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Car loans are the second highest cause of bankruptcy among Malaysians

CY Foong · Feb 2, 2023 10:45 AM

Car loans are the second highest cause of bankruptcy among Malaysians 01

According to the latest report by the Malaysian Department of Insolvency (MDI), there are 49,133 cases of Malaysians declaring bankruptcy between 2018 and December 2022. Out of those cases, 14.39% of them are caused by car loans.

Car loans are the second highest cause of bankruptcy among Malaysians 02

7,072 bankruptcy cases are caused by car loans which makes it the second highest contributor of bankruptcy cases after personal loans which in turn accounted for 42.24% or 20,754 of the total.

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Car loans are the second highest cause of bankruptcy among Malaysians 01

Despite being the second biggest cause of bankruptcy since 2018, the number of cases has steadily declined from 3,392 cases in 2018 to 441 cases in 2022. Based on MDI’s data, car loans are only the fourth highest cause of bankruptcy cases in 2022 alone.

Car loans are the second highest cause of bankruptcy among Malaysians 02

The MDI report also showed the age demographic of those bankruptcy cases and the highest age group is those between 35 and 44 years old. They consist of 18,454 cases or 37.56%.

Car loans are the second highest cause of bankruptcy among Malaysians 03

As for the amount of money owed, the majority of cases owe between RM 100,000 to RM 499,999. MDI only has data from July 2021 onwards which showed that more than 60% of cases owe more than RM 100k which is around the price of a car, typically bought by many Malaysians with a very unrecommended 9-year loan.

Car loans are the second highest cause of bankruptcy among Malaysians 04

Another recent study published by local university UCSI found that 73% of 1,077 Malaysians aged between 18 and 40 years old are in debt with 30% of loans taken for cars. Perhaps it’s really time to consider avoiding that 9-year loan if you’re looking to buy a brand-new car.

Also read: If you need a 9-year loan, you can’t afford the car, and do understand Rule of 78

CY Foong

Writer

Traded advertising for a career that fits his passion for cars. Enjoys spotting cars during his free time and has a soft spot for Japanese Kei cars but drives a thirsty manual sedan.

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