This is a developing story and we hope to have more for you in due time.
In an early Labour Day gift, Bank Negara Malaysia (BNM), late yesterday evening announced that hire purchase (HP) loans will come with additional interest charges after the six month moratorium or holiday effective from April 1 to September 30 of this year.
TL;DR, if you took the six months HP loan holiday it WILL NOT be interest free and you'll have to pay the interest at a later date.
You have three options according to the Association of Banks in Malaysia (ABM)
For many, Option 1 is a little far-fetched. Even at a monthly repayment of RM500 a month, seven months would total RM3500, a significant amount in these times.
Let's paint this scenario with numbers from BNM themselves:
Remaining loan period: 5 years
Interest rate: Fixed interest of 2.71% (or an effective rate of 5.36%) per annum
Now looked at from a monthly basis RM19 is a small amount but take a wider look, RM1,130 or more accurately RM1,140 (we're not sure why BNM's calculations are RM10 short) is not so small anymore, is it? Let's also bear in mind that this is only for a RM50,000 loan at a fixed interest rate of 2.71%.
Perhaps a silver lining is that according to ABM the first two months of the moratorium will be interest-free (April and May 2020) so in effect you will only be charged interest for four months (June-September 2020)
A question that is lingering on many minds including ours is why did BNM not announce this when the offer for the moratorium was made to all Malaysians on March 25? Many of us due to salary cuts or loss of jobs took the moratorium on the basis that it would be interest free. Sure, one could argue that BNM never said nor confirmed that it would be interest free but neither did they dispel the general consensus that it would be.
Expect to hear from your banks soon on any changes to your HP agreements including your revised payment schedule and changes to your payment amounts if you still choose to opt-in for the moratorium.
Were you one of those that took the six month moratorium? Do you feel unfairly treated by this latest announcement? Let us know.