What Are the Personal Loan Late Payment Charges in Malaysia?

Key Takeaways

• Personal loan late payment charges are fees imposed by banks when borrowers fail to make timely repayments, adding to the overall cost of borrowing.

• Late payment charges can be of two charges: fixed fees and interest-based penalties, and both types involve different methods of calculating late payment charges.

Navigating personal loan late payment charges is essential for borrowers in Malaysia to avoid financial penalties and maintain a healthy credit standing.

Understanding the intricacies of these charges empowers borrowers to manage their finances effectively and prioritise timely repayments.

What are Personal Loan Late Payment Charges?

They are fees levied by banks when borrowers fail to make their loan repayments on time, adding to the overall cost of borrowing.

It's crucial for borrowers to comprehend the various types of late payment charges so that they can manage their finances and avoid unnecessary penalties.

Conventional vs Islamic Personal Loan Late Payment Charges

1. Conventional Personal Loan Late Payment Charges

In conventional banking systems in Malaysia, late payment charges are imposed when a borrower misses a scheduled payment after the due date.

These charges are typically calculated as a percentage of the outstanding loan amount.

The late payment charge may compound over time if the borrower fails to settle the overdue amount promptly.

2. Islamic Personal Loan Late Payment Charges

Islamic personal loans operate under Shariah principles, which prohibit the charging or earning of interest (riba). As such, Islamic banks do not impose compounding late payment interest charges. Instead, late payment charges for Islamic loans are usually based on the current outstanding balance without additional interest accrual.

Common Personal Loan Late Payment Charges in Malaysia

Here are the common personal loan late payment charges for several major banks and financial institutions in Malaysia:

1. Maybank

• 1% per annum on the amount in arrears calculated from the overdue date till the date of fully monthly repayment.

2. Citibank

• Mortgage Loans (Residential & Commercial Properties): 1% p.a. on the amount past due multiplied by (number of days past due/365 days) for term loans or financing on a monthly basis.

• Corporate Loans: 1%

3. Bank Islam

Late payment charges for all loans are based on the Ta'widh (compensation) principle:

• Before Maturity of Facility: 1% per annum on overdue installments until the date of full settlement.

• After Maturity of Facility: Equivalent to the prevailing daily overnight Islamic Interbank Money Market (IIMM) rate on the outstanding balance.

• Post Judgement Debt: Equivalent to the prevailing daily overnight Islamic IIMM rate on basic judgement sum calculated from judgment date until the date of full settlement.

4. AEON Credit Service

Also based on the Ta'widh principle, it is calculated at the rate of 1% per annum on outstanding payments from the overdue date until the date of full payment during the tenure or until judgment date (whichever is earlier). 

How Citywide Advisory can help you

Being aware of personal loan late payment charges is crucial for borrowers to stay financially responsible and avoid unnecessary costs. 

Personalised Loan Consultancy Services in Malaysia

Citywide Advisory is the BEST loan advisory service in Malaysia.

Citywide Advisory also offers personalized loan consultancy services, helping clients understand and improve their rejected loan applications for refinancing housing loans and more.

We customise our loan recommendations based on an individual’s needs, considering factors like:

• The specific loan amount you require.

• The urgency with which the loan amount is needed.

• Whether you or your parents own a property that has been held for over ten years.

• Your income level.

• Your CTOS score (such as your credit score and credit history).

Our goal is simple: to help you find the right loan solution, paving the way to financial stability and debt freedom.

Social Media Channels:

Facebook: https://www.facebook.com/Citywide.Advisory 
Instagram: https://www.instagram.com/citywideadvisory/ 
Youtube: https://www.youtube.com/@CitywideAdvisory