Updated: October 2026
A personal loan can make a large expense easier to manage, but the advertised rate doesn't tell you what the loan will cost.
A RM30,000 loan at 6% p.a. over five years costs RM9,000 in interest at a flat rate. On a reducing balance, the same 6% p.a. costs RM4,799. The difference is RM4,201.
Before you choose, find out how the interest is calculated and what fees apply. Then work out the total you'll repay and whether the monthly repayment fits alongside your other payments.
If personal loans are new to you, read how personal loans work first.
How Much Will The Personal Loan Cost?
Flat Rate Vs Reducing Balance
A flat-rate loan charges interest on the original amount for the whole loan period, called the tenure. On RM30,000 at 6% p.a. over five years, the interest is RM9,000 (RM30,000 × 6% × 5 years).
A reducing-balance loan charges interest only on what you still owe. As you repay, you owe less, so each month's interest is smaller too.
| RM30,000 personal loan at 6% p.a. | Flat rate | Reducing balance |
| Tenure | 5 years | 5 years |
| Monthly repayment | RM650.00 | RM579.98 |
| Total interest | RM9,000 | RM4,799 |
| Total repayment | RM39,000 | RM34,799 |
What The Effective Interest Rate Tells You
The effective interest rate (EIR) is the rate you'd pay if interest were charged only on what you still owe each month. The 6% p.a. flat rate on the RM30,000 loan costs as much as a reducing-balance rate of 10.85% p.a. That's its EIR, and it's why you compare loans by their EIR. Two flat rates on different tenures can't be compared, but two EIRs can. A processing fee pushes the EIR higher still, which the effective interest rate works through.
What Bank Negara Malaysia's Rules Say About Personal Loan Rates
Bank Negara sets the rules for personal financing in its Personal Financing policy document, which has been in force since 30 September 2025. From 1 January 2027, banks, Islamic banks and development financial institutions can't offer new flat-rate or Rule of 78 personal loans. The institutions include Bank Rakyat and Bank Simpanan Nasional. Until then, offers with a flat rate may still appear. Rule of 78 takes more of the interest from your early repayments, so settling early saves you less. These rules don't cover licensed moneylenders, who follow the Moneylenders Act 1951 instead.
Fixed-rate loans are still allowed. A fixed rate stays the same for the whole loan, but unlike a flat rate, it's charged on what you still owe. Banks can also offer a floating rate, which can change when Bank Negara changes its Overnight Policy Rate. Banks must already tell you the EIR and the total repayment before you sign. They must also show the EIR in any advertisement that quotes a rate. Both rules come from Bank Negara's product transparency and disclosure policy, and the 2027 personal financing rules repeat them.
Islamic personal financing follows the same rules. It uses a profit rate instead of interest, so you'll see an effective profit rate where conventional loans show the EIR.
What To Check In The Loan Offer
Look for the EIR, or the effective profit rate on Islamic loans, in the Product Disclosure Sheet (PDS) and the offer letter. Banks must give you a PDS for a personal loan before you sign, under Bank Negara's product transparency and disclosure policy. It shows the EIR, the monthly instalment, the fees and the terms for settling early. If an offer shows only a flat rate, ask the lender for the EIR before you compare it with other loans. Banks must also tell you whether interest is worked out on your daily or monthly balance.
Check The Costs Beyond Interest
The PDS lists the fees and charges, and the loan agreement sets them out in full.
| Cost | What it covers |
| Stamp duty | Duty of 0.5% of the loan amount under the Stamp Act 1949, which is RM150 on RM30,000. Ask the lender whether it's deducted from the loan or billed separately. |
| Processing or service fees | A one-off or recurring fee. It's either deducted from the loan amount you receive or added to what you owe. |
| Late payment charges | Charged when a repayment is late or missed. The PDS states the charge. |
| Early settlement | Banks must tell you about any lock-in period, any early settlement charge, how it is calculated and any rebate. Ask for the settlement amount in writing. |
| Insurance or Takaful (Islamic insurance) | Banks must say if insurance or Takaful is a condition of the loan. You aren't obliged to buy it from the bank's panel insurers. If the premium is added to the loan, you pay interest on it too. |
The loan with the lower rate can cost more once you add the fees. Take two example RM30,000 loans over five years on a reducing balance.
