Thursday, November 23, 2006
I had a shortage of cash recently. With my small salary living in a big city, I can't really survive on my own. Which is why I need help. I'm quite lucky not to have any big debts yet that will jeopardize my financial life. I'm still living with my parents though. However, I need to find more ways to get my financial right and not just depending on my crappy job I am in right now. I'll write about my plan later on when I see some success over my implementation.

Down at the mall where my office is, there is a small bank BCB or is now called CIMB Bank. They are now promoting a microcredit loan called Xpress Cash. The financial product was launched by SBB Bank which now they have merged into CIMB Group. Their target market is for those who have an income of RM800 and above. The best part is, for loan under RM5000 there is no need for any guarantor and there are minimal documents to prepare. I was the perfect candidate to apply for the loan where I can apply for up to 5 times my monthly salary. They also provide flexible loan period however there are terms and condition on the fine print of the application you need to take a closer and careful look at.

After some careful study using details on the brochure, I am eligible and can easily apply for a loan using the documents that I could provide them. My goal was to take a RM3000 loan with 12 months repayment. My rough calculation estimated that I have to pay around RM250 a month while receiving RM2150 in cash after deducting the RM100 processing fees and 3 months of security deposit. I will lost almost 30% alone just for the process of the loan itself but I don't mind about it because I need the money to pay up something and ease myself from a financial strain.

To confirm my calculation, I call CIMB Bank and ask them about this product. To my surprise, the repayment for a RM3000 loan on a 12 months tenure is RM301 per month. I ask the officer about the interest rate, the amount she has given to me is already calculated with a 3% interest (daily rest basis). I then asked how much do I pay for a 24 months tenure, she replied back RM177 per month. I further asked her how do I payback the loan if I wanted an early settlement for the 24 months tenure. She told me that for an early settlement, I need to pay the balance amount in full plus an additional 3 months interest and a penalty fee of RM200. I said "What? I have to pay a penalty fee for an early settlement?", she answered that is for the breach of agreement when you've signed the release of the loan.

Let me summarize the figures back for a much clearer perspective:
  • Loan Wanted: RM3000
  • Option 1- Payback for a 12 months tenure: RM301
  • Option 2- Payback for a 24 months tenure: RM177
  • Cash that will be received after loan release (option 2): RM2369
The deductions:
  • 3 months security deposit (We selected option 2): RM531
  • Processing Fees: RM100
Early Settlement:
  • Penalty Fees: RM200
  • Interest Fees: 3 months interest of 3%
Here's another summary of how much the bank wins back their money:
  • Loan given to you: RM3000
  • Option 1- Money being paid back to the bank (12 months tenure): (RM301 X 12 months)= RM3612
  • Option 2- Money being paid back to the bank (24 months tenure): (RM177 X 24 months)= RM4248
From Option 1, the bank gets back RM612
From Option 2, the bank gets back RM1248

Just look at how much the bank is making money out from you if you've decided to get the microcredit loan. I've finally decided not to apply for the loan as it will take away almost 20% of my current income as soonest the loan is approved and I'm stuck with it for 24 months of repayment. I don't want to give the bank more money, they've already sucked out a lot of other people's money. Just check out their financial statement and you'll find out that the numbers always grow every year eventhough the economy is not so good.

Bottomline, if you can find money to borrow from other alternatives, go for it. Don't deal with the banks or even worse, loan sharks. For me, I think I have to do some savings and review back my money management.

Update 25/11: I've found the website. Check out CIMB Xpress: Xpress Cash Personal Term Loan.

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posted by Encik Ash at 11/23/2006 04:50:00 pm |