POWER!
BORROWING BASICS
28 JAN 2014
DESMOND CHONG
1
AKPK set up by BNM on April 2006 to provide:Financial Education
Credit Counselling
Debt Management
All services to individuals are
FREE OF CHARGE
AKPK DATA BASED
PARTICULAR
PERSON
Credit Counseling
248,491
Debt Management
Program
100,871
3
REASON FOR DEFAULT
4
5
OPEN YOUR EYE
6
SOMETHING DIFFERENT!
LIFE CYCLE
8
GOAL
9
10
GOAL MUST BE SEEN
CAN’T
SEEN！
11
1
WHAT IS POWER!
Programme provides young adults
&
prospective
borrowers
with
practical financial knowledge &
debt management
13
CONTENTS
Chapter 1 - Cash Flow Management
Chapter 2 - Borrowing Basics
Chapter 3 - Wise Usage of Credit Card
Chapter 4 - Buying a Car
Chapter 5 - Buying a House
Chapter 6 - Managing Your Debts
14
15
“To borrow or not to borrow?”
…….that is the question!
16
WE ALWAYS LOSS
17
HARD TO GET
18
THEY CAN GET IT
M’SIA RICHEST : ROBERT KUOK
HK RICHEST : LE KA SHENG
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CREDIT & DEBT
20
RULES OF BORROWING
 For productive purpose only
 Within your means
 With a moral commitment
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COMMON SOURCES OF BORROWING
 Licensed financial institutions
 Co-operatives
 Licensed money lenders
 Unlicensed money lenders
Browse website of BNM at www.bnm.gov.my for a complete listing of licensed
financial institutions
22
DEBT TO INCOME RATIO

Important factor in credit assessment

Ratio = Monthly loan repayments x 100
Net monthly income

General rule: Ratio should not be mora than 40%
En. Daud’s gross monthly income is RM3,800. His total monthly
loan repayment - housing, car payment & credit cards is
RM2,128
=
RM2,128 x 100%
RM3,800
=
56%
23
RISK OF GUARANTOR
 Guarantee is risky for guarantor
 Responsible for unpaid portion of loan,
including interest if principal borrower defaults
 Think first before agreeing to be a guarantor!
 Ensure guarantee for loan is for productive
purpose
24
Types of Interest Rates
Flat rate
Fixed Rate
Interest is calculated upfront on amount of money
borrowed over entire loan tenure
(Hire Purchase & Personal Loan)
Interest is calculated based on a reducing balance,
whereby interest rate does not fluctuate during loan
tenure
(Housing Loan)
Floating Rate
Interest is calculated based on a reducing balance,
whereby interest rate is tied to an index or base rate
& fluctuates over loan period.
Common index or Base lending Rate (BLR)
(Housing Loan/Overdraft)
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COMPOUND INTEREST
 Interest is paid on principal & on accumulated past
interest
 Interest calculation can be on a daily, monthly or
annually rest
Advantages: More return on investments
Disadvantages: More interest payment on loans
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PURPOSE
27
PAY CAPABILITY
28
PAYMENT HISTORY
29
THANK YOU
Make Prudent
Financial
Management a
Way of Life
Website:
www.akpk.org.my
Toll Free Number:
1 800 88 2575
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