Public Bank Extended Moratorium: Flexible Arrangements To Reduce Loan Instalments Until End-2021

Public Bank has released the details of its Covid-19 assistance for those who will still be in financial difficulties upon the expiry of the ongoing six-month loan moratorium on 30 September 2020, which is open for applications starting today.

Public Bank has released detailed FAQ documents on the different types of assistance for unemployed individuals, hire-purchase loans, and housing and personal loans respectively. We’ve gathered all the highlights here for you to take a look at below.

For Unemployed Individuals

form-income tax

Individuals who have lost their jobs in 2020 and are still currently unemployed qualify for a 3-month moratorium extension from October to December 2020. This applies to those with housing, fixed, term, overdraft, and hire-purchase loans. However, customers who are undischarged bankrupts or have financing in arrears for 90 days and more are not eligible for this aid.

You must submit your request for the 3-month extension to your account holding branch (the branch where you first obtained your loan) using Public Bank’s standard application form. You need schedule an in-person appointment for this as unfortunately you will not be able to apply online. Documents that you will need to have on hand include evidence of termination or retrenchment such as a letter detailing your retrenchment, voluntary separation, or mutual separation scheme.

Hire Purchase Rescheduling

Those with hire purchase loans or financing who are facing financial difficulties, but are still employed, will be able to reschedule their repayment terms by extending their tenure with a lower monthly instalment. The age of your vehicle must also be less than 15 years and your debt-service ratio (DSR) must not be more than 1 (i.e. your monthly gross income cannot be less than your monthly loan repayment).

According to Public Bank, the interest rate or profit charged under the rescheduling exercise will be the same prevailing rate as stated in your existing hire purchase agreement. The maximum extension of the tenure is subject to the age of the vehicle, and options are also available for customers to select a shorter one.

To apply, you can submit your application online and you are advised to do so before 31 August 2020 in anticipation of a high volume of applications. You will be notified as to whether your application was successful through email within 7 days from applying, so do make sure you provide the correct email address. After that, you have 7 days to contact your account holding branch to complete other documentation and necessary steps.

For Housing/Personal Loans

housing loan

Public Bank will be sending out SMS invitations to targeted individual and SME customers who qualify for further financial assistance once the six-month moratorium ends. The targeted customers who receive the SMS invitations will be able to digitally apply for the reschedule repayment arrangements for their housing or personal loans.

The eligibility requirements to qualify for this arrangement are as follows:

  • Individuals and SME customers with less than RM10 million per housing, term, and fixed loan or financing who are currently under the 6-month moratorium
  • The loan/financing must be less than 90 days overdue
  • The updated debt service ratio (DSR) must be less than 1 and may be self-declared by customers without a need for income documents

The details of the repayment packages for selected customers are as below.

Rescheduled repayment arrangement

If you have a 50% or more reduction in income or cash flow

  • For a period of 6 months from October 2020 to March 2021, you only need to pay 25% of your exiting loan instalment (75% reduction).
  • From April 2021 to December 2021, you either pay 50% of your existing instalment OR your interest only, whichever is higher.
  • In January 2022, you resume your existing instalments.

If you have a 25-49.9% reduction in income or cash flow

  • For a period of 6 months from October 2020 to March 2021, you only need to pay 50% of your exiting loan instalment (50% reduction).
  • From April 2021 to December 2021, you either pay 50% of your existing instalment OR your interest only, whichever is higher.
  • In January 2022, you resume your existing instalments.

If you have a less than 25% reduction in income or cash flow

  • For a period of 6 months from October 2020 to March 2021, you only need to pay 75% of your exiting loan instalment (25% reduction).
  • From April 2021 to December 2021, you either pay 75% of your existing instalment OR your interest only, whichever is higher.
  • In January 2022, you resume your existing instalments.
Interest rate for the R&R package

The existing interest or profit rate of your loan or financing will remain unchanged. However, interest will accrue for all loans and for conventional loans, and will be compounded as well. Your overall loan/financing tenure will also be extended; Public Bank states that for normal loan/financing, the re-amortisation of the loan tenure can come with an extension of 2-5 years.

How to apply

Once you have received the invitation SMS, you can apply digitally on Public Bank’s website. The SMS invitations will be sent out in batches between 7-20 August 2020. If you have not received your invitation by 20 August, you can make your request directly to your account holding branch or credit control centre; the same goes for those who previously opted out from the automatic six-month moratorium – this programme is not only for those who took the moratorium in April. You have until 30 September to make the relevant applications.

You can expect the digital application to be approved within 2-7 days. Once your approval comes in, Public Bank will send you a supplementary letter of offer within 7 days. You then have 7 days to digitally accept this offer; however, if you later opt to rescind this arrangement in 2021 when your cash flow significantly approves, you can do so by writing directly to your account holding branch to cancel it then.

For Converted Credit Card Term Loans

In addition to the financial assistance offered for its housing, personal, and hire purchase loans, Public Bank is also offering a reduction in the repayment amount for customers with converted credit card term loans. Customers who had earlier converted their outstanding credit card balance into term loans (thus qualifying for the six-month moratorium) can apply online for reduced repayment amounts for a further period of six months if they are experiencing a reduction in income.

Option Reduction in Income Reduced Repayment Amount (For a period of six (6) months upon approval)
1 50% or more reduction 25% of existing term loan instalment
2 25% to less than 50% reduction 50% of existing term loan instalment
3 Less than 25% reduction 75% of existing term loan instalment

Do note that the outstanding balances will still be subjected to the prevailing interest rate or management fees, and is also still subjected to a minimum 5% repayment.

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For more information, you can check out Public Bank’s main Covid-19 assistance page on its website here.

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