Six-month car loan payment holiday – how it works

Six-month car loan payment holiday – how it works

On March 25, Bank Negara Malaysia (BNM) issued a directive to all banks to grant an automatic six-month moratorium (deferment) of all loan/financing repayments effective from April 1, to September 30, 2020. Here’s a simple explanation of how the payment holiday works, from an auto perspective.

UPDATE: On April 30, BNM issued an announcement stating that hire purchase loans and fixed-rate Islamic financing will come with additional interest charges after the six-month moratorium that is effective from April 1 to September 30 this year. This latest update throws the original ‘no additional interest on deferred HP loan payments’ point as outlined in this story out the window.

From April 1, all conventional hire purchase (HP) car loan monthly instalments will automatically be put on hold for six months. You don’t have to service or repay your loan instalments during this six-month period, and only resume paying from October 1 onwards.

Six-month car loan payment holiday – how it works

For example, say you’re paying RM1,000 a month now until December 2021. From April 1, you’ll pay nothing until the end of September. Come October, you’ll continue paying the same amount, which is RM1,000, till the end of your loan term, which has now simply been extended by six months to June 2022, with no extra charges.

This payment holiday will be done automatically, so you don’t have to apply or do anything about it. If you wish to continue paying your loan instalments, then you have to inform the bank that you wish to continue payment uninterrupted – some colleagues have already gotten messages about how to do this (see image above).

There’s no interest compounded during the six-month period, because conventional HP loans are already set at a fixed rate, so you don’t pay anything extra. In short, it’s a true payment holiday for all car loans through banks for six months. There’s no penalty, and there’s no catch. There is also the much rarer variable rate HP, which sets things up differently – you might want to check with your bank if the deferment still accrues payable interest.

As for loans from non-bank credit providers, these are not banks and so aren’t tied under the BNM directive, so they’re not bound to offer any deferment. So far only Toyota Capital Malaysia has said that it will, while the rest will look at things on a case-to-case (TC Capital Resources) or customised (BMW Credit Malaysia) basis.

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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

  • Dr Strange on Mar 27, 2020 at 8:32 pm

    The more you borrow, more you saved. Ohsem

    Like or Dislike: Thumb up 17 Thumb down 0
  • Pakya on Mar 27, 2020 at 8:46 pm

    Mana kunci kereta malaysia ni ni. Shame on you!

    Like or Dislike: Thumb up 8 Thumb down 25
  • Gary Yong on Mar 27, 2020 at 9:01 pm

    Can I ask, what if I overpaid installment for 2-3 months? Will those early payment been out on hold until October 1st 2020?

    Like or Dislike: Thumb up 3 Thumb down 2
    • Chris Lau on Mar 27, 2020 at 10:30 pm

      For my understand, put it simple. Say you got 36 months installment left, you can put on hold installment for the the next 6 months, resume after that, you settle your loan on the 42nd month from now.
      You’d overpaid, say 6 months advance, then you have 30 months installment left, and no intention to hold (it’s freedom of choice), then you just continue your monthly or advance payment as usual.
      Any financial specialist, correct me if I’m wrong here or any left out.

      Like or Dislike: Thumb up 6 Thumb down 3
    • julius on Mar 27, 2020 at 11:00 pm

      No. Car loan repayment, if let’s say you pay 2-3 month for this month. the extra 1-2 month will just count as extra pay. you next month still have to pay.

      example you have 36 month left, you pay 3 month worth then 33 left months left. you next month still have to pay. or else the bank will give you a friendly call.

      Like or Dislike: Thumb up 4 Thumb down 3
      • azrai on Mar 29, 2020 at 5:53 pm

        No lah. If you already pay upfront 2 months, so for the next two months you need not to pay lorr. But the bank are porofitting from that upfront payment.

        Like or Dislike: Thumb up 1 Thumb down 0
    • Gary Yong on Mar 28, 2020 at 9:55 am

      many thanks both, I think I better call to Hong Leong bank and ask about this issue.

