Proton Edar Dealers Association reports only 30% loan approval rate in Jan, asks for review of BNM guidelines

Proton Edar Dealers Association reports only 30% loan approval rate in Jan, asks for review of BNM guidelines

Bank Negara Malaysia’s new guidelines on responsible financing, which was announced on November 18 last year and became effective in January 1, 2012, hasn’t brought about desired results, it would seem.

The Malaysian Automotive Association has reported a 25% drop in new car sales for January 2012, attributing the cause partly to the restrictions on hire purchase brought about by the new guidelines.

Proton Edar Dealers Association Malaysia (PEDA) has issued a press release, in which it said that the BNM guideline is the second policy that has harmed the automotive industry after the amendments to the Hire Purchase Act last year.

It is calling for the guidelines to be reviewed – it said that the guidelines had severely damaged its sales, with only 30% of applications for loan submissions being approved in January. It is reported that the automotive industry is set to meet BNM tomorrow to seek a review of the guidelines.

PEDA added that the BNM guideline will not only curb and halt the automotive industry’s growth, but will affect vendors, distributors, dealers and sales advisors. It added that the income of more than 4,500 sales advisors in its dealer network has suffered as a result of lost commission earnings.

“The guidelines on responsible financing will only give rise to illegal loan sharks and promote (an) unproductive population,” PEDA president Armin Baniaz Pahamin said in the release.

The association said that when banks are more stringent, it provides a better opportunity for loan sharks to grow, adding that the loan shark industry was already at its prime even before the guideline was introduced. It added that the guidelines do not echo the government’s 10th Malaysia Plan and the government’s vision of the automotive industry, which is the most prominent sector after property.

Prior to the implementation of the guidelines, PEDA said that Proton, car manufacturers and assemblers were already having difficulty in attaining a good economies of scale due to the country’s small population. It said that the guidelines will further shrink its potential buyer’s demographic, and with a smaller market, the fate of more than 300,000 employees in direct and indirect employment within the automotive industry and its support sectors will be affected.

The association stated that it feared the repercussions and impact to the industry if the guideline isn’t reviewed. As it is, it said there are a lot of road bumps that will not only hinder the growth of the sector, but will stop the industry from moving forward, and the least that BNM can do is to encourage healthy competition among bankers to finance buyers and provide a standard procedure of compliance for the public to refer to when buying a car.

Updated footnote: In its release, PEDA explained the procedural requirements and elements needed for a vehicle hire purchase loan application. Initially, I thought it would be rather cumbersome to have placed it into the story, but so as to explain things clearly, I have now included it below, as fully described by PEDA.

Prior to the guideline, the industry was already affected with strict procedures for vehicle loan application. Application for Vehicle Hire Purchase Loan financing approval was previously based on:

1) Central Credit Reference Information System (CCRIS), FIS and CTOS checking.

2) Individual Banks Credit Risk Scoring, which include but are not limited to the following:

i) The Customer’s historical financial payment track record (any outstanding payment).
ii) The dealer’s historical customer non-performing loan percentages or fraud cases
iii) The vehicle model and type historical non-performing loan percentage
iv) Applicant’s other financial commitment (financial exposure)
v) Applicant’s lifestyle (rented house, mortgage, stay with parent)
vi) Applicant’s employer’s background (its paid-up capital, years of establishment etc)

3) Applicant’s salary (rule of thumb: salary is 3x higher than the HP loan monthly repayment).

4) Documents required includes but not limited to:

i) 3 months payslip
ii) 3 months bank statements
iii) EPF statements
iv) Proof of address
v) Copy of identity card
vi) Copy of driving license
viii) Appointment letter (or confirmation letter)

5) Guarantor’s documents as per para 4 will be prepared if the applicant’s income is less than 3x of the HP loan monthly repayment.

6) Banks have some discretion in approving customer’s loan application bearing the credit risk scoring.

With the above requirements, the average duration for approval took a minimum of 3-5 working days and the overall approval rate already stands at a critical 50% of total submission, with at least 25% of the loan was approved at a lower percentage (loan amount was reduced).

IMPACT ON THE BNM GUIDELINES IMPLEMENTATION:

Since January 1 2012, all banks interpreted the guidelines differently and practice different measures in approving vehicle loan application but the new Rule of Thumb especially for Proton car buyers includes all the six factors above and the following unwritten-terms:

1) Gross income of at least RM1,600 per month.

2) or Net income MUST BE RM800 or more. Net income meaning, gross income less EPF and any other loan exposure with banks.

