6 Things To Know About The Moratorium Before You Sign Up For It

Category: Banking & Finance

The latest moratorium that recently started on July 7th 2021 is the second one the government has announced since the pandemic began. There are some differences between this moratorium and the previous one. 

For one, this moratorium will be available to the B40 and M40 groups, and to small to medium enterprises (SMEs). Whereas, the first moratorium was only open to the B40 group. There are some other differences which we will look at in the points below. But we will also look at how this moratorium is going to work, so you can decide whether or not you want to opt in.

Related: Highlights on PM Muhyiddin’s RM150 Bil Pemulih Aid Package

1. You’ll still need to pay later

If this is your first time signing up for the moratorium, you should know that a moratorium is just a ‘pause’ in payments. Basically, you will be given 6 months off from paying back your loans but you will have to continue paying back once the 6 months have lapsed. 

So, make sure you don’t make the mistake of thinking that a moratorium actually is a ‘discount’ for your loan. It doesn’t actually waive payments for 6 months.

2. You’ll need to apply for it

While this moratorium will be made available to more people, it won’t be given to you just like that. There’s an application process, and either there’ll be a form on your bank’s website to fill up, or your bank will send you an application form via email

For those who aren’t tech savvy and might not know how to fill online forms, you can head over to the bank in person. But do check if your bank’s operating hours have changed or if certain branches are closed during the MCO/EMCO.

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3. You’ll need to fulfill certain criteria

 Thinking of signing up already? Hold your horses because…there are some criteria you need to fulfill before being given the moratorium. Per Bank Negara Malaysia’s website:

  • The moratorium applies to any financing approved before 1st July 2021 only
  • You must not have missed your monthly repayments by more than 90 days and you cannot be bankrupt
  • If you are a company, you cannot have started winding up proceedings (shutting down your company)

If you do tick all the boxes, then you’re all good to go. But before you go ahead, there are some other things you should know about the moratorium.

4. The total amount of your loan will increase

While a pause in payments sounds great, you’ll need to proceed with caution again. Signing up for the moratorium means you’ll end up owing more money to the bank. This is due to the fact that even though you don’t need to pay for 6 months, you’ll still be charged interest during that time.

Besides that, you’ll just end up being indebted to the bank for longer because again, you’ll still need to pay that 6 months’ loan later. So, you’ll need to be mindful of this.

5. It won’t affect your credit score 

Your Central Credit Reference Information System (CCRIS)—more commonly known as your credit score—is a marker for how financially healthy you are. It measures your debt, your ability to pay back, if you’re involved in any legal cases, and so on.

The goal is to have a good credit score always, and being in a lot of debt can affect this. If you’re worried that opting in for the moratorium will affect your credit score, worry not as Bank Negara has clarified that this will not be the case.

Related: I’m Only 21 Years Old. Do I Need A Credit Score?

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6. You might be able to get help even after it ends 

This moratorium may be extended if the banks feel that additional help is needed. In fact, this actually did happen with the last moratorium. Besides that, your bank may also be willing to offer help on a case-by-case basis to individuals who still aren’t financially stable yet. 

This would be more applicable to those who haven’t been able to find jobs, or do not have enough money to meet their commitments. You can also try and work out a new payment plan on your own with your bank, such as reducing the amount you’ll need to pay them each month.

There are also agencies such as Agensi Kaunseling & Pengurusan Kredit (AKPK) that can help you with debt management. They can’t give you cash to pay off your debt, but they can help you manage the debt instead so you won’t be overwhelmed.

Related: What Actually Happens When You Go To AKPK For Help?

Decide what works best for you

All in all, moratoriums are a great way to get some relief from financial commitments, especially if you’re going through a rough patch right now. But if you are still able to meet your monthly payments, you might want to continue paying as normal. Now that we’ve listed out these pros and cons, hopefully you’ll be able to decide what works best for you.

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If you need additional information on the moratorium, you can check out Bank Negara Malaysia’s website, or you can just contact your bank.

On another note, if you’re thinking of taking a personal loan to pay off some commitments, check out how you can get one: