Just like that, six months have flown by and the loan moratorium which began on 1 April 2020 officially ends today, 30 Sept 2020. If you took the moratorium, you’ll need to start repaying your loans from tomorrow. But are you ready?

How will your loans be affected?
Depending on whether your loans are calculated using flat or reducing balance interest rates, the moratorium will impact your loans differently.
Most personal loans and hire purchase agreements are based on flat interest rates. Home loans are usually calculated using a reducing balance method.

The table below compares the effect of the moratorium on both types of loans:

Hire Purchase or Personal Loans	Home/Mortgage Loans
No additional interest charged during moratorium. Your loan will be extended for the same number of months as the moratorium. Your monthly repayments will be the same as before the moratorium.	Your interest would still be calculated during the moratorium, so you’ll owe more in interest payments. You can extend your loan repayment period by more than six months to pay the extra interest – The length of your loan extension will depend on what you agree with your bank based on how much your monthly repayment will be.

BUT reducing your monthly repayments will mean that you need to repay your loan over a longer time. Depending on how your loans are structured, you may have to pay more in interest.

What can you do if you’re not ready to continue repaying your loan/s?
If you have only one loan, speak to your bank directly. If you have many loans, speak to Agensi Kaunselling dan Pengurusan Kredit (AKPK). AKPK can counsel you on how to handle your loans, or you could get into one of their debt management programmes.

Since this is the last day of the moratorium, you need to speak to your lenders TODAY if you can’t continue to repay your loans! They’ll give the following options to help you manage your repayment:

Reschedule: Rescheduling your loans means extending the duration of your loan or changing your monthly payments without changing the terms and conditions of your loan agreement, such as the type of loan or interest charged.
Restructure: Restructuring is when you need to change the terms and conditions of your loan or the type of loan, for example from a bank overdraft to a term loan.
Debt consolidation: You can take a new loan that pays off all your existing loans. But, you’ll get to just pay off one loan with a single interest rate. Just make sure you can afford the new loan or you’ll be right where you started!

Can you get an extension on the moratorium?
If the above choices don’t suit you, you can apply to extend the moratorium until 31 December 2020, but you’ll have to meet certain requirements:

You’ve lost your source of income
If you’ve lost your source of income because you lost your job or had to shut down your business during the MCO and have still not gotten any income by today, banks will extend your loan moratorium up to 31 December 2020.
If your income has decreased
If your income has decreased (either because of a pay cut or your business isn’t doing as well), the banks will help you restructure your loans. When you restructure your loans, your monthly repayments will be reduced by the same rate as your pay cut. For example, if your income has reduced by 30%, your loan repayments will be reduced by 30%.
You’ll need to prove that your income has been affected by showing the bank your payslips and bank statements for the months before and after the MCO.
If your spouse has lost their source of income
If your spouse has lost their source of income and you’re finding it difficult to manage your household expenses, you can write a letter to the banks to appeal for an extension. However, this works on a case-by-case basis. You’ll have to prove a significant loss of income for your household. In addition to proving your spouse’s loss of income, you might have to send in your payslips and your bank statements too.

Whatever you do, DON’T do nothing!
If you simply stop repaying your loans without agreeing anything with your lenders, this is what could happen:

You’ll end up owing a lot in interest: Once you start missing payments, there will be interest and penalties charged that will grow to become a lot of money!
Your credit score will be affected: When you miss payments, you’ll get a bad credit score which would make it difficult to get loans and even apply for services like phone lines in the future.
You could lose the assets you borrowed to pay for: If you have a car loan you’re not paying for, the banks/lenders will take away your car if you start missing payments. If you don’t continue paying your home loan, the banks/lenders will auction off your house to pay off your loan (if it’s sold for less than the money you owe, you’ll have to pay the balance).
You may be filed for bankruptcy: If you miss many payments, your lenders can file for your bankruptcy. You’ll eventually lose your assets, your bank accounts will be deactivated, and you won’t be able to get a loan from a bank! This gets really messy, not to mention stressful.

Time is running out, but now you know what you can do and what you shouldn’t do if you’re not ready for the loan moratorium to end – just make sure you get in touch with your bank or AKPK before the end of today!