The six-month moratorium ends on September 30, 2020.
This blanket moratorium has allowed millions of Malaysians to get temporary relief for loans totalling over RM66 billion. However, this is about to end which means you will need to start paying the monthly instalments for all your housing, vehicle or other personal loans starting from October. How does this work and what are the options available if you are not ready to resume paying your loans? Here’s what you should know to prepare ahead.
What happens when the loan moratorium ends?
After September 30, 2020, you are expected to resume repayment of your loans. Borrowers should contact their respective financial institutions to find out the options available to resume payments if they have not received notification about the post-moratorium repayment.
The blanket bank moratorium had allowed all borrowers to delay loan payments from April 1, 2020, to September 30, 2020, but don’t forget that the existing monthly interest charged for the loan amount will continue to add up.
For home mortgage, the accumulated unpaid interest on the loan will still need to be paid after the moratorium either by increasing the monthly instalment amount or extending the loan repayment period. However, the recent interest rate cuts have also helped bring down home loan interest payments and this could lead to lower monthly repayments.
Those who have personal loans or financing including hire purchase commitments will also need to extend their loan repayment period if they had taken the six-month loan moratorium.
What is the three-month moratorium extension?
If your income is still not back to normal and you are not ready to start repaying your loans, there are several options available to help you manage your debts. The prime minister had announced in July that there will be targeted moratorium extension and repayment flexibility for those financially affected by COVID-19.
It’s important to note that this extension is not automatic like the previous moratorium. Borrowers who want to extend their loan moratorium or reduce their monthly instalment amounts must apply directly to the bank.
If you can afford the monthly repayment now, it’s better to start paying again as the longer you delay means the loan period would be extended even more in future. As for home loans, the longer you delay paying down the loan while adding on the unpaid monthly interest charges will mean paying more in borrowing cost in future.
Who qualifies for the extension and what are the options?
Borrowers must fulfil certain conditions to be allowed to apply for the moratorium extension or other repayment options.
|Who can apply||What are the options available|
|If you lost your job in 2020 and have not found a new one yet||Extend moratorium until December 31, 2020|
|Still have a job but have a salary cut due to Covid-19||Reduce loan instalment in proportion to salary reduction for a period of six months
e.g. If your salary is reduced by 30%, you may apply to reduce your loan repayment by 30%
|Hire purchase borrowers affected by job loss or salary cut||Extend repayment schedule according to the Hire-Purchase Act 1967*
*Note: the options available for repayments are different from those available under loans and financing packages
|SME borrowers and others not included in the categories above||1.Pay only the loan interest for a period of time
2. Extend the loan period to reduce monthly instalments amount
3. Provide other forms of repayment flexibility until the borrower is in a more stable position
To make use of any of these options, you must apply directly to the bank where you got the loan before the blanket moratorium ends in September. Borrowers who need help to renegotiate their loans can also approach AKPK (Agensi Kaunseling dan Pengurusan Kredit) while business owners can seek advice from the Small Debt Resolution Scheme (SDRS).
This article was repurposed from “The Loan Moratorium Is Ending This Month: Are You Prepared?” on iMoney.com.my