3) Bank statement of at least six months (BNM GL: Para 6.11 and 6.12)

4) No discretionary approval; any applications that does not conform to the requirement are rejected without processing. Since the implementation of the guidelines, banks do not seem to have any flexibility in approving loans.

5) Customer has lost all sovereignty in exercising his/her right to apply for any car loan unless they comply to the Debt Service Ratio (DSR) of the BNM Guidelines. This directly impacts the majority of the national car buyer demographic.

6) A car buyer can only qualify to secure a loan if he/she passes the DSR that totals up all outstanding debts repayment obligations from banks and non-banks (eg cooperatives, building societies, credit companies, and merchants that provide credit sales) against its income after statutory deductions (ie. tax, EPF, SOCSO) (BNM GL Para 6.6)

7) 6 months proof of salary is required for applicants with high ‘variable income.’ Overtime includes overtime, allowances and commission.

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Anthony Lim

Anthony Lim believes that nothing is better than a good smoke and a car with character, with good handling aspects being top of the prize heap. Having spent more than a decade and a half with an English tabloid daily never being able to grasp the meaning of brevity or being succinct, he wags his tail furiously at the idea of waffling - in greater detail - about cars and all their intrinsic peculiarities here.

 

Comments

  • “The association said that when banks are more stringent, it provides a better opportunity for loan sharks to grow, adding that the loan shark industry was already at its prime even before the guideline was introduced.”

    What kind of excuse is this!? The banks are just pushing away irresponsible loaners, and distancing itself from defaults. If want do charity, please setup another fund to do it and with strict screenings only.

    Like or Dislike: Thumb up 1 Thumb down 0
    • sirimusa on Feb 23, 2012 at 2:30 pm

      Actually, it’s not the banks distancing themselves. The banks would love to continue to rip-off poeple to buy overpriced cars. And with the thousands of thugs they hire, they can always recover their money.
      It is BNM that is doing a great job in limiting this scam that is monopolized by banks and dealers who are fleecing Malaysians and burdening them with huge debts.

      Go BNM!

      And PEDA, if you want more people to buy domestic cars, revise your prices and stop relying on high prices and car taxes to protect you!!

      Like or Dislike: Thumb up 1 Thumb down 0
      • RON97 on Feb 24, 2012 at 5:55 pm

        -expect more loan manager resign in the 4th quarter.
        -no more ‘small’ (p2&p1) car on the road (major traffic jam contributor)

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    • perodua on Feb 23, 2012 at 3:17 pm

      BNM should not negotiate with PEDA. The newspaper reported that in order to cover 1 bad loan, you need about ? 10 good loan to cover it. This is also to avoid the youngster or people to get bankrupt.

      Like or Dislike: Thumb up 1 Thumb down 0
    • Arrian on Feb 23, 2012 at 3:25 pm

      i’m really really hope that BNM not even turn their head to PEDA request. BNM has responsibility to ensure rakyat not suffer for car loan whilst at the same time the rakyat to be more “responsible borrower”. PEDA has never consider all this thing and their numero uno principal is to generate as much as possible their profit. Did they ever think the borrower have to suffer up to 10 years car loan due to minimal loan requirement. Past time, you can see that sales agent/advisors is trying hard to ensure the car buyer to get loan eventhough they realize the buyer has no affordability to own car…and actually they make the buyer’s life miserable and at the same time they enjoy lucrative commission given by both banks and company.

      So my question now, what the effort was done by PEDA to protect the buyer/borrower interest?

      Like or Dislike: Thumb up 1 Thumb down 0
      • samsam on Feb 24, 2012 at 1:04 pm

        mister potato: “Hentikan membeli kereta pada harga yang melampau lebih dari nilai kereta. Anda mampu mengubahnya.”

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  • only PEDA is condemning..it seems

    Like or Dislike: Thumb up 0 Thumb down 0
    • autojohndoe on Feb 23, 2012 at 3:45 pm

      no la… see this one…

      http://www.mysinchew.com/node/69592

      Like or Dislike: Thumb up 0 Thumb down 0
  • tiadaid on Feb 23, 2012 at 2:28 pm

    I guess we should be thankful for the stringent loan requirements – many will avoid from facing the same fate as Americans back in 2007-2008 which led to the global financial meltdown.

    Like or Dislike: Thumb up 1 Thumb down 0
    • Please thumb tiadaid’s comment up.

      Conclusion: If you want to borrow, please be responsible.

