Since the end of the automatic, blanket loan moratorium in Sept 2020, banks have offered targeted assistance to Malaysians who still need help to repay their loans because they’ve lost income or are getting lower income.
On 18 Jan 2021, banks also announced that those affected by the recent flooding in some parts of Malaysia as well as the on-going MCO 2.0 would be eligible for loan repayment assistance.
Here’s the latest on the type of repayment assistance you can get, and who can get it:
|Who is affected?||What can you get?|
|Victims of recent floods||● Extended loan moratorium for up to 6 months; or
● Deferment of loan installments with waiver of late payment charges
|Borrowers who lost their jobs in 2020 or 2021||● Deferment of loan installments, extended loan tenure or reduced monthly instalments for 3 months|
|Employed individuals whose income have reduced due to the Covid-19 pandemic||● Lower installment amount
● If you’re a middle 40% income earner (M40) individual who is a recipient of Bantuan Prihatin Nasional (BPN), you now only need to provide a self declaration of loss of income. Previously you had to show proof of loss of income to your bank.
|Bottom 40% income earners (B40) registered in the Bantuan Sara Hidup (BSH) or Bantuan Prihatin Rakyat (BPR) database||
● Deferment of installments by 3 months; or
● Reduction of installments by 50% for 6 months
- Repayment assistance only applies to loans approved before 1 Oct 2020.
- Your loan installments are not overdue for more than 90 days at the time you request for repayment assistance.
In addition to the above, other borrowers who don’t fall under the categories above but have difficulties in repaying their loans can also contact their banks to discuss other repayment plans according to their specific needs.
How will the moratorium/repayment assistance affect your loans?
- If you have a moratorium or new repayment plan, you won’t be charged late payment fees.
- For flat interest rate loans such as hire purchase or personal loans, you won’t be charged extra interest. However, the period of your loan will be extended.
- For reducing balance loans (such as housing or mortgage loans) you will accrue interest throughout the relief period. You may have to extend your loan to pay off the additional interest.
Here are some useful questions you can ask your bank:
- How much are my new monthly installments?
- When will my new installments begin?
- How long will my loan be extended for?
- How much additional interest or profit do I need to pay?
- Will I have to make the additional payments all at once at the end of the repayment assistance or at the end of the loan tenure?
- What needs to be done if my income is still affected after the assistance ends?
What do you need to know?
By extending the tenure of your loan, you’ll generally end up paying more in total, even though your monthly instalments will be lower. So, if you can afford to repay your installments as usual, you may prefer to stick with your current repayment plan to avoid owing more debt in the longer term.
But if you lost your job and find it difficult to repay your loans, consider deferring your installments.
If you had a pay cut, you may need to defer your loan installments in either of these ways:
- Reducing your monthly installment
- Only paying the interest/profit for a specific period
- Change to another facility like a term loan for credit cards
If you receive targeted repayment assistance during this period, your CCRIS (Central Credit Reference Information System) report won’t be affected. So, if you were worried about your credit score, you can feel safe under the loan moratorium, as long as you contact your bank and agree on a new plan.
Remember, if you just don’t pay your loans without getting in touch with your lenders, you’ll have to face consequences like impact to your credit score, fees and penalties, repossession or even legal action!
As at the time of writing, you can contact your bank to discuss assistance plans up until 30 June 2021.
What happens if you don’t fit into these categories or can’t fulfil the terms required?
If you need advice on other options, get in touch with the Credit Counselling and Debt Management Agency (AKPK).
If you’d like to apply for repayment assistance and want your bank to contact you, or if you’d like to complain about the repayment assistance plan offered by your bank, you can contact BNMTELELINK via bnm.my/RASurvey.
Interested in reducing your loan but struggling to balance your budget? You may want to check out our guide on planning a budget.
To understand how the type of loan you have can affect the effective interest rate you’re charged, read our guide on effective interest rates. Use our effective interest calculator to calculate the effective interest of your loan.
If you’re concerned you can’t afford the monthly installments after the moratorium is over, consider why you may have to change your loan repayment plan with your bank to avoid a bad credit score in the future.