The Inland Revenue Board of Malaysia (LHDN) announced in May 2023 that it would implement e-Invoicing in stages, with the first set to begin from August 1, 2024. So, what’s it all about and how does it affect you, the car buyer?
Basically, an e-Invoice is a digital representation of a transaction between buyer and seller, formatted in a structured, machine-readable manner. Two e-Invoice transmission mechanisms are being provided by LHDN, which is through the MyInvois portal and/or application programming interface (API) tied in with the tax systems of companies. The government says that the introduction of e-Invoicing is to promote automation, which reduces the time it takes invoices to reach customers and get approved.
Speed aside, another benefit is accuracy, as e-Invoicing can minimise errors or omissions in information that can happen with manual invoicing. This is significant in the buying and selling of cars, as it essentially eliminates discrepancies in the invoices sent between parties – including LHDN – since the amount declared must match.
This should effectively eliminate scenarios where a car buyer is offered a “full loan” – this is when you do not need to pay the usual 10% downpayment in a 90% hire purchase loan. To arrive at the “full loan” amount, the sales agent marks up the price in the invoice when submitting a loan request to the bank, so that the approved loan amount matches or exceeds the actual price of the car.
Why would someone take a full loan? Perhaps he or she can’t afford the minimum 10% downpayment but they still want to buy a particular car. One way to mark up the amount in the invoice is by adding on a bunch of accessories (tinting, cameras, etc) to drive the purchase price up before submitting the loan application.
As an example, let’s assume a car is priced at RM40,000 on-the-road, which would mean the maximum possible loan amount (90% of the price) is RM36,000, with the remaining being the 10% downpayment of RM4,000.
The buyer of the car can’t afford the downpayment and both parties agree to a “full loan,” so the sales agent inflates the invoice with some add-ons, boosting the total price to RM45,000. Now, the maximum loan amount becomes RM40,500 (90% of RM45,000), which is enough to cover the cost of the car, hence a “full loan.”
After this, the sales agent could submit an invoice with a different amount to the government – this is the omission of information that the e-Invoicing system is supposed to prevent. With e-Invoicing, all invoices must go through LHDN, so the SA can’t simply mark up an invoice as the numbers on all other invoices must tally.
Technically, “full loans” aren’t allowed but they are publicly offered by some banks as part of a special promotion with carmakers (here are some examples: 1, 2, 3). However, banks aren’t stupid and do put a cap on the amount of mark up because it’s not sensible for a RM40,000 car to be marked up by 50% (or RM20,000) in accessories so the customer can “earn” from the deal.
Speaking of that, in some cases, SAs might even invoice an amount that far exceeds the price of the car, with the buyer getting to pocket the extra amount. If you’re looking to get “cashback” from buying a car, it’s a bad idea because the loan amount becomes larger, monthly instalments get bigger, and the insured sum – based on the marked-up loan – will be higher too. The latter means higher insurance premiums. This practice is not uncommon with recond and used car dealers as they define pricing independently.
As mentioned earlier, e-Invoicing will begin in August, but it will initially be mandatory for taxpayers engaged in commercial activities generating revenue over RM100 million annually. In January 2025, this requirement will extend to those with an annual turnover of between RM25 million and RM100 million. By July next year, all taxpayers engaged in commercial activities are required to do e-Invoicing, although anyone can choose to participate earlier.
The implementation of e-Invoicing will no doubt have an impact on car buying in Malaysia. What are your thoughts about this move? Have you ever taken a “full loan” before? Share your experience in the comments below.
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In the first place,if a car buyer cant even afford the 10 % deposit..he is at very high risk of default.
This full loan thing has been exploited by the sales team to target desperadoes who may have their cars tarik later.
LHDN ,of course…real motive is taxes,which is their right.
People who cant pay deposits,should be denied car loans.
