{"id":22483,"date":"2023-07-26T14:00:33","date_gmt":"2023-07-26T06:00:33","guid":{"rendered":"https:\/\/www.carsome.my\/news\/?p=22483"},"modified":"2023-09-27T12:31:55","modified_gmt":"2023-09-27T04:31:55","slug":"car-loans-and-interest-rates-malaysia","status":"publish","type":"post","link":"https:\/\/www.carsome.my\/news\/item\/car-loans-and-interest-rates-malaysia","title":{"rendered":"A Guide to Car Loans &#038; Interest Rates in Malaysia"},"content":{"rendered":"<p><span style=\"font-weight: 400;\"><a href=\"https:\/\/carso.me\/DfIyFtSkv\">Buying a car<\/a> is a large commitment because of those hefty price tags, but it is a necessity for some. When you finally decide on your<\/span><a href=\"https:\/\/www.carsome.my\/news\/item\/buying-a-used-car-3-reasons-why\"><span style=\"font-weight: 400;\"> choice of buying a car<\/span><\/a><span style=\"font-weight: 400;\"> \u2013\u00a0 new or used \u2013\u00a0 you have two main options when it comes to paying the price; you can fork out cash-on-hand, or purchase it with a car loan also known as a hire purchase loan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But when it comes to getting a car loan, many (especially first-time buyers!) do not fully understand how it works. <\/span><span style=\"font-weight: 400;\">So, to help you understand how car loans in Malaysia work, here is a basic guide on car loans including the interest rates from local banks like Maybank and CIMB<\/span><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td width=\"601\"><strong>Table of Contents<\/strong><\/td>\n<\/tr>\n<tr>\n<td width=\"601\">\n<ul>\n<li><a href=\"#a\">What Is a Car Loan?<\/a><\/li>\n<li><a href=\"#b\">Basic Car Loan Terms to Understand<\/a><\/li>\n<li><a href=\"#c\">So, What Are the Documents Required for a Car Loan in Malaysia?<\/a><\/li>\n<li><a href=\"#d\">How Does a Car Loan Work in Malaysia?<\/a><\/li>\n<li><a href=\"#e\">Car Loan Installment &amp; Interest Rates<\/a><\/li>\n<li><a href=\"#f\">Car Loan Calculator<\/a><\/li>\n<li><a href=\"#g\">Check out These Helpful Tips to Get Your Car Loan Approved<\/a><\/li>\n<li><a href=\"#h\">Malaysia Car Loan FAQ<\/a><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><a name=\"a\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">What Is a Car Loan?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">A car loan in Malaysia is a type of loan that is <\/span><span style=\"font-weight: 400;\">taken to <a href=\"https:\/\/carso.me\/DfIyFtSkv\">buy a car<\/a><\/span><span style=\"font-weight: 400;\">. By taking up this loan, an individual is tied down to a formal written agreement where the borrower (car buyer) is indebted to pay the loan amount plus interest to the lender (banks, financial agents, etc.) over a specified period of time.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For most of us, getting a car loan is unavoidable as most people wouldn\u2019t have enough cash for it. However, do note that if you fail to keep up with the loan payments, it may result in the <\/span><a href=\"https:\/\/www.carsome.my\/news\/item\/repossessed-car-what-to-do\"><span style=\"font-weight: 400;\">car being repossessed<\/span><\/a><span style=\"font-weight: 400;\"> by the lender.\u00a0<\/span><\/p>\n<p><a name=\"b\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">Basic Car Loan Terms to Understand<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Here are some basic car loan terms you should know before we dive deeper into this topic.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Interest Rate<\/b><span style=\"font-weight: 400;\">: <\/span><span style=\"font-weight: 400;\">This is the price you pay to borrow money from the bank. The car loan interest rates in Malaysia depend on the base rate that is provided by the bank, which can go up or down depending on the country\u2019s economy and decisions by Bank Negara.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Down Payment<\/b><span style=\"font-weight: 400;\">: The upfront payment for the car that covers part of the cost.\u00a0 It is usually 10 percent of the total cost for new cars and 20 percent for used cars.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Margin of Finance<\/b><span style=\"font-weight: 400;\">: The proportion of the car\u2019s cost that the bank will lend to you. Basically, this refers to how much the bank will be financing your car\u2019s cost.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Loan Period<\/b><span style=\"font-weight: 400;\">: The total amount of months or years taken to pay off your loan.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Installment<\/b><span style=\"font-weight: 400;\">: The amount that you need to pay monthly to the bank to clear off your loan.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Guarantor<\/b><span style=\"font-weight: 400;\">: Someone who is bound legally to pay off your loan if you are not able to do it.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Repossession:<\/b><span style=\"font-weight: 400;\"> The lender (bank) takes away the car from a borrower when the latter fails to service the car loan installments in two consecutive months.