Loan reform that quietly favours borrowers

WHEN Bank Negara announced new rules on personal financing, the spotlight quickly focused on one measure: anyone applying for loans above RM100,000 must first attend a financial education class (The Star, Oct 1; online at bit.ly/star_loanclass). It made for good news copy – and a bit of chatter.

But hidden in the fine print is a reform that matters much more to borrowers: the move to abolish the Rule of 78 for personal financing. This may sound technical, but it changes the very way your loan interest is calculated. And it’s a change that tilts the balance back towards borrowers.