Do you think you have the chops to be Malaysia’s next best borrower – to be a loan recipient who is loved by banks, lenders and financial institutions all over the country?
Take a look at the table we’ve prepared below – compiling five key traits that Malaysia’s next best borrower should have – and see if the crown fits!
You Know How Interest Works
Interest rates are an important part of loans and borrowing money, as banks and financial institutions often use interest as a means of deriving profit
You should be very familiar with whether the interest for a loan is being charged monthly, annually, or even weekly – and whether that interest is compounded or not
You should also know that interest rates do not change during the tenure period of a loan, and that your interest rate stays the same until the repayment of your loan is complete
You Have A Good Debt-To-Service Ratio
Your Debt-To-Service (DTS) ratio allows lenders to evaluate how capable you are at managing and repaying loans
Lenders will divide your monthly financial commitments by your gross monthly income to obtain a figure which indicates how much of your income is spent on fulfilling financial commitments and debts
For example, if your financial commitments amount to RM2,000 a month, and your gross income is RM7,000, you would have a DTS ratio of 28%
Generally speaking, if your DTS ratio is less than 40%, lenders will be more keen on letting you borrow from them
You Know Your Fees
When applying for a loan or borrowing money, the best borrowers are perfectly aware of the kind of charges they will need to pay to the lender, and are also able to forecast these charges. Examples of these charges include processing fees and handling fee.
These charges are important to be accounted for as most lenders will directly deduct them from the amount you intend to borrow.
For instance, if you borrow RM5,000, and the charges and fees amount to RM200, you may only receive RM4,800. As such, you should include these fees in your requested amount
You Know Your Tenure Periods
A good borrower always keeps in mind that tenure periods have a large effect on the repayment of a borrowed sum of money.
For example, if you were to apply for Citibank’s Personal Loans, you would know that borrowing RM8,000 with a tenure period of two years will result in monthly payments of RM393.24, while doing so with a tenure period of five years will reduce your monthly payments to only RM196.25.
Being familiar with the effect of tenure periods on the borrowing and repayment process will allow you to apply for loans that best suit you and your financial capabilities
You Know Why You Need The Loan
This is easily the most important criteria to be fulfilled if you want to be Malaysia’s Next Best Borrower
Yes, lenders may not necessarily request for this information to be disclosed – unless you’re applying for a very specific loan like a housing or car loan – for their consideration
However, a good borrower is one who knows what he or she needs the money for. A borrower must be able to estimate how much is needed, how that money will be used, how long it would take to repay the loan, and if the loan can be afforded to begin with
More importantly, this also prevents the money from being misused, thus avoiding possible trouble between borrowers and lenders
This is why knowing what a loan is needed for is the best way to start if you’re planning to borrow money