<\/span><\/li>\n<\/ul>\n<p><a name=\"c\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">So, What Are the Documents Required for a <\/span><span style=\"font-weight: 400;\">Car Loan in Malaysia?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Here are the requirements and general documents you will need for a car loan application.<\/span><span style=\"font-weight: 400;\"> But keep in mind that some banks may require additional documents when you apply for a loan.\u00a0<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Government Employees\/Civil Servants<\/b><\/td>\n<td>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Eligible for those 21 years old and above\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Valid Malaysian IC (for Malaysians) &amp; driving license<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Latest three months payslips\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Latest bank statement (depending on the bank)<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<tr>\n<td><b>Private Sector Employees<\/b><\/td>\n<td>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Eligible for those 21 years old and above\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Valid Malaysian IC (for Malaysians) &amp; driving license<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Latest three months payslips\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">EPF or bank statement<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<tr>\n<td><b>Self Employed Individuals<\/b><\/td>\n<td>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Eligible for those 21 years old and above\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Valid Malaysian IC (for Malaysians) &amp; driving license<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Latest six months bank statement<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Copy of Company Registration (SSM)<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<tr>\n<td><b>Graduate\/Young Professional Scheme<\/b><\/td>\n<td>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Eligible for those aged between 18 and 30\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Valid Malaysian IC (for Malaysians) and driving license<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Job Offer Letter (for applicants who\u2019ve been working for less than three months)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">A certified copy of degree\/diploma certificate<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Latest three months payslip<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Latest bank statement (depending on the bank)<\/span><\/li>\n<\/ul>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><a name=\"d\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">How Does a Car Loan Work in Malaysia?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Generally, there are two types of car loans. <\/span><span style=\"font-weight: 400;\">The interest rates may vary between these two <\/span><span style=\"font-weight: 400;\">as it depends on the base rate, the bank you choose, and if you are getting a new car or a used car.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Two main types of car loans:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Fixed rate loans:<\/b><span style=\"font-weight: 400;\"> The interest rate and monthly installments stay the same throughout the loan period.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Variable rate loans:<\/b><span style=\"font-weight: 400;\"> The interest rate is pegged against the Base Lending Rate (BLR). The BLR is a rate determined by the bank on the cost of borrowing money that will be lent out.\u00a0<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">Banks typically provide you a margin of finance up to 90 percent, while the rest is considered as your down payment.\u00a0 But if you can afford it, paying a higher down payment will lessen your principal loan amount and interest.<\/span><\/p>\n<p><b>Read More: <\/b><a href=\"https:\/\/www.carsome.my\/news\/item\/fresh-graduate-car-loan\"><span style=\"font-weight: 400;\">Car Loan Rejected as a Fresh Grad? Here\u2019s Why &amp; How You Can Buy Your First Car<\/span><\/a><\/p>\n<p><span style=\"font-weight: 400;\">Another factor that might affect your installment and interest is the loan period. In Malaysia, the maximum repayment period for a car loan is nine years. The longer you stretch the repayment period, the less installment amount you\u2019ll pay per month, though at the expense of incurring more interest over the long run.<\/span><\/p>\n<p><b>Example:<\/b><span style=\"font-weight: 400;\"> You take up a RM 70,000 car loan with an interest rate of 3.5 percent.<\/span><span style=\"font-weight: 400;\"> The table below shows the total interest that will be accrued<\/span><span style=\"font-weight: 400;\">, as well as your monthly installment.