Dealers prefer easier approvals to cheaper loans

 

Besides cheaper loans, banks should provide a more flexible package for hire-purchase financing, says Proton Edar Dealers Association

PROTON car dealers say they prefer easier loan approvals rather than cheaper loans to help drive sales.

"The cheaper loan should not be at the expense of an easier loan approval.

"In addition to cheaper loans, banks should also provide a more flexible package for hire-purchase financing," Proton Edar Dealers Association (Peda) deputy president Armin Baniaz Pahamin said in a statement.

The recent cut of a quarter of a percentage point in the key lending rate by Bank Negara Malaysia is negligible.

He argues that consumers may wait for more cuts before buying a new car and this could hurt sales.

Armin said the approval of customers' hire-purchase loan depends on the banks' risk scoring.

"Proton customers' risk profile is set by the banks and is higher compared to other car distributors, making it harder for loans to be approved."

He said there were instances when Peda customers' loans were rejected or reduced but the same customers were able to secure a higher loan to buy a non-national car.

"Currently, customers who do not fulfil or satisfy the banks' risk profile are given an option for a higher interest and lower margin of finance or risk the loan being rejected.

"Unless the risk profile issue is addressed, Proton car sales will be quite stagnant if not lower, even with the cut in interest rate,," he said.

Armin said a cheaper source of financing will, however, cushion Proton dealers from the rising cost of operations.