Compare Malaysia's Best Islamic Loans in 2024

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Islamic Personal Loans

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  • An Islamic personal loan is one that follows the Islamic banking principles.
  • Islamic personal loans, also known as an Islamic personal financing, is issued by Islamic banks in Malaysia.
  • The financing tool uses the concept of Bai’ Al-‘Inah, making it Shariah compliant.
  • Being Shariah compliant means the loan does not have fixed or floating interest rates or fees (also known as riba, or usury) for the loan of money. This is prohibited according to the Islamic banking principles.
  • As Islamic financial institutions are prohibited from making money through interest rates by lending money, Islamic personal financing has to be structured differently.
  • There are various concepts, but most of them include the buying and selling of approved commodities and services following Islamic principles to make it Shariah compliant. These concepts include Murabaha, Bai’ Al-‘Inah and Ijarah to name a few.
  • Islamic personal financing is structured with profit rates, over the conventional interest rate. This is because the Islamic loan is not set up the same way a personal loan is.
  • There are real purchases and resales of assets being made which makes this finance Shariah compliant, therefore making it a finance rather than a loan.
  • Shariah compliant banking is governed by Islamic principles which includes being interest-free. Making money from money, such as by charging interest, is prohibited (usury) and therefore Shariah compliant banking will not have this.
  • Wealth will be made through legitimate trade and investment in commodities or assets, however companies involved with alcohol, gambling, tobacco, and pornography is off limits.
  • Financial tools and financing that are structured in accordance to Islamic law are Shariah compliant.
  • Yes. In order to be considered an Islamic financing, it must be designed in a way that it is consistent with the principles of Shariah (Islamic law) and its application. 
  • The financing must be permissible under Islamic law and one of the key features of that is the absence of interest rates (riba or usury). If it does not comply to the Islamic principles of banking and economics, then it would be a conventional loan.
  • The key difference between Islamic financing and conventional loans is the method by which the bank makes its profit.
  • With conventional loans, banks tend to make their profit by charging interest on the loan amount, also known as the principal amount. The monthly repayments made by the borrower goes to servicing the interest, but also to pay down the principal amount.
  • However, Islamic financing is prohibited from structuring their product with interest rates (riba). Instead, the Islamic banking principles revolved around the buying of a commodity on the borrower’s behalf, and selling it back to the borrower at profit. This profit rate replaces the interest rate that conventional loans charge.
  • Like most loan applications, you will need to submit supporting documents to the bank.
  • This includes a copy of your identification card, 3 months payslip, a copy of your latest BE form with payment of tax receipt.
  • And if you are self-employed, you may need to provide audited financial statements of profit and loss account, a copy of your business registration.
  • This required documents may differ from bank to bank, so it’s best to always check these requirements when you are applying.

Most of the major trusted banks in Malaysia offer Islamic finance and/or have an Islamic subsidiary that offers Islamic financing.

  • HSBC Amanah
  • Al Rajhi Bank
  • Bank Rakyat, Alliance
  • Islamic Bank
  • Hong Leong Islamic Bank
  • AmBank Islamic
  • Maybank Islamic
  • Standard Chartered Saadiq
  • Public Islamic Bank
  • RHB
  • Bank Islam
  • BSN
  • CIMB Islamic Bank

Yes, interest rates (riba) are prohibited in Islamic financing. However, Islamic financing products are structured with a profit rate that is payable by the borrower to the bank.

  • Most banks will require you to be a Malaysia Citizen or Permanent Resident
  • Age of 21 and above (but not over 60)
  • Monthly gross income of RM3,000 or more.
  • Proof of identification, income, and residence must also be submitted to be approved for a personal loan.
  • CompareHero lets you compare Fast Approval Loans, Islamic Loans, and Civil Servant/GLC Employee loans from various Malaysian banks and lenders.
  • You will usually need to produce your EPF statements or pay slips dating back three months (or six months if you are self-employed).
  • Banks will also look at your credit rating before approving or rejecting your loan application.
  • Many Malaysian banks and lenders provide loans from RM1,000 up to RM400,000, depending on the borrower’s credit history or rating.
  • Most banks and lenders set an upper limit on how much applicants can borrow, which can range from 6 to 10 times the amount of their current salary, or a fixed amount.
  • Whichever amount is lower will be the highest amount the borrower can have.

Your Islamic loan’s processing time depends on the bank or lender. Some banks send an approval-in-principle as quickly as an hour; others may take a day. Depending on the lender, the loans may be disbursed as soon as a day after approval.

Do I qualify for a personal loan?

Most banks will require you to be a Malaysia Citizen or Permanent Resident, aged 21 and above (but not over 60 years old) and earn a monthly gross income of at least RM3,000 or more. Proof of identification, income, and residence must also be submitted to be approved for a personal loan. Banks will also look at your credit rating before approving or rejecting the loan application.

How do I repay my loan?

Most personal instalment loans are repaid in fixed monthly instalments. Repayments can usually be made by mail, online, through an ATM, or at a bank branch. If the loan is from the same bank you keep your savings account in, your loan repayments can be automatically debited from this account.

How much can i borrow?

Many Malaysian banks and lenders can lend from RM1,000 up to RM400,000, depending on the borrower's credit history or rating. Most banks and lenders set an upper limit on how much applicants can borrow, which can range from 6 to 10 times the amount of their current salary, or a fixed amount. Whichever amount is lower will be the highest amount the borrower can have.

