BNM dropped a news of revision of policy on moratorium of Hire-Purchase Loan in Malaysia 2 days ago and the social media platform is going crazy. In fact, the revision of policy is unequivocally against the original intention of the moratorium, which is ease Rakyat's (citizens) financial burden during the outbreak of COVID-19 and economic downturn which caused by the global situation.
Here's a simple calculator, you can see how much is your new instalment amount if you opt in the moratorium.
* You can find it in your e-banking page
|Original Instalment Amount||RM ______ per month|
|Revised Instalment Amount||RM ______ per month|
|Addition Instalment Amount||RM ______ per month|
|Total Extra Amount Paid||RM ______|
|New Final Instalment Amount||RM ______|
A simple loan calculator below shows the difference you have to pay when you opt in the moratorium and enjoy 6 months repayment holiday offered by Bank. In the example below, Tim has a 7-year RM50,000 hire-purchase loan, on March 31 2020, he has left 50 instalment (out of 84 months) to be paid later with a 2.7% of Flat Interest Rate. The flat interest rate amount can be found in your e-banking statement or your loan agreement. After the calculation, Tim only has to pay RM 727 (RM19 extra or 2.68% more) compare with his original instalment amount RM 708. Not much difference right? In another word, if you have lost income during the outbreak and you need that extra RM700 cash to support your life, this is actually not a bad deal.
(Financially speaking) In the example above, the moratorium option is equivalent to a loan with an annual effective rate of 5.04%. So, to opt in or not? Our suggestion is, if you have sufficient cash flow on hand, do not, if you really need the instalment amount to maintain your life, there are many ways to acquire a loan by financial institution that has a rate lower than 5.04%.
*The result is just an estimation, this result and article do not constitute a financial advice to anyone. Please consult professional financial institution delegates for your needs.
**This calculation is based on the announcement made by BNM on 1 May 2020 (source: BNM Website)