vehicle financing Archives

Following Proton’s increasing sales numbers, Proton Commerce business is also on the rise

*Visit www.bhpetrol.com.my for more information.*

The momentum started in 2020, in spite of the pandemic situation, and put Proton in a strong position to accelerate into 2021. With an appealing range of offerings, cumulative sales in the first quarter of the year (Q1) were the highest since March 2012, with a large number of orders as well.

This has created a knock-on effect and for Proton Commerce, the carmaker’s finance arm, it could lead to a record number of loan disbursements. It has seen its loan volume grow in line with the increase in sales of Proton vehicles. For comparison, in 2018, it disbursed a total of 5,410 loans and this nearly doubled to 10,668 the following year. For 2020, despite disruptions caused by the coronavirus as well as loan moratoriums to ease the burden on distressed borrowers, Proton Commerce disbursed 14,189 loans.

*In spite of the pandemic conditions in 2020, Proton saw high sales volumes which led to more loan applications to Proton Commerce, its financial arm.*

All-time high for loan disbursements
This year, after just three months, the company is heading towards a record-breaking volume – an all-time high of 20,000 loans disbursed. “Although there was a downturn in many economic sectors caused by the COVID-19 pandemic, consumer sentiment for car purchases remains positive. Proton’s gains in product quality, its additions to the dealer network and the launch of new models have grown interest in its cars and we are seeing the results in the number of loan applications received,” said Mooi Fi Phang, CEO of Proton Commerce.

“Our loan disbursement volume for Q1 this year has increased by 42.3% and we are confident of our volume growing even more in Q2. However, the hire-purchase market could face a tough second half of the year as the PENJANA sales tax incentive is scheduled to expire at the end of June so the industry could see a period of correction as market demand finds its natural level,” he added.

*New models like the X50 are drawing younger buyers, which sees a change in customer demographics for the brand.*

Younger buyers drawn to Proton brand
Mr. Mooi revealed that Proton Commerce is also seeing a change in the demographics of its customers. “The age of Proton buyers is trending downwards, indicating the company’s revamped line-up has made it a more trendy choice with younger Malaysians. He also said 80% of Proton Commerce’s customers opt for 9-year hire-purchase financing plans, and that impaired loan rates up to three times lower than the industry average,” he said.

“2020 was a tough year for the industry as financial institutions had to make modification loss provisions for the 6-month moratorium programme announced by Bank Negara Malaysia. Thankfully for Proton Commerce, the financial stability of our customer base meant a very low number of our borrowers opted for the subsequent moratorium and with the removal of the provisions this year, we expect to contribute a healthy profit to our shareholders,” he added.

Strong start for Proton with Q1 market share highest since March 2012

KINTO ONE offers a different way to own a new Toyota or Lexus

Trends in car ownership are evolving and these days, there is growing interest in what are known as subscription plans. Customers choose a model, and a fixed instalment is paid each month over an agreed period of a few years. The amount includes maintenance costs, insurance and even roadtax so it is convenient.

But there is a catch: ownership of the car is not the customer’s at the end and he or she can either return it or negotiate to buy it over, or even start a new subscription. It’s a good opportunity to upgrade to a new car every few years, and no hassles of having to sell off the old one first.

First in the world
A number of companies in Malaysia offer this approach and the latest to join is Toyota with its KINTO ONE scheme. Introduced by Toyota Capital Malaysia, KINTO ONE is a global financing scheme which the carmaker has introduced in many countries, and it already has a very big presence in the Europe. For Malaysia, it is the first-in-the-world Islamic based car medium-term subscription program.

Originating from the Japanese word kinto-un, which means ‘flying nimbus’, as the future image of mobility, the name is in line with the spirit of providing services that quickly appear when necessary, enabling mobility as per the user’s wishes, and are kind to the environment.

All-inclusive instalment
Unlike the traditional hire purchase (H-P) financing facility, KINTO ONE is an all-inclusive, fixed monthly payment, car subscription plan. The fixed subscription covers registration costs of the vehicle, annual comprehensive insurance coverage and roadtax, as well as scheduled maintenance and preventive maintenance costs. At the end of the term, which can be 2 years or 3 years, the customer can return the car.

Some of the Toyota and Lexus models available under the KINTO ONE plan. The monthly amounts may appear high but remember that they include costs like roadtax, insurance and servicing – which you would have to pay anyway. So all an owner really has to pay for is fuel, paking and toll charges – and fines.

“KINTO ONE is the direct translation of a strategic partnership between Toyota Capital Malaysia and UMW Toyota Motor and is a distinctly curated response to the new generation lifestyle seeking mobility. It is about the shift of consumer behaviour from car ownership to car usership. It is about Toyota’s vision of ‘Mobility for All’,” said Thomas Chai, President of Toyota Capital Malaysia.

