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.

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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