1. POWER!
BORROWING BASICS
28 JAN 2014
DESMOND CHONG

2. AKPK set up by BNM on April 2006 to provide:- Financial Education
Credit Counselling
Debt Management
All services to individuals are
FREE OF CHARGE 2

3. Debt Management Program
AKPK DATA BASED
PARTICULAR
PERSON
Credit Counseling
248,491
Debt Management Program
100,871
As at end June 2011

4. REASON FOR DEFAULT

6. OPEN YOUR EYE

7. SOMETHING DIFFERENT!

8. LIFE CYCLE

9. GOAL

11. GOAL MUST BE SEEN
CAN’T SEEN！

12. 1

13. WHAT IS POWER!
Programme provides young adults & prospective borrowers with practical financial knowledge & debt management

14. 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

16. “To borrow or not to borrow?”
…….that is the question!

17. WE ALWAYS LOSS

18. HARD TO GET

19. THEY CAN GET IT
M’SIA RICHEST : ROBERT KUOK
HK RICHEST : LE KA SHENG

20. CREDIT & DEBT

21. RULES OF BORROWING For productive purpose only Within your means
With a moral commitment

22. COMMON SOURCES OF BORROWING
Licensed financial institutions
Co-operatives
Licensed money lenders
Unlicensed money lenders
Browse website of BNM at for a complete listing of licensed financial institutions

23. 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%

24. 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

25. Types of Interest Rates
Flat rate
Interest is calculated upfront on amount of money borrowed over entire loan tenure
(Hire Purchase & Personal Loan)
Fixed Rate
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)

26. 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

27. PURPOSE

28. PAY CAPABILITY

29. PAYMENT HISTORY

30. Make Prudent Financial Management a Way of Life
THANK YOU
Make Prudent Financial Management a Way of Life
Website:
Toll Free Number: 71