High Commitment Issue

High Commitment Issue

XPRESS GUIDE

High commitments can be a major roadblock to loan approval. One common culprit? Credit cards. Banks have their own way of calculating your commitment, and it's not as forgiving as you might think.

Here's how it works: Let's say you have a credit card with a RM10,000 limit, and you've used RM5,000 of it for a 0% interest installment plan over 3 years. Seems manageable, right? Well, banks don't see it that way. They'll take 5% of your outstanding balance, which is RM250 in this case, and count it as your commitment. That can inflate your commitment significantly.

Personal, car or house loans, on the other hand, are more straightforward since the installment amounts are clearly stated on your CCRIS report.

So, how can you reduce your commitment and improve your chances of loan approval? There are two popular strategies:

  • Apply for a Personal Loan: You can apply for a personal loan with lower interest and a longer tenure. For example, a RM100,000 loan at 6% interest over 10 years would only cost you RM1,333 per month. You can use this loan to pay off your credit card balance and existing personal loan.

  • Consider Housing Refinancing: Housing loans typically have lower interest rates. Refinancing your home with a RM100,000 loan at 4% effective interest over 30 years would only set you back RM477 per month.

There's no one-size-fits-all answer here. Debt consolidation has its pros and cons. On the bright side, it lowers your monthly commitment, freeing up cash for other expenses or new loans like a car loan. However, keep in mind that taking on a new loan might mean paying more interest in the long run.

3X Advisors will help solve high commitment issues, and depending on your objectives, whether to apply for debt consolidation or get cash on hand, we will assist you in making the right decision tailored to your needs.

XCLUSIVE ADVICE

Contact us today!

At 3X Advisor, we are your trusted partner for your banking needs. With our Xpert team, we offer Xclusive advice to overcome challenges in all bank loan applications. Our mission is to help you achieve Xceptional results effectively and sustainably.