How much can you afford to borrow? Work it out in four steps

The right loan size is not the most a lender will approve. It is the amount whose instalment you can pay every month, in a bad month as well as a good one. These four steps take about ten minutes with a pen and your bank statement, and our calculator page has a tool that does the arithmetic for you.

Step 1: Start from your take-home pay

Use the amount that actually reaches your bank account after EPF, SOCSO and tax, not your gross salary. On a payslip it is usually the last line.

If your income varies, because you are self-employed, on commission, or drive for a platform, do not use your best month. Take your last six months, throw out the highest, and average the rest. That is the income you can rely on. If you have no payslip, our guide on proving income without one lists what to show instead.

If two people share the household budget, you can add both incomes, but then you must also add both sets of repayments in the next step.

Step 2: Add up what you already repay

List every fixed repayment that leaves your account each month:

• Home loan or rent
• Car or motorcycle loan
• Credit card minimum payments (use the actual minimum from your statement)
• Other personal loans and study loans, including PTPTN
• Buy-now-pay-later instalments
• Anything you pay on behalf of family that you cannot stop

Be honest with this list. A repayment you forget here becomes a shock later.

Step 3: Work out your repayment ratio

Divide your total monthly repayments by your take-home pay. Lenders call this a debt service ratio; what matters is what it tells you.

Every lender sets its own limit, and they do not all use the same one. Many look for total repayments under about 40% of take-home pay. That figure is a rule of thumb for you, not our approval test: MyOneCredit assesses each application individually. What matters for you is how much is left after repayments for the things that are not optional.

Step 4: Leave a buffer

Before settling on an instalment, ask whether you could still pay it if:

• An unexpected bill arrives, such as a car repair, a medical cost or a school expense.
• Your income drops for a month or two.
• Your other costs rise, for instance rent or petrol.

If the honest answer is no, borrow less or choose a longer tenure. A longer tenure lowers the instalment but costs more interest in total, so pick the shortest tenure whose instalment still leaves you a buffer.

How tenure changes the instalment

For RM 10,000 at MyOneCredit's flat rate of 4.88% a year:

If Aina's comfortable instalment is RM 400, the 36-month plan fits with room to spare and costs RM 1,952 less in interest than the 84-month plan. Our flat rate guide explains why the total keeps rising as the tenure stretches.

Mistakes people make

• Borrowing the approved amount instead of the needed amount. Work out what the money is for, add a small margin, and stop there. Our purpose guides, such as debt consolidation and home renovation, help you size specific needs.
• Counting overtime, bonuses or allowances as income. Use them to repay early, never to qualify.
• Ignoring the card minimum. A card at its limit is a repayment you already have, even if the minimum looks small.
• Stretching the tenure to make any amount fit. A seven-year loan for a short-lived need means paying for something long after it is gone.

Check your own credit record

Lenders will look at your repayment history. You can view your own CCRIS report free of charge before you apply, and fix anything that is wrong. Our guide to CCRIS and CTOS explains how.

Source: Bank Negara Malaysia · eCCRIS

Common questions

Does the 40% include rent? For your own budgeting, yes: rent is a fixed monthly commitment just like a loan. Some lenders count it and some do not, but you have to pay it either way.

What if I am close to the line already? Paying down one existing commitment first, especially a high-interest card, often frees more room than a longer tenure does. Consolidating several debts into one instalment can also help, if the total interest falls.

Is there a minimum income? We assess each application individually, looking at income, commitments and repayment history together. There is no single cut-off.

Try the numbers

Use the affordability check to enter your own figures and see which plans stay under your comfortable instalment, then read what documents you will need before you message us.