Kuala Lumpur, Thursday, 25 January 2018 – In response to a recent article published in The Edge Financial Daily titled “Perodua, Proton to be hit most by lending guidelines”, The Association of Banks in Malaysia would like to state that banks will continue to provide financing, including hire purchase loans, to eligible consumers based on their suitability and affordability assessment. This is important to ensure that consumers are not unduly burdened by excessive debt.
Car loan applications received by our member banks are assessed in accordance to existing guidelines and the respective bank’s internal procedures. These would include credit evaluation assessments taking into consideration the applicant’s income as well as existing borrowing, to determine his/her capability to service the loan. Banks also take into account that borrowers should have sufficient financial buffers in case they are faced with unexpected adverse events. Consumers are thus advised to ensure that proper and complete documentation is provided to the bank when applying for financing.
Common reasons for the rejection of car loans would include but not limited to, history of credit default, insufficient income evidence, uncertain payment ability and low net disposable income. Therefore, it is worth noting that a healthy financial position will be advantageous when applying for loans.
Members of the public may now check on their credit status for free via eCCRIS, a secure online platform for the public to access their own Central Credit Reference Information System (CCRIS) report anytime at their convenience after registering for the same. The report would show the financing and repayment history of a borrower with participating institutions over the past 12 months. The link to eCCRIS is https://eccris.bnm.gov.my
The commercial banks in Malaysia remain supportive of the automotive sector as evidenced by the healthy overall approval rates of 70% for the purchase of cars from January 2017 up till November 2017. Therefore, car loans will continue to be extended to eligible borrowers.
In addition, it is the regulator’s expectation that the impact of the implementation of MFRS 9 this year on financing costs is also expected to be limited.