used-cars

Over the past few days, we've seen a rather misleading letter on MalaysiaKini being widely shared on social media, which lays claim that no individual car loans can be processed by local banks due to so-called "GST paperwork."

The author said that two banks had declined her car loan application, because she wanted to purchase a car from a direct owner. Apparently, the banks would only process loans for those buying from second-hand or new car dealers, citing that there's "too much work involved due to the Goods and Services Tax (GST)."

Is there any truth in this? Thankfully, absolutely not.

Sources within the industry have confirmed to paultan.org that the recent implementation of GST has not affected car loan applications in the way described above. Hire purchase applications are being processed as before, be it for those buying from individual owners or car dealers.

Let's not forget that GST will not be imposed on the sale of a used car from one individual to another. Car loan interest is fully-exempted from GST too, so claims of such "GST paperwork" is clearly unfounded. However, when you buy a vehicle from a used car dealer, the dealer has to pay the government 6% GST, but only on the margin made (not the full amount).

In fact, we at paultan.org have personally had two recent post-GST experiences regarding the matter: once as a buyer, and the other as a seller. In both cases – involving purchased from direct owners, of course - we did not encounter such an issue. The car loans were approved in due time, as per normal procedure.