There are numerous banks that offer both new and used car loans in Malaysia. You can use the table below to compare the various car loans avaliable in Malaysia to find the best one for you. It will also help you understand the interest rates and eligibility criteria that will be applicable on the new or used car loan that you opt for.
Affin Bank
Hong Leong
Kuwait Finance House
As per the institution’s discretion
Public Bank
RHB
Car Loan also known as Hire Purchase, is a type of financing plan available to individuals as well as institutions to help finance the purchase of a vehicle/car.
On the basis of financing principles, there are two types of car loans available:
On the basis of the type of the car, the car loan can be classified into the following types:
The following is the list of features and benefits associated with car loans:
Let’s take a look at the list of banks and financial institutions that offer car loans in Malaysia:
Check out Car Insurance In Malaysia
The eligibility depends upon a list of factors like customer’s legal capacity, credit character, payment behaviour in the past, and the bank’s specific requirement. The following are the basic car loan application process requirements:
The car loan process may require a different set of documents depending upon the type of applicant and the car loan package. Let’s take a look at the different type of documentation required for different type of customers:
| Interest Rate/Profit Rate | ||||
|---|---|---|---|---|
| Affin Bank | Conventional Hire Purchase | Pegged to base rate at 3.85% p.a. flat | Pegged to base rate at 3.85% p.a. flat | |
| Affin Islamic | Hire Purchase-i | Pegged to base financing rate at 6.71% p.a. | Pegged to base financing rate at 6.71% p.a. | |
| AmBank | AmAUTOMate | 4.50% p.a. | 4.50% p.a. | |
| AmBank Islamic | Arif Hire Purchase-i | Pegged to bank’s base financing rate. | Pegged to bank’s base financing rate. | |
| Bank Muamalat | Hire Purchase-i | Depends upon the current Bank’s prevailing rates. | Depends upon the current Bank’s prevailing rates. | |
| CIMB | Hire Purchase | 2.75% to 4.70% p.a. | 4.00% to 7.95% p.a. | |
| CIMB | Hire Purchase-i | 2.75% to 4.70% p.a. | 4.00% to 7.95% p.a. | |
| Hong Leong | Auto Loan | Fixed rate: Up to 10% p.a. | Fixed rate: Up to 10% p.a. | |
| Floating rate: Up to 17% p.a. | Floating rate: Up to 17% p.a. | |||
| Hong Leong Islamic | Auto Financing-i | 3.78% flat | 3.78% flat | |
| Maybank | Al-Ijarah Thumma Al-Bai | 3.40% to 4.10% p.a. flat | 4.25% to 4.50% p.a. flat | |
| Maybank | Hire Purchase | 3.40% to 4.10% p.a. flat | 4.25% to 4.50% p.a. flat | |
| Maybank | My First Car Loan | As per bank’s discretion. | As per bank’s discretion. | |
| Public Bank | Aitab Hire Purchase-i | Pegged to base financing rate at 6.72% p.a. | Pegged to base financing rate at 6.72% p.a. | |
| Al Rajhi | Superbike Financing-i | As per bank’s discretion. | As per bank’s discretion. | |
| Al-Rajhi | Automobile Financing-i | As per bank’s discretion. | As per bank’s discretion. | |
| Bank Islam GradHitz | Vehicle Financing-i | 2.90% to 3.60% p.a. | NA | |
| Bank Islam | Vehicle Financing-i | 2.90% to 3.60% p.a. | NA | |
| Bank Muamalat | Muamalat Vehicle Financing-i GradPack | Depends upon the current Bank’s prevailing rates. | NA | |
| Bank Rakyat | Auto Hire Purchase Financing-i | 2.80% to 3.50% p.a. | NA | |
| Bank Rakyat | Vehicle Financing-i | Up to 15.00% p.a. | NA | |
| BSN | Hire Purchase | 2.53% to 3.15% p.a. | NA | |
| BSN | Hire Purchase-i | 2.53% to 3.15% p.a. | NA | |
| Hong Leong Mach | Cruise Control Car Loan | As per bank’s discretion. | NA | |
| KFH | Automobile Ijarah-i | As per institution’s discretion. | NA | |
| RHB | Hire Purchase | As per bank’s discretion. | NA | |
| RHB | Vehicle Financing-i | Up to 12.00% p.a. | NA | |
The monthly repayment instalment of a car loan calculation depends upon the total approved financing amount, the profit or interest rate associated with the plan, and the length of the financing tenure.