\u00a0<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Loan Period<\/b><\/td>\n<td><b>3 Years<\/b><\/td>\n<td><b>5 Years<\/b><\/td>\n<td><b>9 Years<\/b><\/td>\n<\/tr>\n<tr>\n<td><b>Monthly Installment<\/b><\/td>\n<td><span style=\"font-weight: 400;\">RM2,148.61\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">RM1,370.83\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">RM852.31\u00a0<\/span><\/td>\n<\/tr>\n<tr>\n<td><b>Total Interest<\/b><\/td>\n<td><span style=\"font-weight: 400;\">RM7,350<\/span><\/td>\n<td><span style=\"font-weight: 400;\">RM12,250<\/span><\/td>\n<td><span style=\"font-weight: 400;\">RM22,050<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">Do take note that car loans with a margin of financing of 100 percent do exist. Full loan financing is offered only by very few lenders and for specific buyers such as first-time car buyers.<\/span><\/p>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"alignnone wp-image-23502 size-full\" src=\"https:\/\/www.carsome.my\/news\/wp-content\/uploads\/wp\/Cons55_InfographicBlog_EN.jpg\" alt=\"A guide to car loan in Malaysia\" width=\"1200\" height=\"2428\" srcset=\"https:\/\/www.carsome.my\/news\/wp-content\/uploads\/wp\/Cons55_InfographicBlog_EN.jpg 1200w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/wp\/Cons55_InfographicBlog_EN-148x300.jpg 148w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/wp\/Cons55_InfographicBlog_EN-768x1554.jpg 768w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/wp\/Cons55_InfographicBlog_EN-506x1024.jpg 506w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><br \/>\n<a name=\"e\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">Car Loan Installment &amp; Interest Rates<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The installment and interest rate that is calculated for your fixed-rate car loan is determined by these values:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loan amount;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Loan period; and<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The interest rate.<\/span><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">These are the formulas used to determine the total interest, monthly interest, and monthly installment for your loan.<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Your total interest<\/b><span style=\"font-weight: 400;\"> = interest rate\/100 x loan amount x loan period<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Your monthly interest <\/b><span style=\"font-weight: 400;\">= total interest \/ (loan period x 12)<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Your monthly installment <\/b><span style=\"font-weight: 400;\">= (loan amount + total interest) \/ (loan period x 12)<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Let\u2019s circle back to the same example where your car loan is at RM70,000 with an interest rate of 3.5 percent and a five-year loan period. Here is how your total interest, monthly interest and monthly installment will be calculated based on the formula above.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Total Interest: <\/b><span style=\"font-weight: 400;\">3.5% x RM 70,000 x 5 = RM 12,250<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Monthly Interest<\/b><span style=\"font-weight: 400;\"> = RM 12,250\/ (5\u00d712) = RM 204.16<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Monthly Installment<\/b><span style=\"font-weight: 400;\"> = (RM 70,000 + RM 12,250) \/ (5\u00d712) = RM 1370.83<\/span><\/li>\n<\/ul>\n<p><a name=\"f\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">Car Loan Calculator<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Car hire purchase<\/span><span style=\"font-weight: 400;\"> interest rates in Malaysia differ according to different factors which include the brand, model, the car\u2019s age (new or used), the financial status of the borrower, the total loan amount, the repayment period, and the borrower.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, it is always a good idea to make comparisons between several legal and official lenders to find the car loan with the lowest interest rate and terms that satisfy your needs. The easiest way to do that is by using a calculator like this <\/span><a href=\"https:\/\/www.carsome.my\/car-loan\"><span style=\"font-weight: 400;\">used car loan calculator<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><span style=\"font-weight: 400;\">\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Here is a list of the car loan interest rates* in Malaysia for new and used cars from the ten major banks.