Latest update on Hire Purchase loan moratoriums, there will be no interest nor additional charges during the CMCO.
— Ministry of Finance (@MOFmalaysia) May 6, 2020
The Ministry of Finance has confirmed that the moratoriums that were initially offered by banks will remain the same with the extended repayment period for the following six months. This particular decision has been made prior to BNM’s option to borrowers of either paying off the six-months deferred instalments in one go with October 2020 instalment (no interest charged) or to continue the repayment on a monthly basis post-October 2020, with an extension of six months in the repayment period with interest based on the contractual rate that is charged on the amount of the deferred instalments that remains outstanding.
In the latest FAQ sheet dated May 1 from BNM’s website, it stated that interest or profit will accrue during the six-month moratorium period.
Whereas it’s a completely opposite statement which was mentioned on the previous FAQ sheet that’s dated on March 27: “No additional interest/profit charged during deferment.”
This has made the rakyat confused and worried as those who chose to defer their payments will no longer be interest-free.
Many have come front to criticise BNM including politician Kuching MP Kelvin Yii.
However, BNM has denied that it had backpedalled on its initial announcement on March 25. According to them, they sincerely regret any confusion and anxiety that may have caused by the announcement.
“The deferment package is meant to ease cash flows for borrowers/customers who are affected by the COVID-19 pandemic. This intent remains the same. The confusion arises because of the perception that under the HP loan, the amount repaid cannot be changed. This misperception also arose to some extent from our earlier illustration where we made certain assumptions and caveats.”
They have also stated that their illustration was not meant to preclude interest/profit rates to accrue over the deferment period.
So in short, the moratorium is no longer automatic as borrowers are now required to comply with the procedural requirements which are under the Hire-Purchase Act 1967 (HP Act) and Shariah.
“This additional step is required to incorporate the changes to the payment schedule and/or amounts as a result of the six-month payment deferment in the loan/financing agreements.”
All in all, despite all the confusion, we can now sigh with relief as we have the confirmation from the Ministry of Finance that no additional charges will be applied during the moratorium.
Members of the public can obtain further information from their respective banks.