For a fixed rate car loan, the monthly instalment can be calculated using the following formula:
M = [A + (A x R x T)] / t
Where M = Monthly instalment; A = Total financing amount approved; R = Profit rate or interest rate; T = Financing tenure in years; t = Financing tenure in months.
Before a customer opts to get a car loan, he/she needs to keep some factors in mind. The following is a guide to choose the right car loan:
Q. What are the factors that affect the financing amount associated with a car loan?
A. The approved amount of a car loan depends upon the following factors:
Q. What is the difference between fixed and floating rates of interest associated with a car loan?
A. With a fixed interest car loan, the monthly repayment instalments will be fixed and known from the beginning of the loan period. But the floating rates of interest depend upon the base rate of the bank and market conditions. Thus floating rate of interest may change during the loan period, that might imply a change in the amount of monthly repayment instalment amount.
Q. What are the factors that affect the interest rate or profit rate associated with a car loan package?
A. This mainly includes credit history and a credit score of the applicant, monthly income and debt-to-income ratio of the applicant, the car’s type, model and age, down payment paid for the car, and tenure of the loan. The interest/profit rates can also vary with a change in market conditions and the base rate or base financing rate of a bank.
Q. Is it mandatory for one to have a savings or current account with the bank offering the car loan?
A. No. It is not compulsory for the customers applying for a bank’s loan package to have a savings or current account with the bank.
Q. How much time does a car loan process take for approval?
A. Once an applicant fills out the car loan application form and submits it to the bank along with the set of required documents, the bank will check the validity of the documents. After successful validation, the bank will contact the customer with the details regarding the loan.
Check out How to Get a Car Loan Faster in Malaysia
Q. What are the ways in which I can make repayments on my car loan?
A. The repayments for a car loan can be made via interbank GIRO, by placing standing instructions, or by making an over-the-counter payment at the nearest branch of the bank or financial institution that has offered the car loan.
Q. What are the kind of charges I have to bear with a car loan?
A. Depending upon the car loan package, you can be charged with the registration fee, processing fee, stamp duties, insurance or takaful coverage charges among others.
Q. When do I get the ownership of the vehicle with a car loan?
A. With a hire purchase facility, the ownership of the vehicle will be transferred to you once you complete the repayment of the loan.
Q. Does a car loan application process require one to be accompanied with a guarantor?
A. The requirement of the guarantor may vary from application to application. The customers not meeting the bank’s terms and conditions may be asked to bring a guarantor to the application process. Specific bank car loan packages that are open to foreigners may also require a local guarantor during the application process.
Q. Should I take the motor insurance coverage or takaful coverage with my car loan?
A. For most of the banks, it’s mandatory for you to get the motor takaful/insurance coverage on your car loan as per the Hire Purchase Act 1967.
Q. What if I miss to pay a monthly repayment instalment on my car loan?
A. In case you miss timely payment on an instalment, you will be charged with late payment charges. Depending upon whether the car loan package is under conventional financing principle or Islamic principle, the charges may differ. The following are the late payment charges associated with car financing packages under both the principles:
Conventional car financing: Up to 8% of the overdue instalment amount.
Islamic car financing:
Where IIMM = Islamic Interbank Money Market.
Q. Am I allowed to partially pay the monthly instalment with my car loan?
A. No. The banks or the institutions offering a car loan don’t allow their customers to pay the monthly instalment partially. You are advised to pay the agreed upon amount on or before the due date every month.
Q. What happens if, during the loan facility, I decide to pay the entire outstanding principal at once? Will the bank allow me to do the same?
A. Most of the banks allow their customers to make an early settlement on the car loan.
Q. Is there a benefit associated with an early settlement on my car loan?
A. Most of the banks offer a rebate to the customers with an early settlement of their financing facility. The rebate is calculated on the unutilised portion of the total tenure.
Q. How is the monthly repayment instalment calculated with a car loan package?
A. The monthly repayment instalment for a loan package is based on a flat interest/profit rate is calculated using the following formula:
M = [P + (P x R x T)] / t
Where M = Monthly instalment amount; P = Total approved financing/loan amount; R = Interest rate or profit rate; T = Financing/Loan tenure in years; t = Financing/loan tenure in months.
