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It was a public relations crisis that flooded social media resulting in Bank Negara apologizing for the confusion caused.
But the gist remains unchanged amid the fuss, and pay-as-you-go loan borrowers, used primarily for vehicle purchases, have the option to pay their fees after a six-month moratorium ends or extend their term. loan for an additional six months. in addition to the original duration of your loan.
“It will be necessary to indicate acceptance,” says Banco Negara deputy governor Jessica Chew, during a virtual media conference that clarifies the problem and addresses public annoyance to the terms of extending rental purchase loans under the moratorium plan. of government debt.
She says borrowers will be notified by their banks of the steps that must be taken to accept the moratorium, and borrowers will be guided through the process.
The central bank stepped in as a last resort after public anxiety arose after customers received text messages from banks about the extension of their rental purchase loans.
The texts submitted were different from housing loans, as the moratorium on such loans was automatically extended and borrowers who did not want an extension had to choose not to participate.
Dealing with rental purchase loans is different from normal home loans in that such loans are governmental by law.
“What is required now is an additional step to comply with the procedural requirements under the Procurement and Purchase Act of 1967 (HP Act) and Syariah.
“This additional step is unavoidable and requires that you incorporate changes to the payment schedule and / or amounts as a result of the six-month payment deferment in the loan / financing agreements,” says Bank Negara.
As part of a question-and-answer fact sheet, the central bank apologized for the confusion and anxiety caused, saying the postponement of loan repayments is intended to facilitate cash flows for borrowers / clients affected by the pandemic. from Covid-19.
“This intention remains the same. The confusion arises due to the misperception that the repayment amounts of an HP loan cannot be changed.
“This misperception also arose to some extent due to an illustration we provided in an earlier version of the FAQ, where certain assumptions and caveats were made,” says Bank Negara.
The central bank says financial institutions will inform each borrower / customer of changes to their HP loan or fixed-rate Islamic financing payment schedule and the amounts of the installments.
“Borrowers / clients should weigh the pros and cons of deferring the payment, and pay special attention to their ability to meet these payments after the moratorium,” says Bank Negara.
The previous FAQs were removed and the central bank said it was an illustration of what can happen and is not intended to exclude accrued interest charges on deferred loans. The frequently asked questions removed showed that there was no change in interest payable. New FAQs show that a slight increase in interest will be required.
Interest will have to be paid as there are two sides of the ledger that must be satisfied. For lenders, deferring your loans for six months will free up urgent cash for those who need to get through these tough times.
For those who can repay their loans, they can continue to provide services in a timely manner.
Bank Negara had previously said that it was important to note that interest / earnings will continue to accrue on deferred loan / financing repayments and borrowers will have to honor deferred repayments in the future.
Therefore, borrowers must ensure that they understand and discuss with their banking institutions the options available to resume their scheduled payments after the deferment period. People and SMEs who do not want or need to take advantage of these flexibilities can continue with their current payment structures, ”he says.
“Banks are required to pay a refund to depositors,” says LINK and regional office director Datin Arlina Ariff.
A banker says that each bank will treat rental purchase loans differently after the moratorium. The fact of paying a slightly higher amount of interest is a fact since there is a maintenance cost of the loans. Banks will take a financial hit by granting the moratorium.
How those loans will be repaid after the moratorium is another matter.
There are several ways to collect interest and principal that must be repaid.
Some may soften that charge over the remaining period, while others will mark the highest payments for the last few months of the loan, giving borrowers enough time to rebuild their finances.
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