Sometimes, cash isn’t always king. As an example, when you urgently need expensive consumer goods for your new home such as sofa, washing machine, refrigerator, air-conditioner or TV, it may not be possible for you to make a lump-sum payment.
As a consumer, have you ever heard of the term “objective financing”? Objective financing could be the best solution in situations such as this.
What makes objective financing ideal to consumers?
It is a financing model featuring easy application, fast disbursement/approval, flexible repayment tenure and low cost (with special interest rate as low as 0.85%). Basically, it is designed for consumers to purchase consumer durable products at selected merchants nationwide and pay via flexible monthly instalments.
Depending on the scheme, consumer products that could be financed include electrical products, furniture, car accessories, gold and jewellery, computers, kitchen cabinets, smartphones, smart devices (tablets), cameras (SLR & DSLR), water filters, musical instruments, and more.
Approval only takes between 15 to 60 minutes, within three working days (on average). Often, no guarantor is required, which makes this model ideal for many.
The flexible repayment tenure can go between six to 36 months, with interest rate ranging from as low as 0.85% to 1.25% per month. The financing amount starts from RM2,000 to RM10,000++. For financing amount that goes over RM30,001, agreement fee of RM94 is applicable. Meanwhile, the minimum instalment amount is RM48 per month.
The minimum requirements
Under the objective financing scheme, you’ll be required to provide a few documents, which include one photocopy of I/C (front and back), a photocopy of three-months proof of income and a bank statement or savings passbook.
For the self-employed, you may be required to provide Form J and Business registration form (Borang A and D), a photocopied I/C of proprietor/partners/directors and 6-months bank statement. The minimum monthly gross salary requirement is RM900, while the minimum monthly net pay requirement is RM1,000 if you’re self-employed.
Various payment methods
There are several payment methods that you can choose under this scheme, which include Internet banking, MEPS Interbank GIRO, cash deposit machine at the scheme’s branches, over the counter (at the scheme’s branches), and deduction by auto-debit (at banks such as Maybank, BSN, CIMB Bank, Public Bank, RHB, Ambank Group, Ambank, Alliance Bank, Bank Muamalat and Standard Chartered).
An interest rebate may be offered for early settlement of a loan. The following is a generic formula used to calculate the rebate:
Rebate = RP X (RP+1)
OP X (OP+1)
RP = Remaining period (number of months), from point of early settlement until the original full settlement date.
OP = Original period (number of months) set out in the Agreement.
Paying your loans on time
Just like most financing schemes, there will be Late Payment Charges applied for default payment during the tenure, which is about 5% p.a. on the overdue instalment amount.
Many scheme providers are open to discussing payment alternatives should you have difficulties in making your payments, so try to work out a solution by contacting them. You could also seek help from AKPK, an agency established by Bank Negara that provides free service on money management, credit counselling and debt restructuring.
As a borrower, make it your priority to pay the instalments on time. Always ensure that the products financed are adequately insured, and immediately inform your lender of any changes in your personal info, such as your employment status or home address.
Paying your loans on time could help in building a higher credit score, which in turn would increase your chances of getting your housing, car, personal or business loan approved in the future.