The Proton Edar Dealers Association Malaysia (PEDA) has recently made an appeal to the Malaysian government to reinstate its ELV (End of Life Vehicle) policy.
The association wants the ELV policy, which was initially introduced back in 2014 and was withdrawn later, to be reinstated in the country to enhance the sale of new vehicles. Datuk Armin Baniaz Pahamin who is a PEDA adviser, recently stated that Malaysia presently has around 28 million registered cars, but maximum of the cars may not be qualified to drive on the roads. With no age-limit imposed on the cars of the country, unlike other developed countries; now citizens are reluctant to buy new cars and this is slowing down new car sales.
According to a report, the total industry volume (TIV) has witnessed a descending trend since 2015, and the sale of new cars is constantly falling. For example, in comparison to the numbers of year 2016, which registered the sale 580,123 units, in last year, only 576,635 units of vehicles were sold.
Consequently, the association has urged the government to address this issue in the next National Automotive Policy (NAP) review.
12 April 2018
Ongoing Perodua takeover deal between UMW Holdings and MBM Resources (MBMR) has witnessed a twist as Daihatsu is not in favour of UMW taking an overpowering stake in Perodua.
According to latest reports, Datuk Abdul Rahim Abdul Halim, chairman of MBM, has recently mentioned about a letter from the Japanese shareholders (Daihatsu) that gives their opinion on the Perodua deal. He further mentioned that according to the letter, the Japanese investors are against the proposal of any one company holding a maximum amount of stake in Perodua.
Until now, UMW Holdings was all geared up to take control of Perodua with a plan to increase its stake from the present 38% to 70.58%. In this attempt, UMW had also offered proposals to PNB Equity Resources (PER) and MBMR, which also are shareholders in Perodua, to take over their stakes in the company. MBMR, however, had rejected the offer.
Now, if reports are to be believed, UMW has offered to extend the offer till the end of April.
12 April 2018
Jaguar Land Rover Malaysia (JLR MY) is launching their latest Range Rover Velar model this month in Malaysia. The SUV is packed with exclusive contemporary features that give a pleasurable driving experience.
The vehicle will be offered as a P250 model and the AWD system will be backed with Intelligent Driveline Dynamics (IDD) that provides better traction on- and off-the-road. Among other features, the car’s exterior gear list includes retractable door handles, 21-inch wheels that offer a choice of 4 different designs, and full-LED headlamps among others. Furthermore, the InControl Touch Pro Duo Navigation system of the SUV allows you to operate its multiple features, concurrently. A Surround Camera System, Interactive Driver Display digital instrument board (12.3-inch), hands-free powered rear gate, and Auto High Beam Assist are among some other special specifications of the vehicle.
For safety purpose, the model is equipped with 6 airbags and a cruise control speed limiting function which can come in handy for a driver.
11 April 2018
The car prices have been reduced by 16.38% on an average from 2013 to February 2018. This development is in-line with the targeted reduction of 30% in car prices as assured by the Malaysian government five years ago.
Datuk Seri Ahmad Maslan, Deputy Minister, International Trade and Industry said that the car prices had dropped by 0.52% last year. He also said that even if the prices rose by 2.13% in 2016, the overall drop in car prices reached 12.55%. The reason for this fluctuation is said to be the depreciation in the ringgit value.
Ahmad also listed the model-wise reduction in car prices, such as Proton Exora 1.6—4.7%, Perodua Myvi 1.3—19.4%, Perodua Alza 1.5—11.3%, Honda Jazz—19.3% and Mazda CX-5—6.6%.
He said that since car prices are not determined by the government but by the manufacturers, the government faced a lot of challenges in the process of price reduction. Some of these challenges being market uncertainty, price of completely knocked-down parts, transportation cost, car loan affordability, car insurance premium rates and others.
The government has been discussing with the car manufacturers regarding the various possible ways to reduce the car prices that include but not limited to introducing new models at affordable costs, giving up on importing and beginning new installation plants in Malaysia, etc.
2 April 2018
As part of the 14th general election manifesto, Pan-Malaysian Islamic Party (PAS) has plans to offer about 20 different things for the wellbeing of the Malaysians. They include offering interest-free loans to first-time car owners, the promise to reduce housing prices by up to RM180,000, free school bus facility, restructure highway toll rates, eliminate the Goods and Services Tax, RM2,000 cash aid to working women as capital to start working from home, and many more.