<\/span><\/p>\n<table>\n<tbody>\n<tr>\n<td><b>Bank<\/b><\/td>\n<td><b>New Car Loan Interest Rate<\/b><\/td>\n<td><b>Used Car Loan Interest Rate<\/b><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.rhbgroup.com\/personal\/loans\/auto-financing\/index.html\"><span style=\"font-weight: 400;\">RHB Bank<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">3.18%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Unavailable<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.pbebank.com\/Personal-Banking\/Banking\/Loan\/Vehicle-Financing\/Vehicle-Financing.aspx\"><span style=\"font-weight: 400;\">Public Bank<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">3.31%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">4.1%<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.maybank2u.com.my\/maybank2u\/malaysia\/en\/personal\/loans\/hire_purchase\/hire_purchase.page\"><span style=\"font-weight: 400;\">Maybank<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">3.40%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">4.25%<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.hlb.com.my\/en\/personal-banking\/loans\/motor-loan\/auto-loans.html\"><span style=\"font-weight: 400;\">Hong Leong Bank<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">3.24%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3.78%<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.cimb.com.my\/en\/personal\/day-to-day-banking\/financing\/auto-financing.html\"><span style=\"font-weight: 400;\">CIMB Bank<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">3.755%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">4.45%<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.muamalat.com.my\/consumer-banking\/financing\/vehicle-financing\/muamalat-vehicle-financing-i\/\"><span style=\"font-weight: 400;\">Bank Muamalat<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">2.95%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Unavailable<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.bankislam.com\/personal-banking\/financing\/vehicle-financing\/\"><span style=\"font-weight: 400;\">Bank Islam<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">2.35%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Unavailable<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.ambankgroup.com\/en\/Pages\/default.aspx\"><span style=\"font-weight: 400;\">AmBank<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">3.05%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3.66%<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.affinalways.com\/en\/affin-bank-vehicle-loan\"><span style=\"font-weight: 400;\">Affin Bank<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">2.92%<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3.00%<\/span><\/td>\n<\/tr>\n<tr>\n<td><a href=\"https:\/\/www.bsn.com.my\/PersonalBanking\/Loans\/bsn-myauto?lang=en\"><span style=\"font-weight: 400;\">BSN<\/span><\/a><\/td>\n<td><span style=\"font-weight: 400;\">3.00<\/span><\/td>\n<td><span style=\"font-weight: 400;\">3.80%<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><span style=\"font-weight: 400;\">*Based on individual bank\u2019s hire purchase loan information<\/span><br \/>\n<a name=\"g\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">Check out These Helpful Tips to Get Your Car Loan Approved<\/span><\/h2>\n<p><img decoding=\"async\" loading=\"lazy\" class=\"alignnone size-large wp-image-33881\" src=\"https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234-1024x538.jpg\" alt=\"person's hand holding cash money\" width=\"696\" height=\"366\" srcset=\"https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234-1024x538.jpg 1024w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234-300x158.jpg 300w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234-768x403.jpg 768w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234-150x79.jpg 150w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234-696x365.jpg 696w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234-1068x561.jpg 1068w, https:\/\/www.carsome.my\/news\/wp-content\/uploads\/2023\/06\/pexels-pixabay-259234.jpg 1200w\" sizes=\"(max-width: 696px) 100vw, 696px\" \/><\/p>\n<p><span style=\"font-weight: 400;\">Here are some things you should take note of if you don\u2019t want your application to get rejected.\u00a0<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Determine what you can afford based on your monthly income:<\/b> <span style=\"font-weight: 400;\">This is the most important aspect of the car-buying process. You need to know the type of car you need and how much you can afford. The rule of thumb is to only spend 20 percent of your income on your car loan.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Check your credit score<\/b><span style=\"font-weight: 400;\">: For those with a clean or non-existent credit history (zero loans and credit card payment record), the chances of your car loan being approved by the bank are very low. <\/span><span style=\"font-weight: 400;\">For starters, you need to build a credit history for a minimum of six months such as by getting a credit card. This will show the bank that you can be a good paymaster. <\/span><span style=\"font-weight: 400;\">For those with a poor credit history, you need to rectify your repayment habits by paying your loan or credit card on time, or in full because a poor credit score will lower your chances of getting your car loan approved.