      Like or Dislike: Thumb up 1 Thumb down 0
    • oligopoli on Feb 23, 2012 at 4:03 pm

      1. i’m thankful. for some people, its troublesome. prevention is better than cure.
      2. now a good time to buy a car since we can nego interest rate kaw kaw with bank?

      Like or Dislike: Thumb up 0 Thumb down 0
  • sirimusa on Feb 23, 2012 at 2:28 pm

    This is a real reflection of Malaysians’ real wealth! What does PEDA expect the market to grow only based on borrowings? This is so dangerous.

    If approval rate is only 30% now, it simply means that this is how much disposable income Malaysians have. We’ve been made to believe that we are a wealthy nation with unlimited money. Well guess what, most Malaysians are struggling and living on debt. So I support BNM.

    A real solution would be to scrap this stupid tax on cars so that it is then really affordable. Then more people can buy.

    But for auto-makers in Malaysia to expect to live the easy life, overcharge customers, have them take loan for 9 years and burden their lives is NOT the way to go.
    Keep doing your good job BNM and PROTON and Perodua, revise your prices and make it more affordable!

    And to all people reading Paultan, while we are all car fanatics, we have to excercise caution: banks and car-makers in Malaysia have been fooling the customers making them believe they can buy whatever they want until BNM saw the disaster in making. Same thing goes for the government, they keep borrowing and borrowing until the day comes when… well, things go wrong and you know the end of the story: an economic catastrophe. So BNM is only doing its responsible job to limit this car loan scam…

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    • BOYRACER on Feb 23, 2012 at 2:49 pm

      I agree with you.Nowadays there are many new cars on the road especially those from the national car makers.Also some of these cars kena tarik by the bank due to defaulters.
      It is sad to see these people declared bankrupt,some of them are quite young.
      PEDA only cares about themselves,making more profit without giving thought whether these people are actually can afford new cars.
      Why is it so difficult in buying 2nd hand cars?Finance company seems reluctant to give loans for used cars.Those low income group just cannot afford new cars but they are given difficulty when applying for loans on these used cars.Example used cars needs a guarantor but new cars not required (im referring to those with salary less than rm2k per month).
      I don’t know..Something is very wrong with the system here and I can’t pinpoint exactly what it is..
      Reduce tax perhaps?or our average income too low?
      Something needs to be changed somehow.Make it a win-win situation for everyone,buyers,dealers, manufacturer etc..Now it seems it doesn’t favour the lower income group.

      Like or Dislike: Thumb up 0 Thumb down 0
    • gigganet on Feb 23, 2012 at 4:37 pm

      Well said!

      If I remember correctly, the 9-years loan was started for Proton last time when their sales was down. Now, even with 9-years loan also can’t afford.

      While Proton & other car brands keep increasing prices for new models, What’s next? 20 years loan?

      It’s really sad that we have to pay for 9 years for a piece of metal.

      Like or Dislike: Thumb up 0 Thumb down 0
  • carnut on Feb 23, 2012 at 2:32 pm

    PEDA doesn’t seem to understand that the real issue is the ridiculous high price of their cars. The price of all proton vehicles should be lowered by at least 30%.

    Like or Dislike: Thumb up 0 Thumb down 0
    • VoidDance on Feb 23, 2012 at 4:28 pm

      Yes, they can do that if the Custom Department reduce their excessive 70% excise tax on almost every car sold in Malaysia.

      Without the excise tax or even at 5%, a normal Saga FLX will cost not more than RM30k.

      Like or Dislike: Thumb up 0 Thumb down 0
  • Sorchai on Feb 23, 2012 at 2:39 pm

    I really hate this government. Everything also want to control. Worst than communist!

    They think they are helping but the effect is really opposite. Just like the high taxes on cigarrettes and alcohol. People just start buying contraband. Then the real companies lose out on sales and the workers get laid off.

    Should be free market. Then only Perodua and Proton can develop.

    Like or Dislike: Thumb up 0 Thumb down 0
    • MoFaz on Feb 23, 2012 at 3:33 pm

      i don’t care about cigs and alcohol.. they should’ve been taxed even more because Gov had to spend millions in RM to treat cancer patients and thousands of accidents due to drunk driving. kesian to those secondhand smokers also! Malaysia cigs is RM10 but SGD12 in singapore.. so Malaysia price should be RM25!
      yes we all want tax-free cars. but you have to understand that those countries with lower car tax usually have higher income tax, petrol at market price, and don’t forget petrol tax too.