If it comes to power, PAS also promises to provide an efficient public transport system for rural and suburban areas, to introduce new car ownership scheme called, Al-ijarah, etc.
However, unlike the Federal Opposition Pakatan Harapan manifesto, the PAS manifesto did not promise a timeline by when it will fulfil the pledges.
20 March 2018
The sale of passenger cars in Malaysia is expected to grow by 2.2% this year, given the strong local currency coupled with superb economic growth.
According to BMI Research, advancements in Malaysia’s job market will lift the consumer sentiment considerably so that there will be a rise in consumer spending as well. The research firm also pointed out that as the Malaysian ringgit strengths, the cost of imported cars and their components (which are used in the local car manufacturing units) can be shared with customers as low retail prices for the new vehicles.
However, a word of caution from the research firm says that the interest rate hike and strict lending conditions may force the growth in car sales to become sluggish.
21 February 2018
Banks would continue to provide financing for cars despite the enforcement of strict lending guidelines across the country. The Association of Banks in Malaysia (ABM) confirmed that commercial banks would support the auto sector by extending loans to eligible customers.
The stringent guidelines were implemented due to the frequent history of loan defaulters, insufficient proof of income and financial instability of customers. These guidelines proved to be a major challenge for the automotive sector.
Banks have assured that they would continue to finance car loans to eligible people. The eligibility would be based on customer’s financial stability and affordability. Hence, customers are urged to maintain a good credit score, and to produce genuine and complete documentation to be eligible for car loans. Customers should also have necessary financial buffers in event of any unexpected events.
26th January 2018
The market for used-cars is stagnant and is reporting a loss for over a decade. Though the market for new cars has reported a significant increase, old car dealers are struggling to remain in business.
The major reason for the loss is the challenge to secure financing for used-cars. Many Malaysians are opting for new cars as banks are approving loans for new cars easily. The value depreciation of used-cars is also another reason for low sales.
Customers also are hesitant to buy used cars due to issues associated with prices and quality. Many do not want to own a car that is involved in an accident or theft.
There is also a decrease in sales of domestic cars as people are choosing to buy foreign cars. Banks approve more car loans for high-end foreign cars than for domestic cars. The used-car market is expected to remain stagnant in 2018.
26th January 2018
According to analysts, the Bank Negara Malaysia (BNM) decision to increase the overnight policy rate (OPR) will result in a negative effect on the auto sector.
As per the Malaysia Automotive Association (MAA), there is a 15.6% decline in the total industry volume (TIV) in 2017 and this trend might continue in 2018 as well.
Researchers have reasoned this as a result of the potential OPR hike, strict lending guidelines for hire purchase loans, and swelling popularity in ride hailing services.
However, according to the survey, the passenger vehicle segment may see a slight increase of 2% in TIV for 2018 whereas commercial vehicles may see a decline due to weakening demand for pick-up trucks.
24th January 2018
Mercedes-Benz Services Malaysia Sdn Bhd (MBSM) is expecting substantial rise in its car financing segment, according to reports. The expected growth is projected following Mercedes-Benz’s prediction of recording higher sales in 2018.
In 2017, Mercedes-Benz sold around 12,045 cars, which was 2.3% higher than the sales recorded in 2016. MBSM, which is the automotive financing arm of Mercedes-Benz Malaysia Sdn Bhd, funded four out of every 10 vehicles. This skyrocketed its total financing to RM2.2 billion. According to MBSB, sales are expected to go further up in 2018, which in turn will boost their portfolio as well.
According to MBSM managing director Mike Ponnaz, there were quite a few challenges during the initial stages of MBSM. Building awareness among consumers, fine tuning products, setting up a business from scratch, hiring people and building up the IT infrastructure, were all a part of the efforts that MBSM had to put into.
Today, Mercedes-Benz Malaysia holds a 2.3% share of the local market following record sales in 2017. Ponnaz predicts MBSM’s portfolio will continue to grow in 2018. However, to do so, MBSM has to work on their products to stay relevant to customers need and expectation, he added.
23 January 2018
Al-Rajhi Bank
AmBank
Bank Islam
Bank Muamalat
Bank Rakyat
BSN
CIMB
Maybank
