Friday, November 18, 2011

#Flash* BNM: Maximum loan period for vehicle financing 9 yrs

KUALA LUMPUR (Nov 18): Bank Negara Malaysia (BNM) has issued guidelines to financial institutions that the maximum tenure for vehicle financing applications received from Friday should not exceed nine years.

The central bank said the lending guidelines were to ensure prudent, responsible and transparent retail financing practices.

'The guidelines which will take effect from Jan 1, 2012 complement other measures that promote better protection for financial consumers and a sustainable credit market that contributes towards preserving financial and macro-economic stability,' it said.

BNM said financial institutions must assess a borrower's ability to afford financing facilities based on a prudent debt service ratio as inputs to their credit decisions. The central bank said financial institutions must make appropriate enquiries into a prospective borrower's income after statutory deductions for tax and EPF, and consider all debt obligations, in assessing affordability.

BNM added the guidelines would ensure 'a sharper focus and more consistent approaches across the industry to assessments of individual affordability'.

The central bank said the guidelines were to ensure the increasingly competitive conditions would'' not lead financial institutions to compromise prudent and responsible financing practices.

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