      Like or Dislike: Thumb up 0 Thumb down 0
      • …higher income tax, petrol at market price, and don’t forget petrol tax too…

        I don’t mind, coz it’ll put less cars on road.. less traffic jam for me.. even if I am on public transport.

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      • Name,

        Our income tax is very very high compare to other countries in the world. Just compare to other developing countries.

        And in fact, i would rather buy car without tax, and pay petrol without subsidy. We easily pay about rm30k to 40k for tax & excise duty for an entry level imported car, and i can use 30k to buy petrol for many many years at market price.

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    • bobdbilder on Feb 23, 2012 at 4:57 pm

      Hey look at the real facts;

      The father of Democracy; Greece is on life support. The biggest Democracy; India has a huge income disparity.

      The fastest growing economy is the biggest Communist country. Was it Al Gore who said that you need to be a democratic country to grow?

      Free Market is not Fair Market. Not fair to the 90% of the population. No way can small companies beat the giants of the business world and who themselves grew from their own market protectionism. What we still do need is

      Like or Dislike: Thumb up 0 Thumb down 0
  • sbiru on Feb 23, 2012 at 2:43 pm

    I’m agree…now rich people more richer and poor people become more poor because of debt. and also become buncrupt because can’t pay loan…sigh

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  • nighttrain on Feb 23, 2012 at 2:43 pm

    BNM is doing the right thing. Car prices should be cheaper instead. Oh, and float the fuel. Abolish road tax, fuel companies will pay the govt for roads and highway management. Increase speed limit by 20% too while you’re at it. Modern cars are safer now.

    Like or Dislike: Thumb up 0 Thumb down 0
    • droll on Feb 23, 2012 at 4:42 pm

      i agree with the rest but floating fuel will have implications beyond just cars. your roti canai may cost RM10 instead … :(

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    • gigganet on Feb 23, 2012 at 4:44 pm

      car depreciate – get high tax (Excise)
      property appreciate – get low tax (RPGT)

      should be reversed la…

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  • Jonnie on Feb 23, 2012 at 2:46 pm

    Barking up wrong tree again? If they cannot afford, means they cannot afford. Why not ask Gomen to abolish all taxes so cars are more affordable?

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  • Bravo to you Bank Negara, Bravo! Tahniah goodest move so far!

    Let see after knocking Bank Negara door, then Protongkat go kneeling begging in front of MITI, Kastam offices next…beg to reduce the 75 pct excise duty…Ha Ha Ha…go ahead then the rest of car prices perodua toyota nissan honda etc reflect true market price open competition…Ha Ha Ha!

    This is great news and slow death to Protongkat! Serve you right padan muka hang!

    Wanna reduce 75 pct excise duty next? Go lah if berani ada biji jadi Global Car konon! Pordah!

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    • autojohndoe on Feb 23, 2012 at 3:49 pm

      dream so high eh?

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    • VoidDance on Feb 23, 2012 at 4:33 pm

      You know, that excise tax is tax on every car, including Proton and Perodua. Import tax is at 5% – 35%.. Sales tax at 10%. Proton and Perodua car price will be cheaper if excise tax is reduce or abolish.

      Like or Dislike: Thumb up 0 Thumb down 0
  • Castello on Feb 23, 2012 at 3:06 pm

    anybody know what is it in the new BNM guideline that caused the sales to drop?

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    • Anthony Lim (Member) on Feb 23, 2012 at 5:07 pm

      I didn’t put the details (as explained by PEDA) into the story because I thought it would be simply too long and cumbersome, but will do so now, so no one needs to second guess.

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  • azrai on Feb 23, 2012 at 3:13 pm

    Moral of the story are; if you can’t afford a new car, just use a second-hand car, a motorcycle, or maybe considering public transport. The stringent condition is good to eradicate NPL, and I think used car dealers have something to shout and joy on this news actually.

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  • faizal on Feb 23, 2012 at 3:17 pm

    just pay 30% downpayment lahh

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  • boonzy on Feb 23, 2012 at 3:18 pm

    People who are eligible to get loan won’t buy proton. And they don’t buy proton because of proton. They buy because they can afford others

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    • oligopoli on Feb 23, 2012 at 4:09 pm

      hahaha yeah sure. consider u are correct, wonder why my loan application for new proton approved recently? and u sure i cannot afford others? pity you

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      • I think i am one of the 30%. Tried for bold prime. But that was just for a test run. Main aim is for p3-21a

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  • MoFaz on Feb 23, 2012 at 3:20 pm

    simple rule of thumb: if you considering it too much, that’s mean you can’t afford it.

