit report is generally encouraged for many other financial instruments, personal loans prioritise on the ability of applicants to repay their loans promptly and to meet their minimum annual income requirements instead. For Citibank’s Personal Loan, this would be RM48,000 a year for individuals that are either salaried employees or self-employed.


3. Personal loans require a sacrifice of property

Why isn’t this true? Personal loans do not require borrowers to submit collaterals of any sort in exchange for the loans that they receive, nor do they demand that borrowers should have guarantors.

In fact, their providers do not even require the submission of credit reports, and usually, only request for applicants to submit income statements to show that they are able to meet the minimum income requirement that has been determined.

4. Personal loans applications are troublesome, leceh!

Why isn’t this true? As hard as it may be to believe, personal loans are incredibly easy to apply for – and are also approved at incredibly fast rates, as long as all the necessary requirements are met and all the required documents are attached to an application.

Alliance Bank’s CashFirst Personal Loan, for instance, can be approved and received by the applicant within 24 hours of his or her application and does not require the payment of an application or processing fee either. Citibank’s Personal Loans Online also allows you to get instant online approval in three very easy steps. The application process for foreigners requires more documents, check them out and learn how to improve your chance of approval.

5. Personal loans require fixed incomes

Why isn’t this true? You may be surprised to learn that personal loan providers do not necessarily require their borrowers to have fixed monthly incomes.

For example, CIMB grants its Cash Plus Personal Loan even to those who earn variable incomes, as well as to applicants who are self-employed or receive incomes on a commission basis.

6. Personal loans cost more than their benefits

Why isn’t this true? Personal loans are a good way for you to consolidate debts.

By obtaining a loan at a much lower interest rate than that of your various debts, presents an opportunity to pay off those debts sooner. You would essentially be paying off your debts with noticeably lower interest payments. This makes it an especially handy tool to have in times of emergencies, and you can then pay off the personal loan according to a tenure period of your choice.


7. Personal loans are only given by banks

Why isn’t this true? Personal loans are not given exclusively by banks in Malaysia.

AEON Credit Service is a good illustration of this, as it is a reliable institution that provides various personal financing products – including personal loans – without falling under the ‘bank’ umbrella. However, you should always make it a point to research the institution from which you are planning to borrow a personal loan, regardless of whether that institution is a bank or not. Remember to apply to legally-recognised entities only, and always submit your applications through the appropriate official channels only.


Beyond the myths

Now that we’ve cleared some of the cloudy myths enshrouding personal loans, it should be evident that when they are used correctly, personal loans can be immensely valuable financial instruments. This is especially the case when these loans are taken with proper planning and thorough research.

Don’t be fooled by personal loan myths and make sure to always get the best possible deal for you!





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