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Personal loan interest rates malaysia comparison,car loan 4 u live chat,what is the car loan rate in india,auto loan prepayment penalty india - Tips For You

Author: admin | Category: Loan Car Calculator | Date: 27.04.2014

The nominal fixed interest rate that are usually quoted for personal loans (which ranges from 7.5% to 12%) is not an apple to apple comparison to the 18% annual interest rate charged for credit card debts.
To get a better understanding of the two types of interest rates, let’s look at their difference.
Let us now look at some examples of interest calculations whereby we derive the similar annual interest rate for the personal loan so that we can compare apple to apple with the credit card annual interest rate. For the different NFIRs, I have come up with a schedule (Table 1) to show the monthly and annual interest rates for the personal loan.What Table 1 shows is that for a given NFIR, there is a substantially higher annual interest rate.
Let us now try different tenors for the loan repayment compared to the fixed 3 years and see the difference in the annual interest rates as per Table 2. Therefore, annual interest rates are lower with longer tenors, but do bear in mind that longer tenors will entail bigger absolute sum being payable. Another issue that is equally important but which is usually disregarded by borrowers is the fact that the personal loan is not paid net, but comes after deducting the cost of processing and handling fees. You will note that the annual interest rate has increased about 2.6% with the introduction of loan processing fees. Now, let us go back to our main question – if I have a credit card debt that carries an annual interest rate of 18%, do I take a lower NFIR rate personal loan to settle it? Having said that, for anyone considering converting credit card debts, the better option would be to do a transfer balance, whereby another bank undertakes to settle the credit card balance on your behalf and sets up a reducing balance loan account, albeit certain conditions of course. Be an informed borrower; ask your banker for annualised interest rates or effective interest rates of any loan product.
If you are in debt in either Personal Loan or Credit Card loan, both are equally the MOST EXPENSIVE legally approved loan. To be eligible for the loan, you will need to be 21 years old to 60 years old by the end of financing while having a minimum monthly wage of   RM 2,000.
In 2013, Bank Negara introduced a new regulation, which limits home loan period in Malaysia to a maximum of 35 years.

For your comparison purpose, the table below contains some of the home loan packages with the most competitive rates in Malaysia (as at September 2013). The table below represents the repayment for Alliance CashFirst based on RM 5,000 for 7 years repayment. The requirement cost of this personal loan is very much the same with CashFirst except that this loan requires a compulsory Takaful coverage.
You can consider refinancing all your different outstanding credit card or personal loans to Alliance CashFirst for convenience purpose. Alliance CashFirst and CashVantage is only available for Malaysian citizens and PR  from 21 to 60 years old at the end of financing tenure.
Taking a personal loan to settle credit card sales method has also been adopted by banks in pushing their personal loan product. Firstly, the tenor; while credit cards have an indefinite tenor with a minimum of 5% of outstanding balance to be paid, a personal loan offers a range of between 1-7 years for repayment. So, you’re dead wrong if you assume that a 12% nominal fixed interest rate for personal loan is better than a 18% per annum credit card interest rate. Nominal fixed interest rate is similar to a hire purchase interest rate, whereby a fixed rate is charged against principal, and levied over the period of the payment.
If the banker uses bombastic words, try making reference to hire purchase and home loans, whereby you understand how these interest mechanisms work. You will need to pay the lowest RM 133.33 monthly repayment for RM 5,000 loan spreaded over 5 years.
If you are planning to purchase a more expensive home by stretching your loan period to 45 years or beyond, you should take note that you can’t do that now. At the time of writing, there are no early settlement penalty provided you notify the banks 3 months in advance or you will need to pay at least 3 months of interest for early settlement. There is no consideration given towards the reducing principal balance as the repayments take place.

With some banks now reducing the credit card annual interest rates to 16%, the equivalent for personal loan sits between the 8% and 9% NFIR.
Going back again to our RM10,000 personal loan, let us assume that we only get paid RM9,650 after deducting RM350 for fees, how does this affect the annual interest rate? The personal loan interest rates are fixed interest which means that the rates would remain for the entire tenure irregardless of changes in Base Rate  from the bank. Hong Leong boast a 48 hours quick approval which is good for those who are in need of a quick loan. One notable difference between this loan and CashFirst would be the calculation of interest rates.
Key question – is the total sum paid to settle the personal loan actually less than the sum which would otherwise be paid to settle the credit card debts? Secondly, and more importantly, what is the actual annual interest rate of the personal loan (which differs from the nominal fixed rate quoted for personal loan) as compared to the annual interest rate of the credit card, which is about 18%? Whereas, the credit card annual interest rate is a reducing balance interest charge, therefore interest is charged monthly on the reduced principal balance. This would be a double edge sword in which you can enjoy good rates if there are rise in interest rates or you will have to pay the same rate if the Interest Rate goes down. Any late payment will incur a 1% p.a penalty which starts from due date to settlement date.

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