Waiting on attractive car lease conditions
As in other Asian countries, the ways of funding of corporate vehicles are not as developed and service oriented as in Europe and North America, Japan and Australia. The most common and traditional mode of finance for any vehicle purchase in Malaysia is hire purchase and this applies to an individual and a company.
A hire purchase agreement has a fixed loan amount, interest rate and duration. The repayment is usually monthly over a duration that stretches from 1 to even 10 years. The interest rate varies from bank to bank and there are also times when a particular model is accorded special low promotional interest rates. As a norm, the interest rate for new vehicles is lower compared to the rate for a used vehicle.
The actual rates can vary from 1.5% to up to 7% per annum depending on the loan amount, duration and model.
There a host of banks providing hire purchase facilities both local and foreign. The major players with dedicated auto financing branches and counters include Malayan Banking, Ambank, Public Bank, CIMB, RHB Bank, Hong Leong Bank, OCBC, UOB, HSBC and many more.
The other form of financing is leasing undertaken mainly by companies. All major automotive fleet industry operators and companies also use this form of financing and they include fleet management companies. The leasing outfits fall under the category of credit and leasing. Examples of these companies include ORIX, QC Fleet, Mayflower, Scania Credit, DRB Leasing, Mercedes-Benz Services, BMW Credit and Toyota Captial. Operating lease is only offered by a handful of these companies and not all to prevent domination by a particular brand/company. Since June this year also the international giant LeasePlan has a subsidiary in Malaysia, which it will use as central hub for its product and service offer in South East Asia.
As there is a message from the Bank Negara (Central Bank) presently, is to control the rising debt, the interest rates for both hire purchase and leasing will most likely increase rather than decrease in the near future. This scenario is expected to prevail until the policy makers take a deeper look at leasing as a better mode of vehicle financing without other secondary considerations.
Authored by Eric Lingam, Fleet Asia
