Association denies that banks reject 60% of car loan applications

(FILES) This file photo taken on June 19, 2017 shows Ford Focus compact cars for sale at a dealership in Chicago, Illinois. American consumers spent at a brisk pace in July, pushing US retail sales to their biggest increase in seven months, according to official figures released on August 15, 2017.Auto sales helped drive the mid-summer upswing after sagging for much of the year, posting the biggest gain since December.Long-suffering department stores likewise showed signs of life but cheap gasoline and falling sales of electronics and clothing still weighed on total sales last month. / AFP PHOTO / GETTY IMAGES NORTH AMERICA / SCOTT OLSON

KUALA LUMPUR: The Association of Banks in Malaysia (ABM) refutes a news report’s claim of a 60% car loan rejection rate, saying the approval rate in the first nine months of the year remained the same as last year’s, at 68%.

The association said based on feedback from eight commercial banks offering hire purchase financing, approval rates for loans to purchase cars in 2016 stood at about 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 said in a statement, referring to a Chinese daily report published earlier this month.

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

ABM pointed out 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.

It listed several factors, including the applicant’s ability to service the loan, the applicant’s repayment track record, loan amount applied for, and length (or term) of the loan.

Among the main reasons for the rejection of car loans are history of credit default/unfavourable track record, insufficient income evidence, uncertain payment ability and low net disposable income.

ABM said members of the public could contact ABMConnect at 1300-88-9980 or via eABMConnect at www.abm.org.my for any enquiries or complaints related to car loan matters.