    this guideline is like a double-edged sword. one side will force the consumers to tighten their budget and spending wisely, and at the same time protecting the banks from non-performing loans. while the other side will hurt the industries, their workers and families….
    BNM or banks should consider those who’re buying a car for first time, given that they’re already being confirmed in their employment, maybe after working for 6 months and above… for those who just want to ‘suka-suka’ changing cars everytime their salary increased even just a bit.. be strict to them, unless they really could affort it.
    also be less strict for the first car in the family.. if father or mother already have cars, then be strict about their next car purchase.. too many youngsters driving to college and many of them died after drunk-driving at nite… maybe approve loan for only 50% of the car price for 2nd car onwards.
    majority of buyers for perodua and proton are from low – mid income earners. but why the banks imposing 3-4% loan rates to them while those who buy higher end brands and luxury cars get to enjoy 1% rate? i understand that this is the ‘sub-prime’ factor due to higher-risk group, but if the rate can be lowered, it will reduce monthly installments and ‘easier’ for the borrowers to repay their loans. entending the loan tenures is not the best solution, it will only increase the amount of interest payable. the easiest way, and if the gov is sincere about helping the lower income group is to lower the excise duty on cars from 75% now to 50%. the big drop in price will solve this problem.

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  • We are asking for the completely wrong thing.

    We should not ask for bigger loans.

    We should ask for cheaper cars, i.e. lower import & excise duties.

    When national car started we were told that the protective import duties were “temporary”.

    It has been >20 years now. How long will we continue to suffer?

    Like or Dislike: Thumb up 0 Thumb down 0
    • MoFaz on Feb 23, 2012 at 3:41 pm

      import duties for Asean cars is no more already…
      now proton, perodua, toyota and honda pay the same 75% excise duty.

      Like or Dislike: Thumb up 0 Thumb down 0
      • Hyundai De La Junk on Feb 23, 2012 at 4:10 pm

        It should be Proton, Perodua, Naza & Inokom.

        AS Toyota & Honda do not get the 50% rebate !

        Check your fact don’t simply bantai

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        • MoFaz on Feb 23, 2012 at 5:18 pm

          no more 50% rebate la…

          Like or Dislike: Thumb up 0 Thumb down 0
          • Hyundai De La Junk on Feb 23, 2012 at 6:10 pm

            Then My Dear MoFaz

            Why on earth Naza & Inokom put this badge on their car if not because of the lower tax ? do tell me it look nicer.

            I am sure customer prefer KIA & Hyundai original badge.

            As i said don’t simply bantai !

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          • MoFaz on Feb 24, 2012 at 12:38 am

            kau yang bodoh… Kia and Hyundai is not from Asean. Kia & Hyundai doesn’t have factory in Asean region, unlike Honda & Toyota which have facories in Thai, Malaysia and Indonesia. if they import straight from Korea, they will have to pay more because of import tax!
            now, who simply bantai?

            Like or Dislike: Thumb up 1 Thumb down 0
      • VoidDance on Feb 23, 2012 at 4:34 pm

        Exactly. Somehow people still think that car price here is effected by Proton/Perodua. They are not!

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        • littlefire on Feb 24, 2012 at 11:26 am

          If without Proton & Perodua do you think cars today will still so expensive?!?

          The only thing that the G dont want us to buy cheap & affortable cars is the AP & Tax!!! Who dont want to earn easy money?!? 1 AP at least RM10k…

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  • Carl Wong on Feb 23, 2012 at 3:29 pm

    It’s the right thing to do, to protect our country and our people so we have ‘rice’ to eat. If the people can’t pay the loans our country would get poorer and eventually broke. Nobody wants that……

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  • Time to face reality people… car is expensive in Malaysia and we cant afford it.

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  • nabill on Feb 23, 2012 at 3:36 pm

    Anybody kno wats da reposession rate by da banks for cars??
    If its high thn i can see y thy r making it dificult as mor n mor ppl living beyond their means buying tings thy canot afford…

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  • autojohndoe on Feb 23, 2012 at 3:51 pm

    what la Paultan.. it is not only this one guy complaining…

    the other one also complain what…

    http://www.mysinchew.com/node/69592

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    • Anthony Lim (Member) on Feb 23, 2012 at 4:59 pm

      ajd, we were sent the release by PEDA, and there was a story in there, so we ran it. I’m sure not only P1 and P2 are reeling from the new terms in effect, but they would stand to be the hardest hit by it.