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Compare car loan interest rates: <\/b><span style=\"font-weight: 400;\">Since banks have different terms and interest rates for new and second-hand car loans, it is important to research their interest rates. You can also apply to multiple banks and pick out the best offer.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><b>Get a guarantor:<\/b><span style=\"font-weight: 400;\"> If your credit score is low or non-existent, you can get a guarantor to strengthen your application. The guarantor, who is typically a close relative, will assume the same risks as the borrower.\u00a0<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Always remember, when it comes to getting a car, you should also take into consideration all the other costs that might come up along the way. These costs include petrol, maintenance, repair, road tax, insurance, parking, and travel costs such as highway tolls, among others. So, make sure you consider these costs when budgeting a car!<\/span><\/p>\n<p><b>Also Read: <\/b><a href=\"https:\/\/www.carsome.my\/news\/item\/car-insurance-in-malaysia\"><span style=\"font-weight: 400;\">Everything You Need To Know About Car Insurance In Malaysia<\/span><\/a><br \/>\n<a name=\"h\"><\/a><\/p>\n<h2><span style=\"font-weight: 400;\">Malaysia Car Loan FAQ<\/span><\/h2>\n<ol>\n<li><b>What is the minimum downpayment required when buying a car?<\/b><\/li>\n<\/ol>\n<p><span style=\"font-weight: 400;\">The minimum downpayment is usually 10 percent of the car\u2019s purchase price for new vehicles and 20 percent of the price for used vehicles. However, a lender may require a higher down payment or offer promotions with a lower or even zero down payment requirement.<\/span><\/p>\n<p><b>2. Can I change the monthly installment amount if I have financial difficulties?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">If you are unable to pay your installment due to financial difficulties, you can discuss the matter with your bank. Do note that the decision to modify your loan payment terms is up to the bank\u2019s discretion.<\/span><\/p>\n<p><b>3. Do I still need to pay the monthly installments if my car is stolen?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Yes, because your loan does not cease with the theft of your car. However, you may claim the losses from your insurance provider, up to the market value of your car or the sum insured, whichever is lower. You can then use this insurance claim to settle your loan with the bank.<\/span><\/p>\n<p><b>4. Can I keep my car grant or vehicle ownership certificate (VOC) so I can renew my motor insurance and road tax?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The lender will keep the VOC until the loan has been settled in order to avoid potential inconveniences stemming from card damage, misplacement, or theft. Most banks will provide insurance and road tax renewal services to their borrowers, so you can apply for the renewal directly from your lender. Alternatively, you can apply for a motor insurance and road tax renewal<\/span><\/p>\n<p><b>5. How do I retrieve the vehicle ownership certificate (VOC) from the bank after I have settled my car loan?<\/b><\/p>\n<p><span style=\"font-weight: 400;\">Once you have settled your loan, you can call the bank to confirm that it has been settled and to find out at which branch your VOC is kept. You can then visit the particular branch to collect it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">If you\u2019re looking to buy an affordable, quality car, do check <\/span><a href=\"https:\/\/carso.me\/mVAHu5u0M\"><span style=\"font-weight: 400;\">CARSOME<\/span><\/a><span style=\"font-weight: 400;\"> out. All our cars are thoroughly inspected at 175 points to ensure they\u2019re free of major accident, flood, and fire damage.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Additionally, you can expect a fixed price with no hidden fees, five-day money-back guarantee, and one-year warranty.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Find your dream car on <\/span><a href=\"https:\/\/carso.me\/mVAHu5u0M\"><span style=\"font-weight: 400;\">CARSOME<\/span><\/a><span style=\"font-weight: 400;\"> today or <\/span><a href=\"https:\/\/news.carsome.com\/mobile-app-download\"><span style=\"font-weight: 400;\">download our app<\/span><\/a><span style=\"font-weight: 400;\">.<\/span><\/p>\n<p><i><span style=\"font-weight: 400;\">This content was originally published on 21\/4\/2021. It has been updated for freshness, accuracy, and comprehensiveness.<\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>If you\u2019re planning to buy a car, it\u2019s important to know about how car loans work in Malaysia. Here\u2019s a guide on all you need to know.<\/p>\n","protected":false},"author":27,"featured_media":22511,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[117,46],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>A Guide to Car Loans &amp; Interest Rates for New &amp; Used Cars in Malaysia<\/title>\n<meta name=\"description\" content=\"Car loans and interest rates can be quite confusing especially to first-time car buyers. 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