ABM says banks remain supportive of auto industry

PETALING JAYA: The Association of Banks in Malaysia (ABM) said banks will continue to provide financing, including hire purchase loans, to eligible consumers based on their suitability and affordability assessment.
It was responding to a news report that local car makers will be the most hit by strict lending guidelines this year, especially with the implementation of the Malaysian Financial Reporting Standards 9 (MFRS 9) on Jan 1, 2018, as well as high household debt levels.
“This is important to ensure that consumers are not unduly burdened by excessive debt. Car loan applications received by our member banks are assessed in accordance to existing guidelines and the respective bank’s internal procedures.”
“These would include credit evaluation assessments taking into consideration the applicant’s income as well as existing borrowing, to determine his/her capability to service the loan,” ABM said in a statement today.
The association also noted that banks take into account that borrowers should have sufficient financial buffers in case they are faced with unexpected adverse events.
“Consumers are thus advised to ensure that proper and complete documentation is provided to the bank when applying for financing.”
ABM said some common reasons for the rejection of car loans include the history of credit default, insufficient income evidence, uncertain payment ability and low net disposable income.
“Therefore, it is worth noting that a healthy financial position will be advantageous when applying for loans.”