Even if you aren’t making much money, don’t fret – a personal loan is still possible! Some products are geared toward people with lower incomes that need quick and affordable financing.
That’s the good news, but there is still a limit to how low your income can be when applying for a conventional or Islamic personal loan.
This limit is known as the minimum income requirement and it typically ranges from RM18,000 to RM36,000 per year (or RM1,500 to RM3,000 monthly), although there
Incomes can be classified as monthly salaries and/or variables which include commissions, allowances, overtime pay, and the like.
Bear in mind that the minimum income requirement varies with banks and loan products, as do other factors of eligibility like employment status or loan tenure.
Do I have to be a full-time employee to apply?
No, but just like most loans, some banks may only offer certain loan products to those in permanent employment positions or those employed by the government sector.
Other banks may accept applications from small business owners or the self-employed and request support documents like tax forms, business registrations and etc.
How much can I borrow with a low income?
This figure is generally based on your salary as well as the minimum and maximum financing amounts set by the lending bank.
The general loan amount offered ranges from RM1,000 up to RM150,000 (and more). However, the lower your income, the lesser you’ll be allowed to borrow.
What should I look out for in a low-income personal loan?
Whether you earn a low or high income, it’s always money-smart to consider financing options that will cost you the least! Here are a few pointers to help you choose a good loan that is both
Note Takaful plans
Some banks may insist that you take out a Takaful plan to cover your loan in case an unfortunate incident leads to permanent disablement or death, leaving you unable to pay back your loan. With a cover like this, you won’t have to worry about making loan repayments if a permanent disablement has left you without an income. You’ll also have peace of mind knowing that your estate (e.g. money from your EPF account and other insurances) won’t be used to pay back your loans in case of death. The Takaful contribution is usually deducted from the loan amount.
Opt for lower interest rates
When choosing a loan product, the interest rate is always the most significant part of the deal. Thus, whenever possible, do scout and negotiate for the lowest rates available with respect to your loan needs e.g. how soon you need the funds and how much you need to borrow. The lowest rate may not always come with the quickest disbursement though, so it’s up to you decide which is more important. Also, do remember that your personal rate will depend on your credit risk (among others) and so it may be higher than what is advertised.
Consider loan fees and other costs
Apart from interests, other charges may be levied on your loan. If applicable, these may be absorbed by the bank or charged to you. These fees could include stamp duty (0.5% of the loan amount), guarantee/indemnity agreement fees as well as processing and early settlement fees. You will also likely be charged a late payment penalty if you don’t pay your installments on time. This figure varies with loans but on average, it comes to 1% p.a. of the overdue sum.
Consider a longer tenure
When your earnings are low, you’ll need to keep your monthly installments low as well. With a longer tenure (and lower interests), you can stretch out repayments to make it more affordable in the long run. However, do note that the longer the tenure, the higher the interest costs overall.
You may need a guarantor
Some bank lenders will require that you provide a guarantor when borrowing a larger amount, if your salary is very low or if you have bad credit. In other instances, you may want to ask a guarantor to support your application and help you secure better rates; it may not always work but it is worth a try!
The Top 3 Personal Loans for Low Incomes
Let’s get to it! Here are three of the best personal loans for those on a low income:
Alliance Bank CashVantage Personal Financing-i
If you are earning at least RM3,000 and can repay your loan within two years; this loan is worth your attention! No processing fee is charged and loans can be approved within 24 hours. The financing amount ranges from a minimum of RM5,000 up to RM150,000 and no early repayment fee will be charged if you notify the bank within three months. The loan is offered to both salaried workers and the self-employed.
If you don’t need to borrow a lot, then this loan might be for you as its minimum loan amount is just RM2,000. You’ll also appreciate that it does not charge a processing fee and no early settlement charges will be enacted if you give the bank a one-month written notice. The minimum income requirement is RM2,000 for existing-to-bank customers and the interest rate starts from 8% p.a. The loan is open to both salaried and self-employed applicants.
CIMB Xpress Cash Financing-i
This loan will appeal to those with a very low monthly income; the minimum requirement is just RM800 per month or RM9,600 per year. In terms of borrowing amount, the maximum you can take out is eight times your gross monthly salary (or RM50,000 whichever is lower). So if you are earning RM800, the most you can borrow is RM6,400.
Furthermore, this loan is also a good option when you need emergency cash as approvals can be obtained within 24 hours.
With that said, the flat profit rate is rather high, ranging from 18% to 24% p.a. and stamp duty is also chargeable. The loan is open to both salaried and self-employed applicants.
Are you a foreigner looking for loans in Malaysia? Read this article to know what you need to get approval from banks.
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