      Like or Dislike: Thumb up 0 Thumb down 0
  • seancorr on Feb 23, 2012 at 3:53 pm

    I vote for free market. Healthy and fair competition is the way to go. It is because of gov’t protection that Proton is shit right now. They got lazy in the R&D and come out with crap cars that won’t sell.

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  • Merc=Real Euro on Feb 23, 2012 at 3:55 pm

    Barking up the wrong tree… If sales has declined dont blame BNM….
    Blame the tax structure and automotive policy……
    How long we malaysian going to pay for ridiculously priced cars.
    By giving longer loan is not helping the consumer but only benefit others
    And citing 300,000 ppl work in the auto industry is lame excuse…
    What we are suppose to feed them by taking loans and paying crazy taxes.

    Those 300,000 still can have a job by changing the tax structure….
    If we want to make a stand…stop buying new cars and show who is the boss..
    Simple as that.
    End of the day those 300,000 ppl will lobby and the higher authority will have to
    do something about it…
    But asking the rakyat to take longer loans and pay high taxed is plain wrong…
    And forcing the banks to give out loan that cannot be collected is even worse.

    Just to add some salt to the wound…. Back in 1981 I have Asian Auto Magazine to prove it.

    Corolla cost = 14K
    Today 104K..
    What manufacturing cost has gone up so much..
    Inflation is gone up so much…

    In the US back in 1981
    Corolla cost = 7K
    Today 15K
    How do you explain this????…
    Remember higher the price of cars …..higher is the tax….
    So as cars got more expensive ppl cannot afford…so the master plan was
    give long loans….and everyone is a winner…
    Unfortunately the prices has risen so high and loan amount outstanding also
    risen and banks are finding it tough to collect back…
    Alarm bell is ring….that there is something wrong with the system….

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    • upin ipin on Feb 24, 2012 at 10:36 am

      betol betol betol. U PEDA, ask Najib and Rosmah to feed u la. NFC can got RM250M, u can ask for RM250bil. PEDA, we are not interested to your products, and we don’t care whether we can get financing or not. PEDA useless

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  • bobdbilder on Feb 23, 2012 at 4:02 pm

    We cannot continue to grow our household debts without increasing earnings. When an economy is only growing 5% how can it sustain when private cars sold grow 10%? Reducing our exposure to debts would increase our ability to spend on things that do cost more such as food. Food is going to be expensive as our source of food is mostly imported.

    See MAI report below.

    http://bit.ly/xcKXAy

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  • CarDude on Feb 23, 2012 at 4:10 pm

    Does anybody know what’s the Hire Purchase Act guideline about?
    All we know from the article is that changes are made and proton starts complaining.

    But what exactly is Proton complaining about?

    Like or Dislike: Thumb up 0 Thumb down 0
    • Anthony Lim (Member) on Feb 23, 2012 at 5:26 pm

      CarDude, the story has been updated with the relevant information.

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    • MoFaz on Feb 23, 2012 at 5:34 pm

      Previously, processing for car loans was based on a buyer’s gross income, but since January, the BNM has directed banks to base loan approvals on net income, meaning after deduct all your other commitments.

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  • soundsfishy on Feb 23, 2012 at 5:25 pm

    in other words, proton cars really suit those who cannot afford to own cars…

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  • Thrifty on Feb 23, 2012 at 5:40 pm

    If a person can’t get the loan approved, that means the person will not be able to afford maintaining the car. Buying car is not just about zero downpayment and low installment with lifetime payment. 5-year repayment period should be the maximum, unlike house where 20-year is normal. Once a person owns a car, need to put aside money for petrol (subsidized, not the real price), tolls, scheduled maintenance, unexpected failures/repairs, road tax, insurance, etc. Without money, there’s no way a car can be properly maintained. Without proper maintenance, the vehicle becomes safety hazard to all.

    I always see Proton’s and Perodua’s promotion of zero downpayment for graduates. To me, it does not make sense at all. Why put all the risk to the bank? 20-30% downpayment should be paid when someone buys a car. BNM is doing the right thing.

    Don’t we have too many cars on the road in Malaysia already? Maybe JPJ should start asking question when someone tries to register a brand new vehicle, where it is going to be parked?

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    • Excellent reply! Most of us conveniently forget that paying back the loan is just one side of the coin. The other side is just as Thrifty explained…Total Cost of Ownership, so as to speak.

      And yes, I agree with your suggestion for JPJ to consider parking space as a requirement to own a car. Getting sick and tired of folks in my neighborhood parking their car 3rd, 4th or 5th car where ever they find space…including right in front of your own gate!

