With reference to the article in a local publication titled “High car bookings, but 60% loan rejection rate”, The Association of Banks in Malaysia (ABM) refuted the said allegations.

Based on feedback from amongst the eight commercial banks that offer hire purchase financing, it has been observed that approval rates for loans to purchase cars in 2016 stood at approximately 68% of the total number of applications received. 

The approval rate from January 2017 up till September 2017 remained steady at the same percentage of 68% based on total number of applications received.

ABM stated 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. 

Some of the factors which banks take into consideration in assessing a car loan application are as follows:

• Applicant’s ability to service the loan

• Applicant’s repayment track record

• Loan amount applied for

• Length (or term) of the loan

Some of the main reasons for the rejection of car loans include:

i. History of credit default/unfavourable track record

ii. Insufficient income evidence

iii. Uncertain payment ability

iv. Low net disposable income

It reiterated that the commercial banks in Malaysia have remained supportive of the automotive sector as evidenced by the high approval rates, and car loans will continue to be extended to eligible borrowers.

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