Good for corporate sector
Mr. Chai added that KINTO ONE is also aimed at the corporate sector which wants to be ‘light in their assets’ but still require the functionalities of being mobile. The full range of aftersales and support services will be handled by authorized Toyota dealers nationwide, with 24-hour emergency assistance also provided.

“It all seems new and revolutionary for KINTO ONE aiming to cater to the newer generation of car owners seeking for freedom and mobility through its all-inclusive fixed monthly subscription plan, but KINTO ONE has already been introduced in many parts of the world. While it is newly launched here in Malaysia, we are starting with our learning curves way past the introductory stages. With strong support from Toyota Motor Corporation and the abundant availability of intellectual discourses amongst KINTO operators around the world, it has made our market introduction journey a very enriching one,” said Ravindran Kurusamy, President of UMW Toyota Motor.

KINTO ONE is exclusively available online via the website (www.kinto-my.com) where customers can view the car models available, decide on which subscription plan suits them and then apply online. The subscription plans also cover Lexus models available in Malaysia.

Two more financing schemes available for new Toyota purchases

BMW Financial Services Malaysia extends BMW Engage to BMW Premium Selection

BMW Financial Services Malaysia today announced the service extension of the BMW Engage feature to the all-new BMW Premium Selection digital experience – in line with their commitment to digitalise touch points early last month.

The BMW Premium Selection digital experience offers a wide selection of pre-owned vehicles from the BMW portfolio. From now on, prospective customers in the BMW Premium Selection range will also be able to use the BMW Engage platform to initiate the financing pre-approval process.

With the BMW Engage platform, they can calculate the monthly instalment, generate a quotation, submit an application and obtain pre-approval. The fully-digitalised financing application platform enables customers to tailor the financing of their vehicle to their own needs, and to apply through a contactless process from the comfort of their own home or office.

“When BMW Engage was introduced early this year, it was a reverberation of our commitment to our loyal customers to continue delivering the Premium Ownership Experience – no matter the distance. The digital feature became a timely and necessary solution for customers during that period of physical divide at the height of the pandemic, and it continues to further enhance their purchasing journey,” said Tobias Eismann, MD of BMW Group Financial Services Malaysia.

“As we enter a new normal, we are proud to extend BMW Engage to the pre-owned vehicle segment by expanding its coverage to the BMW Premium Selection portfolio. At the same time, we are also proud that through this, we are able to extend another avenue for customers to join us in our ongoing efforts to assist the B40 community in attaining the highest level of safety for their children while on the road, via the BMW Safety 360° subsidy programme,” he added.

BMW Premium Selection goes digital

Covid-19 — Fighting COVID-19 is our joint responsibility. Protect yourself and others: make these 6 simple precautions your new habits.

Two more financing schemes available for new Toyota purchases

Those who are planning to buy the latest Toyota Hilux or any Toyota model have a choice of various schemes from UMW Toyota Motor (UMWT) to help them with financing. These are the Toyota EZ Beli Plan, Jom Drive, AITAB, Toyota Drive, Toyota Flexi Plan as well as conventional Hire-Purchase and Vehicle Lease financing schemes which are available from all authorized Toyota dealerships and UMWT branches nationwide.

Two new schemes
UMWT, in collaboration with Bank Islam Malaysia Berhad, now offers another two more which are Shariah Compliant Term Financing schemes to its customers – Vehicle Financing-i and Vehicle Financing-i GradHitz.

Vehicle Financing-i is available for all customers aged up to 60 years old with a minimum income of RM2,800 or more. Vehicle Financing-i GradHitz is a special package tailored for newly employed young graduates, aged less than 30 years, with a minimum qualification of a diploma degree from a recognized institution under Malaysian Qualifications Agency (MQA). For this scheme, they can apply for up to 100% margin of financing (terms and conditions apply).

Both schemes are based on term financing under the principle of Murabahah to the Purchase Order as a cost-plus profit financing contract. The financing tenure is up to 9 years, with fixed profit rates from 2.35% to 2.55% per annum. Customers will be eligible for Ibra’ (rebate) if full settlement is made before the maturity period of the financing.

The two Bank Islam financing schemes are applicable for all new Toyota models sold by authorized Toyota dealerships throughout Malaysia (including the Labuan and Langkawi duty-free zones).

Takaful coverage for peace of mind
Auto Financing Takaful Plan (AFTP), a takaful coverage, is also offered to customers. The plan covers the outstanding financing amount in the event of death or permanent disability within the financing period. The AFTP contribution is calculated based on financing amount and age of the applicant.

