As the name implies, car loans in Malaysia is a category of loan taken by a borrower for the specific purpose of buying a car. By taking up a car loan, the borrower is obligated to repay the loan amount plus interest to the lender (i.e. a bank) in instalments over a period of time. Failure to comply may result in the car being repossessed by the lender.
A car loan is also known as a hire purchase loan. The term hire purchase is derived from the fact that when you take up a car loan, the car technically belongs to the lender (i.e. the bank). You are seen as "hiring" the car from the lender until you complete your loan repayment, when the ownership of the car is then transferred to you.
Most car loans in Malaysia have a maximum margin of financing of 90%, so you should always expect to pay at least 10% upfront to the car dealer. If you can afford it, consider paying a higher percentage upfront, which will in turn lessen your principle loan amount, as well as, your interest. Take note that car loans with margin of financing of 100% do exist, though they are offered only by very few lenders and only to targeted demographics, such as first-time car buyers.
In Malaysia, the maximum repayment period for a car loan is nine (9) years. The longer you stretch the repayment period, the less instalment amount you'll pay per month, though at the expense of incurring more interest over the long run.
There are two major types of car loans: fixed rate and variable rate. The interest on a fixed rate car loan does not fluctuate and it features an unchanging instalment amount throughout the entire repayment period; while a variable rate car loan has interest and instalment amount that fluctuates along with the prevailing Base Lending Rate (BLR). In Malaysia, most car loans are the fixed rate variant.
Car buyers with extra disposable income may wish to consider a flexible type of variable rate car loan that allows them to reduce the interest by depositing extra money into a linked account, much like how a flexi home loan works.
In Malaysia, car loan interest rates differ based on several criteria, which notably include the make and model of the car, the age of the car (new or second-hand), the financial standing of the borrower, the loan amount, the repayment period as well as the entity providing the loan. Generally, it is a good idea to make comparisons between several lenders before signing up for a car loan, and the easiest way to do so is using iMoney's online car loan calculator.
To use our online calculator, simply choose the make and model of your car then drag or key in your preferred loan amount and loan period at the top of this page. Upon completion, the online car loan calculator in Malaysia would generate a list of available car loan packages fitting your requirements, starting with the ones with the best rates at the top. By clicking on "fixed rate" or "variable rate" tabs below the calculator, you can switch between the two major categories of car loans. Keep changing the fields until you see a package you like, and then click on the best car loan for you by clicking on the Apply Now button to sign up. Our online application service is FREE and available for all.
This is the loan amount expressed as a percentage of the car's value. For example: if a bank offers a margin of financing of 90% for a car valued at RM100,000, the bank is effectively agreeing to lend 90% x RM100,000 = RM90,000 to the borrower.
A guarantor is a person who agrees to pay off a loan on a borrower's behalf if the latter defaults on the said loan. In Malaysia, a guarantor may be required for a car loan especially if the borrower does not have stable income, or have opted for a loan amount that goes above a predetermined percentage of his or her income.
This is when the lender takes away the car from a borrower when the latter fails to service the car loan instalments in two consecutive months. In Malaysia, a car cannot be repossessed if more than 75% of the car loan has been settled.
iMoney Malaysia compares a big variety of financial products. Check out our useful compassion tools such as home loan calculator, housing loan refinancing comparison table, a list of the best credit cards in Malaysia and others.