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10 Popular Questions about LPPSA Loan Application for Government Servant in Malaysia | Kontraktor Bina Rumah Atas Tanah Sendiri

10 Popular Questions about LPPSA Loan Application for Government Servant in Malaysia | Kontraktor Bina Rumah Atas Tanah Sendiri

10 Popular Questions about LPPSA Loan Application for Government Servant in Malaysia | Kontraktor Bina Rumah Atas Tanah Sendiri 1

  1. What is LPPSA loan?
  2. Who is eligible for LPPSA loan?
  3. What is the maximum loan amount for LPPSA?
  4. What is the interest rate and repayment period for LPPSA loan?
  5. What documents are required for LPPSA loan application?
  6. How to apply for LPPSA loan online?
  7. What are the pros and cons of LPPSA loan?
  8. What happens if I fail to repay LPPSA loan?
  9. How long does it take to process LPPSA loan application?
  10. Can I use LPPSA loan for downpayment of house/car?


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What is LPPSA loan?

LPPSA stands for Lembaga Pinjaman Perumahan Sektor Awam or Public Sector Housing Loan Board. It is a loan scheme provided by the Malaysian government to assist public sector employees in purchasing homes, cars, computers and performing renovations.

Some key points about LPPSA loan:

  • Administered and managed by Lembaga Pinjaman Perumahan Sektor Awam (LPPSA), an agency under the Ministry of Finance.
  • Provides easy financing options exclusively for civil servants in the public sector.
  • Offers financing for buying or building a house, purchasing a car, computer, or performing renovations.
  • Low interest rates and long repayment periods up to 25 years.
  • Minimum loan amount RM20,000 and maximum up to RM200,000.
  • Can apply individually or jointly with spouse who is a civil servant.
  • Must be confirmed in service with minimum 1 year of service.
  • Loan amount based on monthly repayment capability.
  • Option for low monthly installments through salary deductions.
  • No collateral or guarantor required.

In summary, LPPSA loan aims to provide affordable credit and financing options for major purchases and expenses specifically for Malaysian civil servants and public sector employees. It has relatively low interest rates and flexible repayment schemes tailored for government servants.


Who is eligible for LPPSA loan?

The LPPSA loan is exclusively available to civil servants and public sector employees in Malaysia. Here are the eligibility criteria to apply for LPPSA loan:

  • Malaysian citizen who is a civil servant under the Public Services Department. This includes:

    • Employees under Federal Government
    • State Government
    • Local Authorities
    • Statutory Bodies
  • Permanent position with minimum 1 year of service. Contract officers are not eligible.

  • Not within 2 years of retirement age.

  • Good credit track record – no history of bad debts or bankruptcy.

  • Confirmed in service – passed probation period.

  • Salary grade between Grade 1 to Grade 54.

  • Minimum age of 21 years, maximum age of 55 years upon full loan repayment.

  • Has not taken housing loan from other sources if applying for housing loan.

  • Has not reached maximum limit if applying for car or computer loan.

  • Spouse who is a civil servant can apply jointly.

In addition, applicants will be evaluated based on monthly income and existing commitments to determine the loan amount that can be affordably repaid.

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So in summary, LPPSA loans are limited to only Malaysian civil servants and public employees serving in the government sectors. Eligible applicants should meet the basic criteria of job grade, length of service, age, credit history and repayment capability.


What is the maximum loan amount for LPPSA?

The maximum loan amount that can be obtained under the LPPSA scheme depends on the purpose and type of loan:

  • For housing loan – up to RM200,000
    • Can be used to purchase or construct house
    • Land purchase for building house
  • For car loan – up to RM100,000
    • Purchase of new or used car
  • For computer loan – up to RM5,000
    • Purchase of desktop or laptop
  • For renovation loan – up to RM30,000
    • Renovation or home improvement

However, the approved loan amount will also depend on:

  • Applicant’s monthly income – higher income, higher eligible loan amount
  • Number of dependents – more dependents mean lower loan amount
  • Age of applicant – max age 55 upon loan maturity
  • Existing financial obligations – other loans, credit card debts etc
  • Employment grade – higher grades qualify for more

The maximum amount serves as a ceiling, but the actual loan approved will be the lower of the applied amount or repayable amount as determined by LPPSA.

