ABM: Car loan approval rate steady at 68%

PETALING JAYA: The Association of Banks Malaysia (ABM) has refuted the allegations that car loan rejection rate is high, noting that the approval rate from January to September 2017 remained steady at 68%. It was responding to an article in a local publication titled “High car bookings, but 60% loan rejection rate”.

ABM said based on feedback from eight commercial banks that offer hire purchase financing, the approval rate for loans to purchase cars in 2016 stood at the same percentage of 68% of the total number of applications received.

“We would also like to state that, as with all loans, banks would in their credit evaluation process consider all aspects to determine an applicant’s ability to service the loan.”

ABM said among the factors that banks take into consideration in assessing a car loan application include the applicant’s ability to service the loan, repayment track record, amount of applied loan and length or term of the loan. Among the main reasons for the loans rejection include history of credit default/unfavourable track record, insufficient income evidence, uncertain payment ability as well as low net disposable income. ABM further noted that commercial banks in Malaysia have remained supportive of the automotive sector as evidenced by the high approval rate, and car loans will continue to be extended to eligible borrowers.