I took a housing loan from a local bank in 2017. The property was recently completed and thus my monthly instalments are due.
I came across articles in financial and property websites that said that frequent scheduled payments, such as weekly or bi-weekly payments, would reduce the interest and shorten the repayment tenure compared with conventional monthly repayments.
Therefore, I tried setting my monthly mortgage payments to a weekly basis via the bank’s online service, but there was no option for weekly payments, only monthly.
I was told that this hiccup could be solved with a call to the bank’s customer care hotline.
Imagine my disappointment when the officer said the process was complicated.
The reason the bank proffered was that “the bank’s system was set in such a way and nothing could be done”.
This is difficult to believe, especially in this day and age.
I called the bank’s office in Putrajaya to enquire about it.
After a few days of calls, the outcome was still the same: the “bank’s system was set in such a way” that only monthly payments could be made.
I was also told that the bank would auto debit my account on the first of every month for the duration of the loan tenure, even if I have manually made weekly payments.
Apparently this auto-debit clause is in the standard loan agreement.
I can understand the bank’s rationale to auto debit customers’ account to pay for their loans, but why can’t the bank entertain requests from customers to disable the forced auto debit if their payments are up to date?
When I asked what would happen if I closed my account and pay manually, the officer replied that the bank would impose a late penalty on me.
She, however, agreed that if I made weekly transfers from other banks to pay the loan before the scheduled date, I would not be penalised.
When I suggested that it seemed the bank would rather have its customers close their account than to have a simple request accommodated, she replied: “Terpulanglah” (it’s up to you).
I am confused.
If I insist on weekly payments, I can do it by closing my account and make weekly transfers from other banks to pay for the loan.
But I am not asking for a discount or requesting to make late payments.
I am just offering to pay in advance, albeit, in a smaller amount.
The issue here is not whether the bank can allow weekly loan payments. It is a matter of if it wants to.
Maybe the reason for not allowing weekly loan repayments is because if it reduces the interest paid, thus it decreases the bank’s profits.
Perhaps Bank Negara could look into this.
I am not sure of the procedure with other banks, or whether it is practised by all banks.
Financial institutions should not be allowed to employ arm-twisting tactics to take advantage of the public.
I remembered a bank officer once telling me that the bank’s standard loan agreement cannot be altered even if you do not agree with certain clauses in the agreement. It is a take-it or leave-it deal.
R.T.J.H.
Puchong, Selangor