|Think properly before accepting|
PTPTN has recently announced that they will reduce the interest rate charged from 3% to 1% and requires the borrower to submit their application to get the reduction. After that, the loaner would need to wait for a while before PTPTN will send electronically the new contract for the 1% ujrah scheme. The terms and condition can be seen on the new contract that requires you to sign it and affixed a RM10 stamp duty each for 2 copies.
Okey..now we move on to the gist of this post. Why you should REJECT the 1% ujrah and maintain your 3% payment!! On the surface everything looks nice and dandy as 1% interest is lower than the current 4% interest. HOWEVER, here are the 3 reasons why you would consider to reject it.
1. The interest calculation for the 1% ujrah is based on fixed interest rate scheme aka something like what you have for a car loan. So if you loan RM10,000, you will need to pay RM10,000 + RM100 for 15 years. I surveyed around and found out that most/all contracts is for 15 years. Current old scheme is at 3% using mortgage reducing calculation (similar to housing loan. In Bahasa Melayu is "baki berkurangan"), where the interest charged monthly will be calculated based on the remaining principal. So if you pay more each month, the interest charged (kos pentadbiran) will be lowered.
In general, mortgage reducing calculation type will lead to lower total interest rate compared to fixed interest calculation for the same amount of interest charged by PTPTN. And if you suddenly hit jackpot and decided to clear your debt, the mortgage reducing calculation type will help you to save money. That is why it is always a bad idea to clear early your car loan. (since you still need to pay the same amount of interest regardless of when you clear entirely the loan amount).
For argument sake, 1% is much smaller than 3%, hence the new scheme seems much more beneficial and cost savings for the loaner. However, point number 2 is really punishes those that diligently payback PTPTN and render the new scheme useless & pointless.
2. I have no idea why PTPTN comes out with this next idea. (Note that ujrah idea was approved in 2008 by the government but took a few years to implement!!)
Remember that point 1, PTPTN uses fixed interest 1% calculation on your loan. However, the loan amount is based on the remaining amount on June 2008!!! Yes...2008. Not sure why PTPTN don't at least try to use year 2011 or even best best case use the amount when you submitted your new contract.
For example, lets say your remaining loan at 2008 was at RM10,000. However, in 3 years you diligently pay the minimum required amount and the loan at year 2011 , now stands at RM5,000. So, you will think that the 1% ujrah interest calculation will be based on RM5,000. Then you will be dead WRONG!!!
If you look closely at the near contract, it clearly shows that the 1% ujrah will be based on RM10,000 (the amount you had left in 2008). And hence the interest charge would be RM100 instead of RM50 (1% of RM5,000) which you thought. Using 2008 as the reference point really does not make sense for those that payback a huge sum in within those 3 years. You actually get charged another 1% on the RM5,000 that you already paid back!!!!
I have made a general rough calculation, if a person paid diligently the MINIMUM amount monthly under the old 3% scheme (provided you continuously payback during the >June 2008-2011) until you clear the entire amount, the total interest accumulated is not that much compared to the 1% scheme which calculation is based on June 2008 loan amount. Furthermore, YOU CANNOT save on interest if you decided to clear all your loan earlier.
So for those diligent and law abiding students that regularly & consistently pay back, the 1% ujrah is not beneficial since interest savings cannot be achieved.
3. With new contract comes new term & conditions inserted. Now PTPTN requires payment to be done through your employer. (hopefully your employer is honest enough to send the amount each month. I am not sure for those that work in big companies, how are they going to explain to the HR finance do this extra procedure or extra task. You are giving people more things to do!!!)
Secondly, by signing away this new contract, it gives PTPTN the full authority to submit your PTPTN loan information and your personal details to the banking system, EPF, LHDN, etc. This means that your CTOS & CRIS points will be affected if you tend to be slow or negligent in servicing your loan. This is no joke as thru CTOS & CRIS, every bank knows your loan track record.
And it also gives PTPTN full authority to ask the banks to reject your future loan applications. And any court fees issued to you to demand payment will be bored by you.
They also can demand full payment from government bodies such as EPF to clear fully your loan, if you are continuing to be a stubborn mule in repayment.
4. In order to protect their investment (I deemed this is a good reason by PTPTN. Their money is our rakyat's money after all), they will buy insurance takaful on your life. This is just in case you croak and cannot fully clear the remaining loan. But you need to pay for the takaful ( i assume this is cheap compared to conventional life insurance. I remember with RM1 school children can be insured. Now sure how much for an adult) and the premium amount is not stated by the contract.
So no information on the premium amount and the amount of coverage. (Ambiguity in a contract is a NONO) PTPTN now has the authority to solicit the remaining loan amount not covered by takaful from your family if you say bye bye.
5. PTPTN has the right to charge another additional 1% (ta'wid or pampasan) on the monthly loan amount that you "forget" to pay. And by right, ask you to pay up the full amount immediately if they deem fit. And immediately, if they discovered that you are a bankrupt or in need of financing help/counselling from AKPK, they can also ask you to pay up.
So be wise, and DO your own DUE DILIGENCE before accepting this new 1% ujrah. (certain situation may merit you to take the loan!! For those diligent ones that pay extra each month, it is better NOT to take up the new contract) When things look too good to be true, always LOOK for the fine print.
And finally the scariest part in the contract.
“23. Walau apa pun yang tersebut diatas, PERBADANAN berhak pada bila-bila masa menurut budi bicara mutlaknya meminda atau menambah terma-terma atau syarat-syarat yang terkandung di dalam PERJANJIAN PEMBIAYAAN PENDIDIKAN.”