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  • Malaysia is the highest household debt in the world. We rich because of debt! Thanks Malaysian because make malaysia the debt country.. Im proud of it!

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    • Visitor on Feb 24, 2012 at 12:07 am

      Show us some links or sources from which you based your statement from, that would be much helpful!

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      • http://www.themalaysianinsider.com/breakingviews/article/household-debt-in-malaysia-is-it-sustainable-s.m.mohamed-idris/

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  • Kiasu No Kiasi on Feb 23, 2012 at 6:28 pm

    I am all for the new BNM new rulling, with the ever increase property price, no thank to our speculator + developer + banker (aka the evil trio), world longest car loan (9 years) the average household debt of Bolehland is 78% against GDP (second highest in Asia after South Korea), to make the situation worst this selfish Developer & Car Dealer are pushing the government to relax the new rulling.

    We have seen what happen to US & Europe result of high household dept, i hope BNM will not backoff on this, for the sake of the nation future.

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  • kanne on Feb 23, 2012 at 7:20 pm

    those 4500 sales advisors could now start looking for part time jobs!stupid PEDA…

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  • Merc=Real Euro on Feb 23, 2012 at 7:39 pm

    Reality is prices has gone up so much over the years we have been immune
    Just take longer loan lah…is not the answer…

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  • guys
    dont compare US car price one since there are double cheaper
    even toyota camry2.4 in japan is RM143,000

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  • BuzzStop on Feb 23, 2012 at 7:53 pm

    Start buying car with cash or get use to public transportation . Since most people would not qualify on the terms and condition or maybe they already either blacklisted. Good luck Malaysian…

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  • _xXx_ on Feb 23, 2012 at 8:02 pm

    Bawak la moto, kalo duit xde. I m with u BNM. Every road is carpark soon…

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  • 4g63tdsm on Feb 23, 2012 at 8:26 pm

    Good move.

    Back in the days, we bought a cheap used car in cash until we found our legs. That system works. Getting young ins deep into debt is disaster in the making.

    Car prices here are artificially jacked up. With easy loans, even with reduction of duties, car prices remain rather inelastic and would hold its market position as consumers are used to it.

    It takes a monetary system shock like this to show consumers that cars are indeed still insanely expensive and the lack of easy loans brings this to light that many Malaysians simply cannot afford to own a NEW CAR!

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    • Merc=Real Euro on Feb 23, 2012 at 10:35 pm

      no point we rant and rave here….pls stick this your FB and start educating the general public. Change starts with you….

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  • zamandaberubah on Feb 23, 2012 at 9:41 pm

    Good move by BNM. It is even better if the ruling is more stringent such as max 5 years loan tenure, min 30% dp and the min nett income of RM2500. Let the pax car market to shrink by 75% because this is the reality, that is maybe only 25% of working adults can actually afford to obtain loan to buy car. It’s not the financial system that killing the industry, it is the government policy. How much longer the financial system and the people can bear this unrealistic and over inflated prices. One day this bubble will burst and we will end up like Greece, Spain and so on.

    I think it is HIGH TIME for us to organize “STOP BUYING NEW CAR” campaign to save us and our future generation from mountain of debts. Lets show them the real power, that is the people’s power. Common guys, lets organize something, through FB, Twitter, Blog ans so on. Lets make the new car volume sales to shrink by 10% this year and 20% next year until the government change the policy to open market policy.

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  • fuel cell phone on Feb 23, 2012 at 10:31 pm

    i support this move by BNM and totally disagree with PEDA’s request

    instead, they should request to the G to revise / reduce their car prices through tax restructuring

    at the same time, especially for P1, they really should increase the overall quality, reliability and after sales services in order to win the hearts of our disheartened rakyat

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  • PEDA.. backoff!! you just being selfish

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  • Visitor on Feb 24, 2012 at 12:12 am

    I demand government invests more in improving public transportation in the country as a trade off for more stringent car ownership rules! It is now time that our urban planning prioritise public transport, pedestrians and cyclists.

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  • mister potato on Feb 24, 2012 at 12:25 am

    Suddenly a lot of people here points out the elephant in the room, the ridiculously high artificially jacked up car prices. Bank Negara has taken the first step to give this affordability issue more attention from the public, and a very strategic maneuver indeed.

    Hentikan membeli kereta pada harga yang melampau lebih dari nilai kereta. Anda mampu mengubahnya.

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  • Vj the Rat on Feb 24, 2012 at 1:58 am

    Simple. Keep driving your old one or buy a motorbike instead. Zero downpayment and 9-year loans are a joke, it means YOU CANNOT AFFORD IT, WAKE UP!