      Like or Dislike: Thumb up 6 Thumb down 0
  • vivizurianti on Mar 27, 2020 at 9:29 pm

    Any clause to say that bank will cut short the deferment period, say from 6 months to 3 months?
    The bank u-turn from 6 months to 3 months.

    Let’s say COVID19 problems all settled under 3 months but unfortunately the car owner lost his job and unemployed during 4th month. Jialat liow.

    Like or Dislike: Thumb up 1 Thumb down 10
  • Dong gor on Mar 27, 2020 at 9:43 pm

    What about standing instructions for auto debit.. Will that automatically be on hold and re activated after 6 months?

    Like or Dislike: Thumb up 5 Thumb down 2
  • Maxie on Mar 27, 2020 at 9:44 pm

    How about hire purchase at variable rate?

    Like or Dislike: Thumb up 1 Thumb down 0
    • macampondan on Mar 29, 2020 at 7:16 pm

      All variable rate … i.e. reducing balance loan, Interest will be charged but not necessary compounded (depends on which bank)

      Like or Dislike: Thumb up 0 Thumb down 0
  • Shankar on Mar 27, 2020 at 10:34 pm

    So there’s really no additional interest for the next 6 months if you opt in? Sweet.

    Like or Dislike: Thumb up 5 Thumb down 0
  • Hire Purchase on Mar 27, 2020 at 11:07 pm

    Could we just ignore the message and keep paying?

    Like or Dislike: Thumb up 3 Thumb down 1
  • What if my hp loan is on a auto direct debit? Do I need to call in to apply?

    Like or Dislike: Thumb up 2 Thumb down 0
  • The image about the text message asking for reply with car plate numbers and your ic numbers could be a scam. Just beware.

    Like or Dislike: Thumb up 1 Thumb down 6
    • Berombon on Mar 28, 2020 at 1:05 pm

      Somebodybtold me it is a scam. Cos the bank will not ask for your ic but until i get clarification from the bank, im not going to do anything yet.

      Like or Dislike: Thumb up 0 Thumb down 3
    • azrai on Mar 28, 2020 at 1:35 pm

      It’s real.Coming from the same number of Maybank.The Maybank website alredy mentioning about this sms.Do some research.

      Like or Dislike: Thumb up 7 Thumb down 0
  • Is it apply to all SME conventional and islamic loan?

    Like or Dislike: Thumb up 0 Thumb down 0
  • C.P. MOHAN on Mar 28, 2020 at 2:33 pm

    Know some are effected, so my comment do not apply to them, there are some willing to pay and do not want extension seeing that it effects the cars RV and furthermore like to take advantage of low rates.

    Like or Dislike: Thumb up 0 Thumb down 2
  • Phang Ka Fong on Mar 28, 2020 at 5:53 pm

    I would like to continue auto debit for my car loan monthly instalments

    Like or Dislike: Thumb up 1 Thumb down 0
  • David you on Mar 29, 2020 at 11:20 am

    Note to the post. The SMS seem to be scam. I read in somewhere. Can writer verify it?

    All bank should be grant the deffer loan automatically

    Like or Dislike: Thumb up 1 Thumb down 6
    • azrai on Mar 30, 2020 at 10:46 am

      The SMS is not for applying the moratorium. The SMS is for the opposite, tellling the bank you are NOT ACCEPTING the moratorium a.k.a want to pay just like usual.

      Like or Dislike: Thumb up 0 Thumb down 0
  • I just bought and got my car in mid March, haven’t started paying my loan yet since due date is mid April. Am I eligible to this payment holiday too. Thanks.

    Like or Dislike: Thumb up 1 Thumb down 0
  • Damian Leong on Mar 29, 2020 at 5:59 pm

    Is it confirmed information from the banks that they will not stack on interest based on the extra six months?

    Like or Dislike: Thumb up 0 Thumb down 0
 

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