As part of the PEMULIH package announced by prime minister Muhyiddin Yassin, this RM150 billion aid package will also include another six-month moratorium on your bank loan.
The first moratorium was announced back in July 2020, this would make it the second to be implemented since then.
What is a moratorium?
A moratorium is a temporary suspension of activity until future events warrant lifting of the suspension. Moratoriums are often enacted in response to temporary financial hardships, such as those seen in recent times of the pandemic.
Often indicted when a crisis disrupts normal everyday routines, governments typically grant a moratorium during floods, droughts or disease outbreaks.
The moratorium in July 2021 isn’t automatic and has to be applied for from July 7th onwards. The moratorium accepts applications from all 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?
You don’t have to meet 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.
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?
Not having to pay for your loans will come as a silver lining especially for those forced to take up unpaid leaves.
It will also help if you are juggling and have been paying off multiple loans such as housing, car or other personal loans.
Interest still accumulates during the moratorium period. So, what you don’t pay now could end up increase in the long run as six months’ worth of interest will be added on to the total that you have to pay off.
What makes this different is that interest is simply being added to the total loan amount even without the instalments being paid.
It’s vital that you seek the information on how they are handling the interest rate situation. You have to pay attention to the news and remember to check legitimate sources such as the bank’s website.
Most would need you to just adjust your existing loan tenure or to increase your monthly repayment amount after.
The moratorium doesn’t apply to credit card debt, but banks offer the option to convert credit card balances into three-year term loan or financing with lesser rates.
By offering an indirect way of allowing 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.
At most, 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 in fact facing a dreaded financial hardship during this time, then it may be something you can consider.
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 have a thing or two to say about that.
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