Deep, deep dive
Checklist of questions to ask your bank/money lender
You should always know all the terms and conditions beforehand when applying for a loan. Here is a summary checklist of questions you should be asking your bank/money lender
What is the interest rate per year if I take a loan for X number of years?
If they give a small number like 1.5%, you should ask if that is per month or per year. Remember: 1.5% per month is actually 18% interest per year. So, if you were going to take this loan to pay off your credit card debt, that’s a really bad idea!
Legally, licensed money lenders can’t charge you interest above 12% per year if security is provided, and only up to 18% if it’s an unsecured loan (a loan where you don’t put something up as security or collateral) (Source: Money Lenders Act 1951, Part V, 17(a))
What is the total interest cost for this loan?
How much will I be paying monthly?
Be sure you can meet these monthly payments.
What are the charges if I settle the loan early (also known as the prepayment penalty)?
How does the interest rate increase if I don’t meet my monthly payments? Are there any other penalties?
Our monthly spending can sometimes be unpredictable, and we may end up missing a monthly loan payment or two. Always ask if your interest rate increases and how much the penalty or late charges are.
If the bank/money lender doesn’t give you clear answers to these questions above or they insist that you submit an application first, you should consider this a red flag. They may not be a trustworthy moneylender and you may be walking into a financial trap.
Check if you are going to a licensed moneylender
It isn’t always obvious who a licensed money lender is and who isn’t.
Some money lenders might pretend to be licensed when they are not – be careful!
If you’re looking for a loan on the internet or end up on a WhatsApp chat with someone looking to give you a personal loan, you should be very, very careful!
Like most Malaysians, you’ve probably heard or read horror stories about people who have fallen victim to loan sharks and their shady methods. This is why it’s crucial to always do your research about the moneylender before you decide to borrow money from them. Always read the fine print, and take as much time as you need before you sign any documents (don’t let anyone pressure you into it!).
The example below shows you what looks like an authentic license from Bank Negara but is NOT:
Don’t take a risk. If you have any doubts or inquiries about the legitimacy of a moneylender, get in contact with Bank Negara. You can confirm with them that the moneylender you’re looking at indeed is registered and licensed:
BNMTELELINK (Customer Contact Centre)
To submit enquiries or complaints, type 15888