In short, you don't need to make any repayment during this time.
Now, before you hippity hip hooray, please understand what BNM’s Loan Repayment Moratorium is about and the consequences that come with it.
1. No need to apply. It’s automatic.
Don’t have to pening one... all individual and SME with conventional loans or Islamic financing repayment obligations that meet below criteria will automatically qualify for the loan deferment:
- No defaulted loan repayment for more than 90 days as at 1 April 2020 (you’re advised to approach your banks to seek assistance if you have);
- denominated in Malaysian Ringgit.
Meanwhile, if you’re one of the corporate borrowers/customers, you may request for a moratorium on loan/financing repayment from your respective banks.
As for those who don’t want to partake the automatic deferment package and want to continue to make timely and full repayment of your loan/financing, please respond to the notification sent by the bank or talk to your bank about it.
2. You will pay more interest by deferring your loan.Although the banks aren’t allowed to impose late penalty charges on the deferred amount, interest still jalan, you know. Because… banks still need to make money maaa. So, this is something you’ll need to think about because it only means that you’re going to fork out more money later.
Here’s the breakdown:
- Conventional loans: The interest will continue to be charged on the outstanding balance comprising of both principal and interest portion (i.e. compounded) during the moratorium period.
- Islamic financing: The profit will continue to accrue on the outstanding principal amount, but will not be compounded in line with Shariah principles.
So, take note that the interest/profit will continue to accrue on loan/financing repayments that are deferred - which means accumulated repayment amount during the deferment of the repayment period will be added to the outstanding loan/financing amount.
Additionally, BNM suggested you guys discuss the suitable workout plans to repay the principal and interest accumulated during the said time because there’ll be an increase in monthly
payments or longer tenure - probably extended by six months.
3. It doesn’t apply to credit card balance, but...… your card issuer will automatically convert it into a term loan of not more than 3 years at an effective interest of not more than/financing 13% per annum. However, this is only for those cardholders who are unable to meet the minimum monthly repayment consecutively for the last 3 months, regardless of the income levels of the cardholders.
Do know that you can continue to use the credit card up to the remaining credit limit after taking into account the balance converted into a term loan/financing. The outstanding balance converted into the term loan/financing is treated as part of the credit card limit.
To add, the monthly term loan/financing instalments will then form part of the minimum monthly repayment amount on the credit card.
4. Your CCRIS records will not be affected.No, it will not because BNM yang initiated this temporary deferment, not because you don’t want to pay. But, maybe after the deferment period, it can get affected. How come? Because the interest/profit will continue to accrue on loan/financing repayments that are deferred - remember?
So, as a borrower, you’ll need to honour the deferred repayments in the future. If not, rosak lah your CCRIS. You better call your bank to discuss the options available to resume repayments after the deferment period without affecting your everyday finance.
If you want to know more about credit score, read 11 Things You Might Be Doing That May Hurt Your Credit Score.
SIDE NOTE: Infomation shared is based on BNM's FAQ. If you have any questions about this initiative, please contact your bank first or refer below banks' FAQs:
- Public Bank
- Hong Leong Bank HLB
- Affin Bank
- MBSB Bank
- Agro Bank
- Bank Simpanan Nasional
- Bank Islam
- Standard Charted Bank
- Bank Rakyat
- Bank Muamalat