How Does A 6 Month Loan Moratorium Affect You?

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Picture of the National Bank of Malaysia

As part of the PEMULIH package announced by prime minister Muhyiddin Yassin, the RM150 billion aid package will also include another six-month moratorium on bank loans.

This would make it the second to be implemented since then the first moratorium in 2020 last year.

What is a moratorium?

A moratorium is a temporary suspension of activity until future events warrant lifting of the suspension.

Often indicted when a crisis disrupts normal everyday routines, governments typically grant a moratorium during floods, droughts or disease outbreaks. It is then lifted when the population returns to normalcy and there is no significant threat to livelihoods around.

Unlike in 2020, the moratorium in July 2021 isn’t automatic, it has to be applied for from July 7th onwards. The moratorium accepts applications from all individual borrowers, microenterprises and will be granted without any conditions or documentation.

Small and medium-sized enterprises that have been adversely affected by the pandemic can apply too, with only self-declaration required.

So, once granted, how will it affect you?

Deferred loan/financing

You don’t have to meet your monthly loan payments throughout the six months and will not be penalized.

Approval is automatic but you’d still have to contact your bank in order to apply for it.

There will be no compounded interest or penalties for taking it up and it will also not work with credit card debt.

However, the moratorium only works for loans and financing approved before July 1st 2021, interest will still be accumulated and doesn’t apply to loans/financing that are more than 90 days on the date you requested for the moratorium.

Delayed payments, a good thing or bad thing?

For starters, not having to pay for your loans will help with a monthly budget if you have one. Especially for those who are forced to take up unpaid leaves during this time, this will come by as a silver lining .

It will also help if you are successfully juggling and have been paying off multiple loans.

While you’re saving up on not having to pay your dues, interest still accumulates during the moratorium period.

What you don’t pay now could end up increase in the long run where six months’ worth of interest will be added on to the total that you have to pay off.

Interest rates

On normal days, you would still be accruing interest. What makes this different is that interest is simply being added to the total loan amount even without the instalments being paid.

When enquiring with banks about the moratorium, it’s vital that you seek the information on how they are handling the interest rate situation. Pay attention to the news and remember to check legitimate sources such as the bank’s website.

Most cases would need you to either just adjust your existing loan tenure or to increase your monthly repayment amount after the moratorium ends.

Credit

More on the elephant in the room, the moratorium doesn’t apply to credit card debt. BNM directed banks to offer the option to convert credit card balances into three-year term loan or financing with lesser rates.

By offering an indirect way for credit card holders to pay off their balances, this takes advantage of the moratorium. However, much like every other applicant, nobody will be free of interest accruing.

The amount of interest will just be subjected to a lower amount from being a term loan.

If you’re already capable enough of paying off your credit cards loans, maybe switching over may be a hurtful move.

If you are facing a dreaded financial hardship during this time, then it may be something you can consider.

Missed payments

If you’ve not paid your loans for more than three months, you will not have access to this moratorium.

Although it doesn’t come by as good news for those already in financial hardships, credit counseling may help.

Finsource Solution not only offers five different loans and financing, but also provides credit counseling from experts in its advisors!

With a clean loan, property loan, 2 in 1 financing, gap financing and invoice financing suited to meet your financial needs, our loan advisors are ready for your questions 24/7.

Contact us today to learn more about how we can be off assistance to your financing needs.

Phone: 03-2712 4333
Whatsapp: Wasap.my/601111018333

www.finsourcesolution.com

 

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