Most banks require deposits for real estate purchase,which may even increase in value.Cars depreciate in value badly towards the later years.
don’t simply assume, as there are many scenarios why people would want to take full loan. one example is to take 100k HP at 2% Low interest per annum for max tenure of 9 years. then slowly pay back the bank while freeing up the cash flow for business or other expenses. it’s all about cash flow.
Same. If the person cannot spare even 10%, he shouldn’t be doing business too. Those in wedding planner, catering and food industry are some of the examples. You often hear how they bail on the day of your event, uncontactable.
You claim to be financial expert but dont even understand what is happening here.
You take a depreciating asset and lump it with an appreciating asset? You should not br in business or run any profit oriented concern!
100k car and 10% is only for 10k. What cashflow you talking about when the value is only 10k. I guarantee you can’t flip a 10k into 100k in 9 years time? A person who well manage cashflow can easily afford more than 10% of downpayment. Myself I bought a continental car and paying 15% dp while my wife car 70k Perodua I paid half dp. Sound stupid to do so? I afford to pay so and of course I have balance in my bank account.
Moreover that those who take full loan usually buying car below the 100k. If one cannot fork out 10% dp mean he is not ready to buy the car yet.
Totally agree. Buying a car is not just about affording the down payment. Petrol, annual insurance during the loan, road tax, tolls, maintenance, tyres etc etc etc, all this costs money. So if anyone needs to take a “full loan” to buy a car, better think 2x 3x 4x 5x or 10x, whether you can afford the post loan approval expenses… Just my 2sens
Agreed tht full loan thing must stop. Even reduce to max 7yrs installment. This certainly will reduce the volume of new cars on the road, hence reduce trafic and increase used car value too. Better still, enforce 20yrs max car scrapping plan. Further reduce those cars tht dont hv basic safety features such as abs, traction control, airbag, etc.. Not only cars, lorrys also.
No way. Government won’t allow.
You are right except for this part: “increase used car value too.”. Reduction of credit availability has negative impact on price.
Apadehal? Bulih keluar kwsp account 3 bayar downpayment
Sori to say. Common sense and general rule of thumb. If the car you want can only be bought via full loan, then that car is not yet for you.
100% support stopping full loan for cars. This and world’s cheapest petrol are main reasons for Malaysia being top fossil fuel polluter.
High time banks do real ESG.
crude is not from fossils!!…as we have learnt from school (even myself) if it was then archaeologist will not be finding dinosaur and other prehistoric animal bones!!
Crude is like our blood… if we lose blood, the bone marrow produces blood to replenish the volume needed( unless one has severely lost blood, then transfusion is done)
crude is continuously produced from deep underground and no one knows how.
Typical, talking thru the backside, holier than thou mentality
Probably you need 100% loan to buy your cars. With this policy there will be less B40 on the riad with their sticker infested cars and stupid driving attitude. You shouldn’t buy a car which you can’t afford to pay the loan off in cash.
Better than u? eat and crap via backside and wipe using surat khabar. Pure crap too
einvoice is just for the Government especially the tax authorities to spy on the lives of private citizens under the pretext of efficiency and automation
You mean like those private citizens who are earning a lot but not paying taxes?
Need more taxes so gov can upgrade menteri cars to Rolls Royce Phantom and pulis to BMW M5 CS so they can be better at their job.
Don’t forget that your interest incomes from FD and CASA also subject to e-invoicing
Lots of business owners and people doing shadow economy are not paying taxes. When you say T20 or even T1, those real rich people aren’t even on the spectrum, so e-invoicing hopes to make this loophole smaller as when you buy stuff from them you’re expected to get issued an invoice for you to be able to claim reimbursement from your company etc.
Example, in Penang there are lots of seafood restaurants the tourist trap type that don’t issue receipts and you can even get discount by paying in cold hard cash, everyone knows why.
Rule of thumb: You can only afford a car which is price equal to your annual income.
e.g. RM3000 salary x 12 months = RM36k
Proton Saga kosong
Proton saga manual?
