Following the announcement made on 1 May 2020 by Prime Minister YAB Tan Sri Muhyiddin Yassin of the Conditional Movement Control Order (CMCO) on 1 May 2020, Bank Negara Malaysia (BNM) also announced that the 6-month moratorium on bank loans will now accrue interest of the course over the deferment period.
To the layman that opening line in itself has a lot of financial jargons that can come across very intimidating, so let’s break it down one by one to ensure that we can all understand what all of this means and how it can affect individuals with hire purchase commitments, especially car loans.
What is a ‘loan moratorium’ anyways?
Let’s start with what a loan moratorium actually means to the everyday Joes and Janes. Essentially, it means that due to the fragile state of our financial situation during this pandemic, the Malaysian government has put in place a temporary freeze on loan repayments for the next 6 months – beginning April 1 until September 1 2020.
To put it in perspective, let’s say your car loan period ends in January 2021: it will now be extended until July 2021 (6 months later) should you opt to apply for the 6-month loan moratorium. Of course, if you are financially secured you can always do your repayments as per usual lah.
Pretty easy to understand kan? Let’s dig in more!
An interest-ing turn of events
Initially, on 27 March 2020 to be exact, it was announced by BNM that additional interest will not be charged during the 6-month loan deferment period, meaning later on you still pay the same amount if your loan agreement is extended 6 months longer than the original end date.
Then, an FAQ that was released on 1 May 2020, states that interest will now be charged during the loan moratorium period. What this means is that you will need to repay the interest when your loan repayment resumes after the deferment period. You can defer repayment, but interest still jalan!
THEN, on 6 May 2020, it was once again announced that Banks have agreed to waive any interest charges on during the moratorium period.
With that being said, due to the consistent update on the moratorium status, we urge all loan customers to educate themselves on this topic and read up on as many credible sources as they possibly can in order to plan out their financial health over the next 6 months and even after that.
We get it. Financial panic is fully understandable but, we must do our best to ensure that our loved ones are also secured during this pandemic through knowledge and understanding the ongoing financial climate.
For more relevant information >>> https://twentytwo13.my/issues/moratorium-faqs-from-pronouncing-it-right-to-eligibility-for-new-vehicle-owners/