Chapter 1: What is a personal loan❓

A personal loan is an amount of money you can borrow to use for a variety of purposes. For instance, you may use a personal loan to consolidate debt, pay for home renovations, or plan a dream wedding. Personal loans can be offered by banks, credit unions, or online lenders. The money you borrow must be repaid over time, typically with interest. Some lenders may also charge fees for personal loans. 

-Understanding personal loans-
A personal loan allows you to borrow money to pay for personal expenses and then repay those funds over time. Personal loans are a type of installment debt that allows you to obtain a lump sum of funding. 

-Types of personal loans-

Personal loans may be secured or unsecured. A secured personal loan is one that requires some type of collateral as a condition of borrowing. For instance, you may secure a personal loan with cash assets, such as a savings account or certificate of deposit (CD), or with a physical asset, such as your car. If you default on the loan, the lender could keep your collateral to satisfy the debt.

An unsecured personal loan requires no collateral to borrow money. Banks, credit unions, and online lenders can offer both secured and unsecured personal loans to qualified borrowers. Banks generally consider the latter to be riskier than the former because there’s no collateral to collect. That can mean paying a higher interest rate for a personal loan.

In Malaysia, it can be said that all banks have products in the form of personal loans.
In fact, there are institutions that offer more than one personal loan plan. The plans offered may be the same or different in terms of loan features and eligibility requirements to be eligible to apply to give customers the option to choose a personal loan that suits their needs and eligibility.

Furthermore, if the institution has an Islamic banking branch that offers Islamic products and services. The branch will offer Islamic personal loan plans as an option to conventional personal loans offered by major branches.

The Islamic personal financing products offered are Shariah compliant as most of these institutions have their own Shariah panels to ensure that the Islamic loan plans offered meet the requirements set by Shariah law.

That's all for now! We hope you can understand a little bit about personal loans. Please wait for the next update ;)