Personal Loan FAQs

What is a Personal Loan? A personal loan is a one-time loan where the principal and interest are repaid in small fixed amounts at regular intervals. Payments are usually made on a monthly basis for a predetermined period of time. When should I use a Personal Loan installment ? You can use a personal installment loan for needs that other loan types cannot cover. Examples include paying for weddings, renovations, and medical costs not covered by insurance. Some people prefer taking out a personal installment loan instead of using a credit card because the fixed monthly repayments are easier to plan for. For other purposes such as paying for cars, education fees, housing, it is usually cheaper to use a loan specific for that purpose. Ask your bank about car loans, education loans, home loans, et cetera. It is advised to only use personal loans when you cannot find a loan that matches your needs. Do I Qualify for a personal loan installment ? Most banks will require you to be a Malaysia Citizen or Permanent Resident, aged 21 and above (but not over 60 years old) and earn a monthly gross income of at least RM3,000 or more. Proof of identification, income, and residence must also be submitted to be approved for a personal loan. Banks will also look at your credit rating before approving or rejecting the loan application. How much Can I borrow ? Many Malaysian banks and lenders can lend from RM1,000 up to RM400,000, depending on the borrower's credit history or rating. Most banks and lenders set an upper limit on how much applicants can borrow, which can range from 6 to 10 times the amount of their current salary, or a fixed amount. Whichever amount is lower will be the highest amount the borrower can have. How Do I Replay My Loan? Most personal instalment loans are repaid in fixed monthly instalments. Repayments can usually be made by mail, online, through an ATM, or at a bank branch. If the loan is from the same bank you keep your savings account in, your loan repayments can be automatically debited from this account. What is The Difference between ans secured and unsecured Loan ? A secured loan means there is some form of collateral (guarantee) made to the bank. Examples of collateral include your property, car, stock portfolio, gold assets, etc. The value of the collateral must exceed the loan amount. If you do not repay the loan as agreed, the bank has the right to seize the collateral. An unsecured loan does not require collateral. There is no guarantee beyond your signed loan agreement (which is a legally binding contract). In general, unsecured loans have a higher interest rate than secured loans. What is loan Insurance ? Loan insurance, sometimes called "payment protection insurance," is insurance that helps protect loan policy holders from defaulting the loan. It provides financial support due to disability, unemployment, or other debilitating factors that prevents the borrower from repaying the loan immediately. What is a late fee? This is a fee imposed for missing repayments. There is usually a grace period of 60 days, starting from the stated date of repayment, during which late fees will not be charged. What is a processing fee?  This is the amount charged for the administrative effort in granting you the loan (e.g. a legal team was required to draft the terms and conditions, staff are needed to upkeep accounts, and so on). Processing fees vary with each bank. What is a Pre payment penalty ? This is a fee imposed when you attempt to pay down your loan before the given loan tenure. To avoid this penalty, ask your bank or lending agency if they have policies on early repayment.      

What is a personal loan?

A personal loan is a one-time loan where the principal and interest are repaid in small fixed amounts at regular intervals. Payments are usually made on a monthly basis for a predetermined period of time.

What is a prepayment penalty?

This is a fee imposed when you attempt to pay down your loan before the given loan tenure. To avoid this penalty, ask your bank or lending agency if they have policies on early repayment.

What is a processing fee?

This is the amount charged for the administrative effort in granting you the loan (e.g. a legal team was required to draft the terms and conditions, staff are needed to upkeep accounts, and so on). Processing fees vary with each bank.

What is an annual fee?

An annual fee is also known as a maintenance fee that is charged annually by your credit card provider. Some banks waive off annual fees depending on cards and promotions.

What is loan insurance?

Loan insurance, sometimes called "payment protection insurance," is insurance that helps protect loan policy holders from defaulting the loan. It provides financial support due to disability, unemployment, or other debilitating factors that prevents the borrower from repaying the loan immediately.

What is the difference between a secured and unsecured loan?

A secured loan means there is some form of collateral (guarantee) made to the bank. Examples of collateral include your property, car, stock portfolio, gold assets, etc. The value of the collateral must exceed the loan amount. If you do not repay the loan as agreed, the bank has the right to seize the collateral. An unsecured loan does not require collateral. There is no guarantee beyond your signed loan agreement (which is a legally binding contract). In general, unsecured loans have a higher interest rate than secured loans.

What is the minimum payment?

The minimum payment is a sum that you will have to pay each month in order to avoid getting a bad credit score. It is calculated according to your outstanding balance, and will appear in your monthly statement. Other factors that will affect your minimum payment are unpaid balances or any balances that exceed your credit limit. If you pay the minimum amount on your monthly bill, there will still be interest charged to any unpaid amount. This will be carried on to your next statement. However, if you fail to pay the minimum fee, a late payment fee will be charged to you, on top of the interest on the outstanding balance.

When should I use a Personal Loan Installment?

You can use a personal instalment loan for needs that other loan types cannot cover. Examples include paying for weddings, renovations, and medical costs not covered by insurance. Some people prefer taking out a personal instalment loan instead of using a credit card because the fixed monthly repayments are easier to plan for. For other purposes such as paying for cars, education fees, housing, it is usually cheaper to use a loan specific for that purpose. Ask your bank about car loans, education loans, home loans, et cetera. It is advised to only use personal loans when you cannot find a loan that matches your needs.

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