Technology had shaped so many aspects of our lives, but getting a loan still requires a lot of time and effort. However, your journey can become less complicated if you know what to expect. Generally speaking, the process that leads you toward getting a loan mostly entails these steps:
STEP 1: Understanding your needs
Malaysia’s financial system is very mature and has a slew of loans that cater to your needs such as credit cards, personal loans (could be anything from financing your study, refurbish your car, covering your credit card outstanding to travel or buying a piece of new furniture), hire purchase (buying new or used vehicles) and mortgage (buying a house).
STEP 2: Do your research
After knowing what you need, the next step is to research on which product suits you the best. The simplest way to know what’s available in the market is by going to loan comparison websites like RinggitPlus, iMoney or LoanStreet. These websites rank loans with their proprietary algorithm and many of them also provide free loan application service that helps you to secure a loan.
However, if you are more of a “trust nothing on the internet” kind of person, you can visit your preferred bank websites to look for information. Many bank websites have “product disclosure sheet” that details their loan information. If you fancy an alternative with sweat, you can walk into different bank branches and inquire for loan information.
STEP 3: Digest and decide
When digesting the marketing information available to you, beware of words like “as low as” or “starting from”. These words only mean that the interest rate you are looking for can be that low, not the bank will offer to you that rate. Depending on your credit profile, banks often give a higher interest rate than advertised (assuming that the bank approved your loan application), unless your credit profile is exceptional, and you are applying for a high loan amount and, your loan tenure is short.
You might also want to check the loan’s eligibility before applying. Different loans have different terms and conditions such as minimum/ maximum amount, minimum/ maximum tenure and minimum income requirement amongst others.
One last thing to check is the “not-so-obvious” fee and charges. Examples are processing fees, disbursement fee, lock-in period, early settlement penalty, rebate condition, late payment charges, etc.
STEP 4: Prepare for submission
The next is to prepare your loan documents. Depending on if you are a self-employed or a salary earner, commons documents that banks will need are your salary slips (generally 3 months), identification (your IC), EA form, BE form, bank statements, company registration (if self-employed), and latest KWSP statements. Once you have these documents prepared, make more copies of each because for every bank you apply to, you will need to attach a full set of the documents. Also, having more copies help prepare for events like misplacing documents, blurry copies, accidental damages, etc. Additional documents like the Sales and Purchase Agreement (SPA) or developer’s letter may be required if you are applying for a home loan.
STEP 5: Now wait…
After you have submitted your application, banks will generally take 3-10 days to process your application, and during this time, it’s likely that the processing officer will check for your credit history, employment confirmation or call you up to do applicant verification.
STEP 6: Seal the deal
The bank may call you for the letter of offer signing after they approve your loan application. Be very sure which loan offer to accept because some banks impose a penalty if you want to retract the loan after the letter of offer is signed.
You can see that there is a lot of work and time invested into getting a loan, from doing market research, to deciding which offer to accept and their privacy concerns. The sad truth is, how you would apply for a loan today is still very much the same as how your grandfather would have done it many years ago. For this reason, I am on a journey to weave new digital experience into the entire process. I will release more information in future posts, so stay tuned!