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  • Faizul on Feb 24, 2012 at 8:22 am

    i agree if someone outhere willing to promote movement that refrain public from buying new cars. why bother buying new cars when in reality you can’t afford it… we have been burden by expensive car price for so long now and there is no clue or whatsoever from the government to change this bloodsucking tax structure. GE come and go but still the vehicle tax structure remain and i bet even under PR federal government there will be no changes to this practice. so why not create a silent movement for people to stop buying new cars. if there is significant drop in car sales this year say 10% to 15% and next year 20% to 50% i bet that the government will review the tax structure sooner or later.

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  • Stop buying the car for this moment. I hope the gov with open heart to implement open market car prices.

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  • BNM is doing its job, we already have a Malaysian version of sub prime in the making. Take a look at the car dealers that are touting loans for black listed borrowers, I am not sure who provide these loans, but people are buying a depreciating assets (car) that they can’t afford. As I see it, the problem is two fold, stagnant real income and over inflated car prices. Young Malaysians are generally brain washed into thinking that cars are an extension of their personality or “face”, so they must have “presentable” cars (read new) even if it means taking up 9 years loan that will leave them mired in financial mud hole. Keep you old car, maintain it well and keep out of debt.

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  • omanjedi on Feb 24, 2012 at 11:37 am

    Good move from BNM…the auto market is suffering and they will learn their lesson from this…..

    Next move – property market
    PLEASE STOP CURRENT PROPERTY PRICE MANIPULATION!!!!!!!!!!!!!!!!!!

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  • DewaSemut on Feb 24, 2012 at 11:43 am

    BEFORE THE RAKYAT STEP INTO THE CAR SHOWROOM, THESE NEEDS TO BE DONE FIRST:-

    1) Price of car should be affordable in the first place. Cheaper cars mean cheaper monthly loan repayment and loan tenure can be shorter.

    2) Cost of owning the car should also be affordable as well inclusive the HP interest rate, road tax & insurance, spare parts & maintenance, fuel price tolls etc…

    3) Public transportation network should be efficient, so only who can afford and really want to buy cars actually buy one.

    4) Road condition must improve. Improvement of road condition will add up to car life span.

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  • Wisdom on Feb 24, 2012 at 12:08 pm

    BNM, please add more condition to prevent people from buying 2nd or 3rd car. I see all over Malaysia car park by roadside like nobody’s business.

    Never buy excuse its for their son or daughter. That means their children still can’t afford a car. Pampered generation in the making and its bad.

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  • rear light on Feb 24, 2012 at 2:42 pm

    Bring in Veloster 1.6 Turbo, Insight 1.5 and Focus Titanium 2.0 Tdci, the market will revive.

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  • I think the gov and JPJ should come out with quota system to control the population of cars on the road. Let say 2000 quotas will be provided for each type of vehicle. eg. car, motorcycle, lorry, etc.. In order to eligible the quota, the gov must impose some rules to car buyer.

    1. Only car buyer whom make a downpayment 30% or until are eligible to receive the quota.

    2. Paid by cash is recommended..

    3. The car owners are limited to owned two cars under his/her name. Otherwise, higher surcharge will be borne by his self.

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  • anak malaysia on Feb 25, 2012 at 11:20 am

    saya ada kancil, kembara dan nissan livina, kancil&kembara dah habis bayar, skrg cuma kena bayar livina rm800.00 sebulan. perit juga nak bayar bulan2 lagi 5 tahun…so sy sokong Bnm, mampu bukan sekadar beli, maintenance, minyak, insuran, roadtax etc kena kira jugak.

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  • This is a positive move by Bank Negara, with certain possibilities:-

    1) Increased demand for second-hand cars, less car price depreciation.

    2) Prompted the big G to revise the NAP, to make car prices cheaper and more affordable to the masses by reflecting their true prices.

    Thanks to the caring BNM, the car makers and car dealers doesn’t even care if more people got bankrupt, they just have to make sure high sales figures as it is their purpose for being in the car industry.

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  • bongeks on Feb 26, 2012 at 9:55 pm

    remember, SAga LMST, 1st price 35K, then Merdeka edition 27K. where goes 8K? So, lower car price, tax etc, then stringet the loan approval.

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  • Charlotte on Jul 23, 2012 at 10:47 pm

    My friend is planning to buy a car..
    He lives at Penang..
    His family is living at Sabah..
    Is there any way he can get car loan without guarantor?

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