Moratorium, defined as “a legal authorisation to debtors to postpone payment.”
Yes, this means your car loans (hire purchase agreement) are liable for the deferment announced by Bank Negara Malaysia (BNM) that mandates all banks to grant an automatic six-month deferment for all loans and financed repayments from 1 April 2020 (no April Fool’s joke here). Credit card balances are exempted from the moratorium though.
This means you don’t have to make the monthly installments on your car loan until September 2020 with no repercussions from the banks (the repo man will not cometh).
If you’re wondering if you qualify, the answer is most likely yes. BNM states the deferment applies to all active loans in Malaysian Ringgit so long as there aren’t any arrears for over 90 days as of 1 April.
According to the announcement, the deferment will be applied automatically to “individuals likely to be most affected by Covid-19.” You can always contact your banking institution to confirm that you’re eligible for it. If you want to defer on the convenience, simply let your bank know that you’ll be continuing payments as per norm.
However; and this is paramount to be noted, you’ll still have to make the payment for the six-months, just down the road. In simpler terms, consider your loan tenure extended by six months.
“Wait a minute, won’t a longer loan period mean more interest as well because banks are the bad guys?” Sorry Captain Obvious but no prizes for being right. The answer is unfortunately yes, the interest will continue to accrue on your loan if you take up the deferment.
Given the extra interest involved, BNM has ensured that banking institutions are to meticulously educate borrowers on the options and consequences; such as a repayment structure that incorporates the accrued interest for the deferment period.
Many experts have stressed that the real long-term repercussions of the Covid-19 virus will be its impact on the economy that could bring about a recession. Even now, the cashflow of individuals and SMEs will likely be strained and BNM wants banking institutions to do their part to help alleviate the burden.
Pore over the FAQs from BNM about the moratorium here if you're not sure or just give your bank a call.