We will now find it harder to get our car loans approved, following measures taken by banks beginning two months ago which includes checking the applicant’s credit ratings with 3 different sources before considering approval.

An applicant’s credit ratings will go through a financial rating check by Bank Negaras Central Credit Reference Information System (CCRIS) as well as two private credit rating agencies – Credit Tip Off Service Sdn Bhd (CTOS) and Financial Information System (FIS) Sdn Bhd. The applicant’s MyKad number, occupation, salary, existing loans and other details will be keyed in. CCRIS will provide the borrower’s repayment patterns, spending habits, credit card and electronic transaction records for the last 10-20 years. CTOS and FIS will provide credit standing information with other banks.

Once this information is gathered, credit ratings will be assigned. A – automatic qualification, B – can be considered, C – rejected but possible appeal, D – rejection is final. If an applicant does not get an A rating, but instead gets a B, usually a higher interest rate or less margin of credit as well as shorter repayment period will be offered because of the higher risk of repayment default by the individual. However in the current market situation, banks usually only give loans to applicants with A credit ratings, of course this depends on which banks you’re dealing with.

Proton and Perodua will likely suffer because of this, as those that buy Protons and Peroduas are usually of the low to low-medium (this sounds like describing how I want my steak done) income bracket, and some have other loans on hand like house loans – thus not having a strong credit rating! People are already reluctant to buy new cars because they get very low unattractive prices for their used cars, now they face another problem – getting a loan to buy a car to replace their traded-in used car.

With all these barriers put before us, does a car scrapping policy look feasible to implement anytime soon? :)

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