There has been a worrying trend recently whereby young Malaysians below the age of 35 are declaring bankrupt and this number is increasing annually at an exponential rate. This pattern is also worrying the government, and in particular, Bank Negara, as it effects the rate of household debt in Malaysia. A high household debt can contribute to a volatile economy and put many financial institutions at risk.

It has been reported that Malaysians between the ages of 23 to 33 borrow heavily from the banks and other financial institutions, so much so that they live on the brink of bankruptcy, meaning they live very close to the edge. Studies have also shown that more than 75% of these young people have one long term loan to service, and 37% have more than one long term loan.

In some cases, the borrowing cannot be avoided and the young debtors need it to buy necessities for their lives. However, many also practice impulse borrowing and impulse buying, a sort of retail therapy for themselves to relieve stress or to cope with emotional difficulties. Some young people also feel the need to show off to family and friends that they are wealthy, so they live beyond their means. Some are even pressured by their parents to look rich so that others will respect their family, Of course, it goes without saying that these are unhealthy financial attitudes.

Another reason that young people accumulate debts is that they borrow from one loan to repay another. Reports currently suggest that young people spend about a quarter to one third of their monthly income servicing debt, while the rest goes towards their expenses like food, rent, transport and others. More than half of the young people interviewed stated that they hardly have any savings at the end of the month.

Here are the main types of debts that those below 35 years of age shoulder:

Housing Loan or Mortgage
This loan is often necessary as many young people who live and work in cities have moved here from the rural areas and therefore they don’t have a house in the city to inherit. Others may have family in the cities but prefer to be independent and own their own home.

Hire Purchase or Car Loan
This loan has the highest amount of young debtors as many are of the opinion that a car is an absolute necessity in life and public transport is a hassle because of its irregularity and poor service. Other public transport like taxis are costly, thereby making them spend on cars.

Education Loan
The majority of the education debt is owed to PTPTN, the government body in charge of providing education loans to those wanting to pursue tertiary education. However, the amount of PTPTN defaulters have reached more than 300, 000 and the government has blacklisted them on CCRIS.

Credit Cards
An easy option for those who love shopping as they can spend beyond their monthly income and only pay the minimal amount each month. Basically, they spend money they don’t have.

Personal Loans
People take personal loans for various reasons, including to finance their small businesses or even pay for their expensive hobby like car modification, photography, golf or the like. There have been cases where people even take personal loans for fun and spend it on a holiday or shopping spree.


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