How applying the loan moratorium can affect you?
Bank Negara announced the six-month moratorium beginning July 7, 2021 which individuals and SME owners can opt in to apply for it. This announcement is indeed good for individuals or SMEs who are having tight cash flow during the pandemic. It said banks will not charge interest on interest, or profit on profit (i.e. compounding interest/profit), or any penalty interest/profit during the period of assistance.
The repayment assistance packages for individuals are as follow:-
However, banks will still be charging interest on the loan outstanding amount. Only the compounding interest is excluded. For example:-
The original loan amount: RM 500,000
Loan interest per annum: 3.10%
Loan tenure: 30 years
Loan monthly instalment: RM 2,148.68
After 10 years, the outstanding loan amount will be RM381,090.63. If one starts to apply for the 6 months’ loan moratorium, one will be charged additional interest for these 6 months, i.e. approximate RM 100+. The planned repayment of the principal with interest is RM 12,892.08. Please note that the full repayment with the additional interest can be immediately payable upon the end of 6 months’ loan moratorium. If you need to postpone the repayment of this amount, you need to arrange with the bank and more compounded interest will be incurred and spread over to the remaining loan tenure. If you are not having cash flow problem, you should continue paying your normal loan instalment as normal. Delaying it will cost you more and upon the end of 6 months’ moratorium, you will face bigger outstanding amount to be paid.
Different banks will have different treatments. You can check the following links for different banks.
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