In that case safer to buy Axia Rahmah, only 22k
Elok turun juga jadi 7 tahun sahaja maximum
Agreed
7 and 9 years was introduced when economic downturn was so bad that affects national car. Should limit back to 5 years. You will have less bankrupts candidates on the street.
Myvi kena 25k dlu. Blh rujuk pd menteri formula tu.
instead of 10% d/p to the Car Dealer,
better be 100% Loan but 5% cash deposit to the Bank,
which could even help lowering down the bank interest due to Bank accessible to the cash deposit for Investment Fund.
Of course, to be regulated under BNM.
I like how u think.
How i see it is that the 10% deposit wont affect monthly installment by much hence wont have much affect to loan approval. This applies for mass market cars.
Personally, i do not prefer putting money up front for a depreciating liability like a car. However, i dont mind letting the bank hold my 10% in a fixed deposit form and tie it to my loan for lets say 1year as a collateral. This reduces the banks risk and i earn a little from my FD. Its a win2 situation.
Sorry to say I think wld still exist like property developers SPA show higher amt then issue supplemental agreement or CN. So buyers still can use higher amt e inv to get loan
Real estate property is a different story altogether. Real estate prices, most of the time, will increase over time. Cars, on the other hand, are depreciating assets. That is the reason housing loans can be as long as 35 years (worth so much more after 35 years), while car loans are only 9 years (which is already too long anyway – after 9 years, the car value will be around 10-20% of the original value)
sama saja,
if like that the buyer will find TnG Loan 10% for d/p lol.
Allowing practices like a FULL LOAN and Loans up to 9 years led to the situation where people who technically couldn’t afford a certain vehicle, now suddenly could. And that was the start of a very steep slippery slope. If one can’t settle a car loan in 3 years, the car simply isn’t for us.
If you can’t afford down payment then you can’t afford a car is that simple
Mostly ppl commenting here no common sense like lhdn. Even, I hv capable of paying deposit, i dont want to as I can use the cash for other purposes. Take the article example 4k down payment. If you include it in loan, the repayment u going to pay is only very less. The interest accumulation also very less. So, let the owner of the car decide whether they want full loan or not. Otak prawns!
This mentality is like the other day punye rich Tesla Model 3 owner parking roadside on the pedestrian crossing… So you have the affordability to buy the car, but you chose to use your cashflow for other stuffs instead of parking, so you park roadside… Otak Prawns lah kau!
If 4k also cannot afford as dp then you should not buy the car. You think people saving the dp 4k can do other thing? I believe most people take full loan are those have little penny in their wallet but still they desire for a new car.
So actually the so said ‘full loan’ scheme of thing is a blatant manipulation of loop holes by salesmen and bank officer.
But after self regulate e based data management, the G should take the blame because B40 cannot buy Alza or City?
I agree with you yoture. The prblem is our lousy economy/opportunity + high car tax/AP that lead to the full loan BS. Our OKU minister is only capable of fixing the symptoms and not the root of the problem
Many 2nd hand dealers do this. No wonder so many poor ppl having those ugly boxy japanese cartoon looking refrigerators on wheels. An eyesore with many on the road in Malaysia.
sorry, but sidetrack here a bit – I heard that if you pay 100% cash for a car (more than 100K), that the SA will “report” you to LHDN – is this true?
when cannot pay the loan, then these people will do the sambung bayar thingy. if still cannot pay, then they will blame the bank and say interest is haram.
Perodua and used cars will see a boom in business…
First step in shut down P1P2 then then remove minyak supsidy kick sosialisDAP out everything will be normal.
Change it back to max 7 years repayment instead of 9 years.
Good move by the government but I think the used car industry will find a way. For example they can absorb the taxes cost of extra revenue and later they add up other company expenses to reduce and contra the previous added unreal revenues amount. No doubt mark up scheme and (100% loan) offering will continue.