Banks set to increase interest on borrowings for non-national car buyers (20/04/09)

[Crymson]

This sux. The bank also increase rate sometime late last year in-anticipating BNM will increase BLR but BNM didn't. Few months after that BNM decrease BLR, twice. Now they pull this stunt.Monday April 20, 2009 Banks set to increase interest on borrowings for non-national car buyers By YAP LENG KUEN PETALING JAYA: Despite the economic slowdown, several banks are believed to be raising interest rates on car loans. And the move may be implemented today. It is learnt that these hikes, probably on a tiered basis, are likely to affect non-national cars. The current reasoning for the hike in loan rates for non-national cars is to make up for provisions set aside for losses and administrative costs. This could indicate that non-performing loans in the auto segment could be creeping up. Sources said talk was rife in the banking and auto industries late last week that under the tiered proposal, better rates could be quoted on shorter term loans for non-national cars. The duration of the car loans could stretch to five, seven and nine years. Currently, a flat rate of about 2.7% to 2.8% is charged on loans for non-national cars although the effective rate over the duration of the loan could be higher. It is believed that for a five-year loan for a non-national car, the hike could be only a few basis points, expected to be in the region of 0.4% to 0.5%. However, rates which are higher at around 3.75% for national cars could see a reduction as the tiered scheme is supposed to provide more attractive rates for shorter term loans. Car loans were adjusted sometime in the middle of last year as a lot of the rates were below or slightly above the interest rate of around 3.6%. However, many are asking why should car loans go up when the base lending rate to which housing loans are tied is on a downtrend. Car loans, however, are fixed rate loans and not tied to the BLR.

 

[Crymson]

Tuesday April 21, 2009

Interest rates for car loans raised

By YVONNE TAN and ELAINE ANG


Dealers confirm higher charges for purchases of non-national cars
PETALING JAYA: Interest rates on car loans have been raised effective yesterday, car dealers confirmed.

A senior sales adviser with UMW Toyota Motor Sdn Bhd said rates had been raised although he said nothing official had come out from banks as yet.
Most major banks declined to comment when contacted.

However, a random check by StarBiz found that Malayan Banking Bhd (Maybank), one of the largest hire purchase financiers in the country, raised its rates yesterday.

Hire purchase interest rates for new non-national cars (such as Toyota and Nissan) have increased to 3.25% for loan tenures of five years and below, 3.4% for six to seven years and 3.5% for eight- to nine-year loans.

Previous hire purchase interest rates were in the range of 2.4% to 2.5%.
But in the case of new national cars, the opposite prevails. Maybank which used to offer a flat rate of 3.6% for loans up to nine years for Perodua cars and 3.75% for Proton cars, is now offering slightly lower rates. For loans of five years and below the rate is 3.5%, six to seven years (3.65%) and for eight to nine years (3.75%).
Meanwhile, a senior officer at Toyota said: “Interest rates for Toyota cars used to be between 2.6% and 2.8%, depending on the tenure of the loan. The average rate is about 3.2% now.”

An Edaran Tan Chong Motor Sdn Bhd dealer who distributes Nissan cars concurred that rates had been adjusted upwards effective yesterday.
“Interest rates were 2.4% to 2.5% before but today (yesterday), we heard that this has been increased to 3.2% for a five-year loan and 3.4% for seven years,” he said.

An analyst with a local stockbroking firm expects hire purchase interest rates to stabilise, going forward.

“Raising hire purchase rates will help banks to protect their margins. Credit risk is also higher in the current economic slowdown and this must be priced in as well.
“Competing via interest rates is not a good way. The rates are low already. How much lower can they go?” the analyst said, adding that interest rates for new national cars were higher than for new non-national cars.

This was because the credit risk was traditionally higher as the target customer segment of national cars was the lower to middle income group, she noted.