Customers who require more information may contact any authorized Toyota dealership in Peninsular and East Malaysia. Locations of the dealerships can be found at www.toyota.com.my.

100% financing packages to buy new Toyota or Lexus models

Finance Ministry says banks agree not to charge any extra interest on H-P loans

Following the uproar when it was announced by Bank Negara Malaysia and the Association of Banks Malaysia that the 6-month moratorium offered on loans, including Hire-Purchase loans, would incur interest for the 6 months, the Finance Ministry has today said that there will be no interest charged.

The announcement on the Finance Ministry’s website

Prior to this, the financial institutions had said that borrowers will have the option of settling the 5 months deferred instalments in October in one lump sum and not pay any interest, or interest for each month would be added for those who did not settle in full. This meant that the amount for the remaining instalments would be increased and the repayment term would extend a further 6 months (incorporating the deferred months). This applied to both conventional and Shariah H-P loans.

The charging on additional interest was seen as being unfair, more so at a time when many people are facing financial challenges in view of the impact of the pandemic on businesses. Allowing a 6-month deferment in paying instalments was a welcome move as it would allow them some time to recover and try to stabilize their situation, but to charge them additional interest was only adding extra financial burden.

After a discussion between the Finance Ministry and the banks, it was agreed that no interest will be charged or compounded, and therefore the amount owing would not change. In other words, whatever instalment amount has been paid will be maintained and the only difference will be that the repayment term will continue for 6 months after the original month it was supposed to end.

Sales — *The amount you agreed for your H-P loan plus the interest at the time of purchase will be all you have to repay, with no additional interest being charged.*

Borrowers have the option of accepting the 6-month deferment or they can opt out. In either case, they need to inform their banks of their decision.

Banks change their mind about interest-free deferment of loans, will now charge extra interest

Just as many Malaysians can feel some relief that the severity of the COVID-19 pandemic seems to be diminishing, Bank Negara Malaysia (BNM) and the Association of Banks Malaysia (ABM) have dampened the optimism with the announcement that there will be additional interest charges for what was to be a 6-month moratorium on loans.

This is a u-turn from what we were told on March 25. Back then, it seemed that, understanding the burden on many people during this period, BNM directed all banks to automatically allow a 6-month moratorium on loans from April 1, 2020. That meant instalments for the months of April, May, June, July, August and September 2020 need not be paid as scheduled. No application was needed as the deferment would be automatic (unless the customer did not wish to accept it) and interest/late penalty charges would not be incurred.

The move was welcome because many people have faced financial challenges since the Movement Control Order (MCO) started and their incomes have been disrupted. Therefore being able to defer their loan repayments at least gave them some breathing space.

Sa;es — The total amount of the H-P loan and the interest to be charged for the entire period of the loan will have been agreed upon at the time of purchase. Now, if you decide to defer instalments for 6 months, you will be charged additional interest.

Click here for the FAQ from Bank Negara Malaysia

With the change which comes into effect from May 1, customers will not have an interest-free payment holiday from April to September 2020. Also important to note is that the banks now say that deferment will no longer be automatic H-P loans. Customers will be informed of the change and asked to confirm whether they want the deferment with the additional interest, or opt out and continue paying.

There is no penalty for opting out from May 2020. All the customer needs to do is inform the bank that payment of instalments will resume as scheduled in the agreement. BNM expects the banking institutions to allow borrowers ‘reasonable time’ to regularise any outstanding scheduled payments that were earlier deferred under the moratorium.

“BNM requires banking institutions to take appropriate steps to ensure that borrowers/customers are provided with clear information on the process and changes to the terms of their agreements, as well as convenient means to conclude these agreements in view of the movement control order.,” said a statement from BNM.

The ABM’s statement said borrowers will have two options at the end of the moratorium. The first is to pay the accumulated 6 months’ deferred instalments together with their October 2020 instalment and no additional interest will be charged. That’s going to be very tough for most people to pay 7 months of instalments at one go.

The second option is to continue the repayment of instalments post-October 2020 through an extension of 6 months in the repayment period after the original date the loan repayment period ends. In this case, interest based on the contractual rate will be charged on the amount of the deferred instalments that remains outstanding until these instalments are fully repaid, which should be by the end of the extended 6-month tenure.

The additional interest will be spread out over the monthly instalments from October 2020 which may not be too bad if you have a few more years left to your loan. It is an unusual approach since H-P loans have a fixed amount of interest for the entire period.

The banks are already notifying customers tonight via SMS or e-mail (or registered postal mail) and if you do not get any notification, check their website or visit the branch managing your H-P loan for clarification. Banks are essential services so they are open even during the MCO.

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