Personal Loan business at Malaysia: Easy by RHB - Easy Pinjaman Ekspres Annualized Percentage Rate Analysis

Source: http://www.rhb.com.my/easy/easy_pinjaman_ekspres.html

Personal Loan business at Malaysia

Bring along your MyKad and head to the nearest Easy branch to apply for a personal loan and obtain instant approvals and loan disbursement.

.Unique features:

• No documentation required, but MyKad
  
• On-the-spot approval and disbursement in less than 10 minutes
• Flexible Personal Financing amounts from RM2,000 to RM50,000
• Low monthly installment amount from less than RM60 per month
• Flexible loan repayment tenure of up to 5 years (60 months)

However, does borrower aware about the APR (annualized Percentage Rate) before taking the plan?
You might be shocked that legalized finance institution in Malaysia charges for an extrem high APR to borrower. In the US and the UK, lenders are required to disclose the APR before the loan (or credit application) is finalized. Let us have a brief of basic understanding of APR.


1st method in Excel:

Effective APR = rate(nper,pmt,pv,fv,type)

Example 1: for a 12-month-repayment loan of RM2,000 borrowing with RM189 monthly installment.

Effective APR = 12*rate(12,-189,2000,0,0) = 23.88% p.a.

Example 2: for a 48-month-repayment loan of RM8,000 borrowing with RM196 monthly installment.

Effective APR = 12*rate(48,-267,8000,0,0) = 25.39% p.a.

Result of the effective APR is tabulated as table below:
Discussion: Max=25.39%p.a, Min=20.97%p.a

2nd Method in Excel:

Effective APR calculation uses Excel's xirr method.

Example 1: for a 12-month-repayment loan of RM2,000 borrowing with RM189 monthly installment. Assuming Borrower obtained RM2,000 from Lender on 1-Jan-10. Borrower starts his installment amounted RM189 for 12 months begin from 1-Feb-10 to 1-Jan-11.

xirr = 26.80%p.a

Example 2: for a 48-month-repayment loan of RM8,000 borrowing with RM196 monthly installment. Assuming Borrower obtained RM8,000 from Lender on 1-Jan-10. Borrower starts his installment amounted RM 196 for 48 months begin from 1-Feb-10 to 1-Jan-14.

xirr = 28.59%p.a

Discussion: Max=28.59%p.a, Min=23.13%p.a


Emm...good business. somemore, it is legal but it is a kind of customer exploitation.