| RM30,000 over five years | Loan A | Loan B |
| Rate | 6% p.a. | 6.5% p.a. |
| Fees | RM900 | None |
| Interest and fees | RM5,699.04 | RM5,219.07 |
| EIR if the RM900 is taken from the loan amount | 7.27% p.a. | 6.5% p.a. |
The rates and the RM900 fee are examples.
How Much Can You Afford To Repay?
Before you apply, work out a monthly repayment you can afford after your other expenses. Lenders check affordability with your Debt Service Ratio (DSR). It divides your total monthly debt repayments by your net monthly income, meaning your pay after deductions. Your car loan, home loan, credit card minimum payments, PTPTN loan and ASB financing all count.
For example, Ahmad takes home RM4,000 a month. He pays RM600 a month for his car loan and wants a RM30,000 personal loan over five years, with a RM580 monthly repayment. His DSR is 29.5% (RM600 + RM580, divided by RM4,000). Most banks want a DSR below 60% for a personal loan. RinggitPlus's DSR guide rates a DSR below 30% as excellent and 30% to 40% as good.
Each bank sets its own criteria, so a low DSR doesn't guarantee approval. The DSR counts only debt repayments, so check that you'd still have enough for housing and food after the new repayment.
The DSR calculator asks for your pay before deductions, so your DSR there will be lower than Ahmad's 29.5%. The DSR guide explains how the calculation works.
Choose A Tenure That Fits Your Budget
If you borrow for longer, you pay less each month but more interest overall. Bank personal loans can't exceed 10 years.
| RM30,000 reducing-balance loan at 6% p.a. | Monthly repayment | Total interest | Total repayment |
| 3 years | RM912.66 | RM2,855.69 | RM32,855.69 |
| 5 years | RM579.98 | RM4,799.04 | RM34,799.04 |
| 7 years | RM438.26 | RM6,813.56 | RM36,813.56 |
| 10 years | RM333.06 | RM9,967.38 | RM39,967.38 |
The 10-year loan cuts the monthly repayment by RM580 compared with the 3-year loan. But you'd pay RM7,112 more in interest. Choose the shortest tenure you can afford.
How To Compare Personal Loan Offers
Compare each offer the same way, so you can see which costs less and fits your budget. On RinggitPlus, you can compare personal loans from banks and licensed lenders by rate, tenure and monthly repayment. The rates on the comparison page are the rates the banks supply, so ask the bank for the EIR before you compare. Start with the loans you're eligible for that fit your budget, then compare them by EIR, total repayment and fees.
| What to compare | How to find it |
| EIR | In the PDS and the offer letter. Ask the lender for it if the offer shows only a flat rate. |
| Total repayment | Monthly repayment × number of months, plus any upfront fees. Use it to compare loans with different tenures. |
| Fees | In the PDS. |
| Tenure | In the PDS and the offer letter. |
| Eligibility | Minimum income and job type, listed on each product page. |
Apply to only the one or two that suit you. Lenders report pending and approved applications to CCRIS, Bank Negara's record of your credit accounts. The next lender can see that you applied elsewhere. RinggitPlus's loan matching service shows which banks might approve you and how much you could borrow, based on your income and budget.
Check Your Credit Record Before Applying
Get your CCRIS report before you apply. It shows your credit accounts, your repayment history for the past 12 months and your pending and approved applications. If an account or loan entry looks wrong, contact the bank that reported it, because only that bank can update the record. If your personal details look wrong, flag it through eCCRIS or your bank. RinggitPlus's guide to getting your CCRIS report from Bank Negara covers how to register for eCCRIS.
Personal Loan Or Credit Card?
