While it was good news that the loan interest rates will not be raised for the time being, even more good news has seemed to come our way!
Finance companies are in the midst of restructuring car loan repayments to help their customers with heavy financial commitments. So far, 3 banks have been working on this and are set to announce their hire-purchase loan restructuring packages soon. There has been no indication which banks these are or whether the other banks are embarking on a similar exercise but considering the competitive environment the banks operate in, it might be likely that other banks will have no other choice but to do the same.
It will be interesting to see how the restructuring plans will be carried out as we all know that banks aren’t exactly kind and philanthropic. If it involves the stretching out of the loan over a longer period, I’m not sure if that will really help their customers, as it will simply mean paying a higher interest overall.
Watch this space to find out more over the next few days! In the meantime, read the article from The Star after the jump:
PETALING JAYA: Finance companies are resorting to restructuring car loan repayments to help ease the burden of customers with heavy financial commitments.
At least three major banks will announce their hire-purchase loan restructuring plans soon.
A senior manager of a prominent local bank with a substantial volume of hire-purchase customers said that given the current economic scenario, where prices of fuel and food had increased, many customers would be burdened by the high repayment plans that they had signed previously.
Finance companies could not rule out that some customers might find it difficult to service their monthly instalments, he said.
“We expect that for next year there will be more repossession orders given, but it won’t be a drastic increase,” he said, adding that his company issued a monthly average of 2,500 repossession orders.
Most banks and finance companies will try to assist any customer whom they feel could fail to meet their monthly instalments.
The move is expected to bring cheer to thousands of hire-purchase customers, especially those paying high monthly instalments for their car loans.
A Perodua Kelisa owner, Jen Neoh, 29, welcomes an option to restructure her car loan, as it would ease her financial burden.
“I think it’s better to be in debt with a bank, rather than borrowing from friends, family or even loan sharks,” she said.
Neoh, who now pays almost RM400 for her monthly instalments, said she would be comfortable paying about RM200 instead.
A public relations manager in a large bank here said her bank was now very selective with new approvals for hire-purchase loans.
“And we have also started calling customers to help restructure their hire-purchase agreements to help them make ends meet,” she said.
Loan restructuring is commonly done by extending the account holder’s repayment period to lower the monthly instalment that needs to be paid.
“Many factors affect how much the refinancing would affect the new monthly repayment amount,” said a head of retail collection in Kuala Lumpur.
He said they included how much loan was taken in the first place and the customer’s financial status.
“But if they can’t pay, reduction is not a solution. They can always surrender their cars. But we will try to help them so that they won’t have to,” he said.
Federation of Consumer Associations adviser Datuk Hamdan Adnan said Bank Negara must step in and help consumers who have been threatened with having their vehicles repossessed.
“Banks always claim they are customer-friendly. But in reality, they exploit some customers,” he said.