Those with longer service tenures and higher salaries will be granted higher loans, while newly joined applicants may get lower loan amounts.


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What is the interest rate and repayment period for LPPSA loan?

LPPSA loan offers competitive interest rates and flexible repayment tenures for government servants. Here are the key details:

  • Interest rates
    • 3.5% per annum effective from 1st January 2023
    • Among the lowest interest rates for personal loans
    • Fixed rate for entire repayment period
  • Repayment period
    • Maximum 25 years for housing loan
    • Maximum 10 years for car loan
    • Maximum 5 years for computer and renovation loans
    • Repayment duration depends on loan amount, income, age of applicant
  • Repayment options
    • Monthly salary deductions
    • Direct bank debit instructions
  • Option for early settlement or early partial redemptions

The low interest rate makes LPPSA an attractive financing option compared to commercial loans. Applicants can opt for longer repayment tenure to reduce monthly instalments.

The loan can be fully settled earlier than maturity date by paying outstanding principal and interest. Partial early redemptions can also be made based on applicant’s repayment capability.


What documents are required for LPPSA loan application?

Applicants will need to prepare and submit several documents when applying for the LPPSA loan.

Key documents required are:

  • Completed LPPSA loan application form
  • Copy of MyKad (front and back)
  • Latest 3 months’ salary slip
  • Certified true copy of job confirmation letter
  • Employment details letter from personnel department
  • EA Form – annual salary details
  • Evidence of other income (if any)
  • Statement of account for past 6 months
  • Quotations and invoice for items to be purchased

For housing loan:

  • Sale and Purchase Agreement
  • Copy of land title
  • Approved building plan

For car loan:

  • Car invoice with details of car
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All documents must be certified true copy by department head or authorised officer. The documents help verify the applicant’s identity, income, employment status and the loan purpose.

Applicants must ensure all required documents are complete to avoid delays in processing the LPPSA loan application. The loan will only be approved upon receipt of full documentation.


How to apply for LPPSA loan online?

LPPSA loan applications can be submitted fully online through the LPPSA website.

Here are the steps for online LPPSA loan application:

  1. Go to LPPSA website
  2. Click on “Permohonan Atas Talian” for online application.
  3. Register for an online account as a new user.
  4. Log in to the portal with registered username and password.
  5. Select “Permohonan Baru” to start a new application.
  6. Choose the loan scheme – housing, car, renovation etc.
  7. Fill up all details in the online form.
  8. Upload softcopy of all supporting documents.
  9. Review application and click submit.
  10. Print confirmation acknowledgement.

Applicants will receive a reference number upon submission. Status can be checked online using the reference number.

The key benefit of online application is convenience and faster processing. Documents and details are populated electronically to expedite approval.

Applicants should ensure information and documents submitted are accurate before final submission.


What are the pros and cons of LPPSA loan?

LPPSA loans offer many benefits but also come with some limitations that applicants should be aware of:

Pros of LPPSA loan:

  • Lower interest rates compared to commercial loans
  • Long repayment period up to 25 years
  • Higher loan amount eligibility being civil servants
  • No collateral or guarantor required
  • Flexible repayment through salary deductions
  • Faster approval compared to banks
  • Convenience of online application

Cons of LPPSA loan:

  • Only available to government sector employees
  • Longer processing time of 2-3 months
  • Penalty charges for late repayments
  • Limited loan purposes – only for house, car, renovation, computer
  • Cannot switch jobs during repayment period
  • Loan amount tied to repayment capability
  • Subject to maximum limits based on loan purpose

In summary, the LPPSA loan is advantageous for its competitive rates and flexibility but is also restrictive in its limited scope. Applicants should weigh the benefits against limitations before applying.


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What happens if I fail to repay LPPSA loan?