Use a personal loan for a large, fixed expense. Use a credit card for spending you can repay in full each month.
| Features | Personal loan | Credit card |
| Amount | Fixed at approval | A credit limit you can use again as you repay |
| Repayment | Fixed monthly instalment | At least 5% of the balance you owe, plus any instalment plan |
| End date | Fixed tenure | None while you keep using the card |
| Interest | Rate stated in the offer | Up to 15%, 17% or 18% p.a., depending on the card tier |
| Best for | A large, one-off expense | Everyday spending you repay in full |
Bank Negara's credit card policy caps card interest at 15%, 17% or 18% p.a. by card tier. It requires a minimum payment of at least 5% of the balance you owe. Interest keeps running on whatever you don't repay. If you repay a RM10,000 card balance at 18% p.a. in equal instalments over three years, the interest comes to RM3,014.86. The same RM10,000 borrowed as a personal loan at 6% p.a. over three years on a reducing balance costs RM951.90 in interest.
A personal loan can pay off a card balance like this. Using one loan to pay off other debts is called debt consolidation. You gain from consolidating only if you can afford the repayment and the loan costs less overall than the debts it replaces. RinggitPlus's debt consolidation calculator estimates your new monthly payment. Then check that payment against your DSR.
Can You Get A Personal Loan With A Lower Income?
A lower income doesn't stop you from getting a personal loan. It can reduce the amount you qualify for and limit the loans you can choose from.
Each bank sets its own minimum income before deductions. CIMB's Cash Plus loan asks for RM2,000 a month from employed applicants, and Maybank's Personal Loan needs RM3,500. Some lenders accept less. The minimum is RM1,500 a month at GXBank, AmBank Islamic and AEON Credit's i-CASH, and RM1,000 at some licensed lenders. Bank Rakyat's personal financing for government pensioners requires a monthly pension of RM800, the lowest we list. RinggitPlus lists personal loans for lower-income borrowers with each lender's minimum income.
Licensed moneylenders are another option for lower-income borrowers. KPKT's moneylending FAQ says licensed moneylenders can charge up to 18% p.a. on loans without collateral (no asset pledged). It also says interest above the amount you borrow needs a court order. If a moneylender quotes 18% as a flat rate, the EIR is higher. For example, RM5,000 over two years at 18% flat costs RM1,800 in interest, which is an EIR of 31.5% p.a. Ask for the EIR before you sign.
If you pay late, the lender can charge 8% a year on the unpaid amount, calculated daily. If you're more than 28 days late, the lender can end the agreement after giving you 14 days' written notice.
Check that the lender is licensed before you proceed. Use the i-KrediKom app from the Ministry of Housing and Local Government (KPKT) to check a licence. It lists licensed moneylenders in Peninsular Malaysia, which KPKT calls Kredit Komuniti companies, and lets you lodge a complaint. If you can't find the lender, or you live outside Peninsular Malaysia, call KPKT on 03-8000 8000. Treat the lender as unlicensed until KPKT confirms.
What To Do Before You Sign
Get the EIR from the PDS and compare loans by it. Add the fees to the total repayment, and check the monthly repayment against your DSR. Then pick the shortest tenure you can afford.
Frequently Asked Questions
Does a personal loan affect my credit score?
Yes, it can. A new bank loan appears on your CCRIS report, which lenders check. CCRIS has no score of its own. Lenders can also use reports from three credit reporting agencies: Credit Bureau Malaysia, CTOS, and Experian. These agencies are registered under the Credit Reporting Agencies Act 2010. Bank Negara's CCRIS page says the agencies can use your CCRIS data only with your consent and may charge a fee for their reports.
A late payment stays on your CCRIS report for 12 months, even after you settle it. The report updates by the 10th of the following month, so a payment you make today may not show until then. To see how your score affects an application, read how your credit score affects loan applications.
What documents do I need for a personal loan?
If you're salaried, you'll need your IC and proof of income, such as three to six months of payslips or your EPF statement. If you're self-employed, you'll need your IC and your business registration documents. You'll also need proof of income, such as six months of business bank statements or your Form B tax returns. Lenders differ on which documents and how many months they want.
