Personal Loans for Low-income Earners

If you are a low-income earner and you find yourself in need of money to cover living expenses, a personal loan might be your option. There are a variety of different types of loans available for low-income earners, and only accessible depending on the requirements of the financial institutions.

• What is a low income personal loan?

  A low-income personal loan is an unsecured loan that caters to those with low salaries. For most financial institutions, this means individuals with an income of less than RM2,000 per month.

• 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 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.

• Who is eligible to apply for a low income personal loan?

  Personal loan requirements vary by lenders, but there are a few considerations, namely credit score and income level, that financial institutions always look at when reviewing applicants. Get familiar with the eligibility criteria so it may help streamline your application.

• What are the minimum and maximum loan amounts for a low-income personal loan?

  In Malaysia, one can be able to get access to personal loans which can be as low as RM1,000 with some even exceeding the RM150,000 mark. The loan amount is determined by the purpose of the loan, the individual needs as well as their ability to repay the loan.

• What is the interest rate for low-income personal loans?

  Low-income personal loans usually have a fixed interest rate. A low interest rate means you will pay less over the life of the loan. Use our iMoney Personal Loan Calculator to find the best low income personal loan with low interest rate.

• What is the monthly repayment of low-income personal loans?

  When applying for our best low-income personal loans, you can choose your repayment period from the options shown in our iMoney Personal Loan Calculator to get an idea of how much the monthly payments you can afford. Remember, a longer repayment period may result in a lower monthly payment but more total interest than if you choose a shorter repayment period for the same loan amount.

• What is the minimum salary to get a personal loan?

  The minimum salary requirement for a personal loan is determined by the lender and the amount that you are looking to borrow. In general, you should have a monthly salary of RM1,500 to RM2,000 before applying for a low-income personal loan. However, some personal loans in Malaysia only require a minimum salary of RM800 per month.

• How much can I loan based on my salary?

  Regardless of your salary, the best way to find a personal loan that suits your income is to use our iMoney Personal Loan Calculator. It takes your salary into account (which will determine how much you are able to borrow), the type of loan you want, and the amount you want to borrow. 

  Generally, the amount that you can borrow is based on many factors such as your salary, the type of loan and the amount you are borrowing. In Malaysia, Banks will typically look at these factors together with your Debt-to-Income (DTI) ratio and the multiplier of your income in order to calculate how much loan you can get before approving your application. Regardless of that, the best way to find a personal loan that suits your income is to use our iMoney Personal Loan Calculator.

• How can I apply for a personal loan with a low salary?

  All you need to do is click on the orange “Apply” button on the top right of your screen. Then fill in your contact details and we will get in touch to get started with your loan application.

• What are the factors that can help get your low-income personal loan application approved?

  There are a number of factors that affect your chances of being approved for a loan. These include:

  1. Your history of paying bills and other loans
  2. The types of other loans and credit cards that you own
  3. The length of your credit history
  4. The number of loan applications that you have made over the last 12 months
  5. Any legal action that has been taken against you

  All of these factors are calculated as part of your credit score. To learn more, visit our Learning Centre.

• What are the fees, charges, and other penalties of a low-income personal loan?

  It is recommended that you go through the loan agreement to familiarise yourself with the other fees that may be required for a certain loan. These could include stamp duties, cancellation fees, processing fees as well as other one-time charges.

• What are the required documents when applying for a low income personal loan?

  The documents needed to apply for a personal loan are:

  1. A copy of your NRIC

  2. Your payslip

  3. Your EPF statement

  Though, there are unsecured loans that don't require proof of income or payslip. You may also need other documents depending on your income status (salaried/self-employed/commission).

• Are there personal loans in Malaysia that don't require a payslip or salary slip?

  Yes, there are loans that don't require proof of income or a payslip.

  You may also need other documents depending on your income status (salaried/self-employed/commission).

• Can I still get a personal loan if I have good credit but low income?

  Regardless of the health of your credit score, there is always a personal loan that suits you. Learn more about improving your credit score today.

• What personal loan is best for low income earners?

  The best personal loan for you is the one that meets your needs and will not financially burden you. You can check our list for the best low-income personal loan.

• What are the pros and cons of getting a low-income personal loan?

  The following are general pros and cons of low-income personal loans:

  Pros

  1. An excellent credit score is not required
  2. Fast approvals

  Cons

  1. Higher interest rates than other loans
  2. Fees and penalties can be high

• 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.

• 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.