6 Self Help Tips to Cope with Post Loan Moratorium
Many struggled with the after-effects of the COVID-19 pandemic. Amid the pandemic, the government announced an automatic 6-month moratorium or known as deferment on all loans or financing repayments from 1 April to 30 September 2020; providing financial relief to individuals and businesses who face financial adversities to cope during this challenging period.
Extension of the moratorium to those affected
Source: Freepik (@Torwai Photo)
The blanket moratorium will end on 30 September 2020. For those who have existing personal, car, or housing loan, you will need to resume with the loan repayment starting from 1 October 2020.
While the majority of Malaysians have returned to work and many businesses have resumed operations, more than 860,000 Malaysians are still unemployed. Some have lost their main source of income; regardless it is their job or business. So, to curb the issue on 29 July 2020, Bank Negara Malaysia (BNM) announced that the banking industry will provide a targeted moratorium extension and repayment flexibility to:
- Individuals who have lost their jobs in 2020 and are still looking for one will be offered a 3-month moratorium extension (i.e. no loan repayment until 31 December 2020); or
- Individuals who are still employed but have their salary cut due to COVID-19 will be offered a reduction in loan repayment in proportion to their salary cut for at least 6 months
Affected individuals can start making applications starting from 7 August 2020 with their respective banks. The flexibility provided by the bank will not affect the borrower’s CCRIS reports.
6 self-help tips to manage your finance post moratorium
If your income or job is affected during the COVID-19 period, the targeted moratorium extension should provide some financial relief to you. But, don’t get too comfortable as the moratorium will end one day. You should make the best use of the time available now to fully prepare yourself and be able to meet your monthly commitments after the loan moratorium has ended. Here we share below 6 self-help tips that you can act on it now to have a better tomorrow.
1. Evaluate your financial position honestly
The first step is to assess your current financial situation in terms of your available savings, current monthly income that you can generate, how secure is your current income and what commitment or debt that you need to pay in the coming months. Be honest about it. Make a list of your monthly expenses and debt commitment. This would help you to identify the “gap” or “shortfall” between your expected income or savings with what you need to pay over the next 6 to 12 months.
Just because you don’t need to pay your loan during the moratorium period, it does not mean that you should spend on unnecessary things. Save instead as it will help you to reduce the “gap” and make your life easier.
2. Cut down on unnecessary expenses
Go through your expenses and identify ways to cut it down. For instance, one of the main expense is rent. Try discussing with your landlord about your current situation and get a discount for your monthly rental cost. For expenses like food and transportation, you can start bringing home-cooked meals to work instead of eating out, using the public transport to work or practicing carpool, doing outdoor activities rather than joining the gym and cutting down on video or music streaming for some time until your financial is back to a stable footing.
It is those little changes that you make help you to be frugal with your spending. To help you better track and plan your expenses, why not try using these free financial budgeting apps.
3. Generate side income while having a full-time job
While a full-time job can make both ends meet, with the current economy sometimes it is unpredictable when you would receive a pay cut or worst still, to lose your only job. So, it is always a safer move to have a side income acting as your “back-up”. Try thinking a side income as a supplement to your main source of income.
A side gig can be done easily within the comfort of your own home, or even after your working hours. Basically, anytime and anywhere. Utilise the knowledge and skills that you have. Turn it into something that people are willing to pay for. There are many options available out there, from becoming a freelancer, Grab driver, home baker, etc. Get creative and start looking for opportunities! Check out this article for more creative ways to earn extra income.
4. Upgrade yourself with new skills and improve your CV
It is understandable and worrying at the same time when you have lost your job or received a salary cut during this challenging time. Use the extra time that you have now to seek for a new job and also upgrade yourself with a new skill that is of high demand now – either digital marketing, web development, or graphic design.
There are many free online tutorials and courses available on YouTube and Coursera that will allow you to pick up these skills. This will help you to improve on your CV, standout from your competitions and possibly land on a new job. Alternatively, the new skill set will also provide you the opportunity to generate side income apart from your main job.
5. Discuss with your financial provider to reschedule or restructure your loans
After you have reviewed your financial positions, going through step (1) to (4) above, and still have a “shortfall” to meet your loan commitment, don’t panic. Set up an appointment and discuss with your respective banker about your current situation. Don’t wait until the moratorium ends. Most banks are open to assist borrowers to restructure and reschedule their loans, as ultimately it is also the bank’s objective to see the loans fully paid back.
Options available to help borrowers include:
- Lengthening the loan tenure to reduce monthly commitment,
- Paying only interest of the loan for a period of time before the normal monthly instalment kick in, or
- Payment holiday for a short period of time
If you have done your financial assessment as discussed above and be able to show your income versus commitment gap to your bankers, it will help them to better understand your situation and hence approve a payment scheme that suit your needs.
Alternatively, you can also opt for debt consolidation whereby you combine all of your outstanding loans into a new loan that has a much lower interest rate. This could be a smart move as BNM has cut the OPR rate by 1.25% since the start of the year and this has resulted in lower financing costs. That way you will also get to lower down your monthly instalments and save up some money in the long run.
6. Get in touch with AKPK
Always remember, there will always be a way. Let’s say even if banks reject your appeal for the moratorium extension, never go to a loan shark or ‘ah long’ just because it is easier that way. You will regret it as that’s not the pathway that you want to take.
There’s nothing wrong or shameful to get in touch with AKPK. They provide free consultation services. AKPK even has a programme called the Debt Management Programme whereby counsellors help individuals to develop a personalised debt repayment plan. This would help individuals to better manage their financial struggles.
A change is always hard at first.
This is an unprecedented time and has changed the way we live, at least for now. Don’t be despair if you lose your job/income or have to accept a lower salary. There are still ways you can manage the situation, although some changes in lifestyle will be required. Tough situations build strong people because what doesn’t break you makes you stronger.
Start making changes to how you manage your finances. The sooner you find your way to pay back your commitments, the better.
If you have decided to take up a low interest rate personal loan to consolidate your more expensive debts to reduce commitment, then Direct Lending is ready to help. We are a personal loan lending platform which offers bank and koperasi loans especially for government servant. Do reach out to us if you have any questions or concerns. Our team of friendly consultants is more than willing to assist you with the entire process with absolutely no charges. Check your eligibility & apply with us today for free!
