Personal Loans for Government Servants

Are you a government servant or working at a government-linked company (GLC) and want to explore your financing options? More often than not, the best choice for you will be a government servant personal financing solution. A government servant personal financing solution, as the name implies is a personal financing solution that is offered only for civil servants, employees of GLCs, and employees of statutory bodies. These types of personal financing solutions offer a lot of advantages such as a low income requirements, and a fixed and low interest rate.

• What is a personal loan?

  A personal loan is an unsecured loan you borrow from a bank. This means that you can borrow money from the bank without the bank asking for any collateral. However, you should still repay your personal loan on time to avoid late penalty charges or negative impact on your credit score. 

  A personal loan has a shorter repayment period compared to home loans. You are usually expected to fully repay your personal loan within 10 years. 

  Also, unlike home or car loans, you can get a personal loan without any specific purposes. You can get it for home improvements, start a business or even for medical emergencies. However, we do not recommend getting a personal loan without careful consideration.

• What is a government or government-linked company (GLC) personal financing solution?

  As the name implies, a government or GLC financing solution is a financing solution that is only open for government servants or employees of a government-linked company (GLC).

• What are the differences between Islamic loans and conventional loans? Which should you get?

  Firstly, let’s find out what is a conventional loan: 

  A conventional loan follows conventional financing principles where lenders lend money to customers like you and earn profit from the interest you paid on your loan every month.

  What is an Islamic loan?

  An Islamic loan follows Shariah financing principles which prohibits Riba (interest-based transactions). Instead, it is based on the concept of earning through the sale of commodities which looks like this:

  • Lending you the money is equivalent to the bank buying the item that you want to finance (e.g. car, renovation). This item is then sold to you at a markup price.
  • Refinancing: This is equivalent to you “buying the item from the bank” in your monthly repayments.  

  You can read more about it here.

• What are secured and unsecured loans?

  What are secured loans? 

  Secured loans are where you are required to offer an asset (e.g. car, house) as a collateral in case you cannot repay your loan. 

  This means that the lender has a legal right to seize the asset you listed in the event you cannot repay your loan within the agreed repayment terms.

  Bigger loans like home loans may also require you to list a guarantor in case you fail to repay your loan.

  What are unsecured loans?

  Unsecured loans are loans where the lenders are not required to list any asset as a collateral. Instead, they will assess you’re your creditworthiness based on the following criteria among other factors before they decide if they want to lend you the money:  

  • Your employment status 
  • Your proof of income (at least 6 months)
  • Your credit score 

  These criteria will also determine how much you can borrow, your personal loan terms and interest rate.

  Read more about it here.

• What is the situation like in Malaysia?

  In Malaysia one can be able to get access to personal loans, which can be as low as RM 1000 with some even exceeding the RM 150,000 mark. The loan amount that one can be able to access is determined by the individual needs as well as their ability to repay the loan. The terms offered by the given lender will also influence the decision to be made by the client. In a situation where one needs a loan amount that exceeds what is being offered by the lender one has the alternative of taking a secured loan.

  If you choose the lender to be a bank, you have to follow the necessary procedure which could involve a loan agreement which will specify details such as the amount borrowed, the interest rate being charged and the amount that is to be paid on a monthly basis. The repayment terms will also be included in the loan agreement that is the monthly payment and how long the loan payment period will be. It is a given fact that the longer repayment periods will attract higher cumulative amounts for the payment of the loan.

  The types of loan offered could either be secured or unsecured loans. The personal loans that most opt for in Malaysia are the unsecured type.

• What are the features, benefits, and advantages of a government personal financing solution?

  The benefits and features of a government personal loan depend on the financial institution, but the most common benefits and features include;

  1) Affordable financing options

  2) No guarantor is needed 

  3) Auto-deducted monthly payment from your salary

  4) A long loan tenure of up to 10 years.

• What is the interest rate for government personal financing solution and how is it calculated?

  As a government personal financing solution is legally required to be Shariah compliant, they don't charge any interest rate. Instead, they charge profit rates as a substitute for the interest rate. The profit rates and how they are calculated depends on the institutions offering the financing solutions.

• Eligibility criteria

  Most of the lender have tight rules as far as eligibility is concerned. The eligibility terms could range from the income or even age requirements. At times the client may be asked to give the lender proof for the ownership of certain property or any other assets. Your debt liabilities would not be spared either.

• What are the required documents when applying for a government personal financing solution?

  For a government personal financial solution, usually the financial institution will require a front and back copy of your IC, your latest three months pay slip, a three months salary credited bank statement, your confirmation letter, and your Angkasa form (blue form).

• What are the fees, charges, and other penalties of government personal financing solutions?

  A government personal financing solution usually charges four types of fees, which are the processing fees, stamping fees, early settlement fees, and late payment charges.

• What is the loan amount for government personal financing solutions?

  The financing amount you can get from a government personal financing solution depends on the financial institution, but usually you can get up to a maximum of RM400,000.

• What is the monthly repayment of a government personal financing solution?

  The monthly repayment of a government personal financing solution is calculated during making the agreement with the financial institution offering the loan.

• How does the government personal financing solution calculator work?

  The personal financing calculator allows you to find the best personal financing solution according to your needs. All you have to do is key in the financing amount and loan tenure you're looking for, your monthly salary, and the type of loan you're looking for.

• How can I pay the monthly repayments of a government personal financing solution?

  A government personal financing solution usually uses salary deduction using the Biro Perkhidmatan Angkasa (BPA) as their payment method.

• How can I apply for a government personal financing solution?

  You can apply for a government personal financing solution at the financial institution of your choice here.

• How fast is the application and approval process for a government personal financing solution?

  The application and approval process time depends on the financial institution, but usually it will take anywhere from one business day to two weeks.

• What are the top government personal financing solution with lowest profit rates in 2021?

  The government personal financing with the lowest profit rates are;

  1) CBP Personal Financing-i Lestari at 2.69% profit rate

  2) MBSB Afdhal-i at 3.35% profit rate

  3) Public Islamic Bank BAE Personal Financing-i at 3.99% profit rate

• Can you apply for a government personal financing solution if you have bad credit?

  Financial instutitions are more forgiving towards bad credit for government personal financing solutions, but your credit score will still have an impact on your quality as a borrower.

• Some of the common personal loan terms

  Collateral:

  This refers to the asset the borrower pledges to a given lender in order to secure a loan and this will be impounded by the lender in case of default in payment of the loan. The case in Malaysia particularly for the islamic personal loans don require the need for a collateral.

   

  Early settlement penalties:

  The fees that the borrower will have to pay in the event that he/she had settled the loan at an earlier date from the one specified on the loan agreement. This is usually estimated as a percentage of the initial loan amount.

   

  Guarantor:

  This a person who agrees to be liable for the payment of a loan in the event that the borrower will not be in a position to pay it in time.

   

  Late Payment Charges:

  This is the fee that the bank will charge you in the event you are not able to pay your loan in the agreed time schedule. The borrower has to pay for this additional fee and it is mostly at the rate of 1 % per annum.

   

  Loan/Financing tenure:

  This refers to the period for a certain loan. At the end of the loan tenure the borrower is supposed to have cleared the loan taken.