It is crucial for LPPSA loan borrowers to diligently meet the repayment schedules. Failure to repay the loan can lead to serious consequences:

  • A late payment fee will be imposed if monthly instalments are not paid on time. The current fee is 1% on outstanding instalment amount.

  • For consecutive defaults exceeding 3 months, the entire loan principal may be recalled on demand.

  • Legal action can be taken to recover loan amount owed including:

    • Issuing summons
    • Initiating bankruptcy proceedings
    • Charging order on property
    • Wage garnishment
  • Any legal costs incurred will be borne by defaulters.

  • Future loan applications will be rejected.

  • Impact on civil service career like delay in annual increments, promotions, bonuses etc.

  • Bad credit record leading to rejection of other loan applications with banks and creditors.

  • Obstruction in obtaining any future loans due to bankruptcy status.

In summary, failure to repay LPPSA loan can lead to legal action, career stagnation, destroyed credit reputation and long-term financial implications.

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Applicants should only commit to the repayment obligation if they can comply strictly as per the schedule. Seeking an early repayment scheme or extension of tenure is recommended in case of hardship rather than defaulting.


How long does it take to process LPPSA loan application?

It typically takes 2 to 3 months for an LPPSA loan application to be fully processed and approved.

The general processing flow and timeline is as follows:

  • Applicant submits online application with documents (1 week)
  • LPPSA reviews documents for completeness (2 weeks)
  • Queries raised to applicant if any information lacking (1 week)
  • LPPSA evaluates eligibility and loan amount and issues Letter of Offer (3 weeks)
  • Applicant accepts offer and returns signed Letter of Offer (1 week)
  • Loan is disbursed upon receipt of acceptance (2 weeks)
  • Total processing time from application to disbursement is 2 to 3 months

However, the following factors can lengthen the processing time:

  • Incomplete documents causing back and forth
  • Clarifications required from applicant
  • Higher loan amount applications needing detailed assessment
  • Government sectors having delays in document certification
  • Peak application periods like early year and festive seasons

Applicants should ensure documents are complete and anticipate a normal processing time of 8 to 12 weeks. Follow up regularly for status updates to avoid undue delays.


Can I use LPPSA loan for downpayment of house/car?

Yes, the LPPSA loan can be used to finance the initial downpayment when purchasing a house or car. This provides an alternative to using Employees Provident Fund (EPF) withdrawals.

For house purchases, the LPPSA loan allows financing the downpayment of minimum 10% of property price.

  • Applicant needs to provide the Sale and Purchase agreement as proof of property price and downpayment required.
  • The downpayment amount is disbursed directly to the developer’s account.

For car purchases, LPPSA loan can be used to fund up to 90% of the car price.

  • Car invoice must be provided showing 10% downpayment amount.
  • The downpayment is remitted to dealer’s account once loan approved.
  • Car is used as collateral for the loan.

An advantage of using LPPSA loan instead of EPF is that it does not deplete the retirement savings. The interest cost for a LPPSA loan may also be lower compared to opportunity cost of EPF withdrawal.

However, applicants should ensure they are able to comply with the repayment obligations before taking the loan. Overall, the LPPSA loan provides an option for financing major downpayments.

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Key Takeaways

  • LPPSA loan is a financing scheme by Malaysian government for civil servants to purchase house, car, computer or perform renovations.
  • Maximum loan amount up to RM200,000 for housing, RM100,000 for car, and lower amounts for computer and renovation.
  • Interest rate fixed at 3.5% p.a. with repayment periods up to 25 years.
  • Applicants must be confirmed Malaysian civil servants with minimum 1 year service.
  • Requires complete documentation for online application via LPPSA website.
  • Processing time is 2-3 months from application to approval.
  • Consequences of default in repayment include legal action, bad credit record and career stagnation.



  • The LPPSA loan provides easy financing access exclusively for government servants to purchase assets and cover expenses.
  • It offers competitive rates and flexible tenure not available through commercial loans.
  • Applicants must assess repayment capabilities before commitment.
  • Compliance with repayment schedule is crucial to avoid legal and credit issues.
  • Processing time may be lengthy so applicants should anticipate 2-3 month duration and ensure documents are complete.

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