Why did Malaysian banks approve record car loans in December 2025?

Question

Accepted Answer

Record Car Loan Approvals in December 2025 Linked to Vehicle Sales Surge and Subsidy Policies

Malaysian banks approved a record RM10.7 billion in hire purchase loans in December 2025, surpassing previous peaks and coinciding with a surge in vehicle sales. This record approval level was influenced by factors including the expiry of tax incentives for imported electric vehicles, which spurred a rush of sales, and a continued reliance on private vehicle ownership. Analysts also attribute the trend to the prolonged delay in implementing targeted petrol subsidies, which maintained artificially low pump prices and indirectly supported the hire-purchase market.
Record Hire Purchase Approvals Driven by Sales Rush

In December 2025, lenders approved RM10.7 billion in hire purchase loans, representing a new high and exceeding the previous peak of RM10.3 billion recorded in March 2023. The total value of car loan applications during this same month dramatically increased to RM18 billion. This surge in loan activity directly correlates with a record year for Malaysia's automotive industry, which saw 820,752 vehicles sold in 2025.
Tax Incentives Fuelled December Vehicle Demand

The automotive sector experienced an all-time monthly high in vehicle sales in December 2025, with 90,716 units sold. This significant increase was largely driven by consumers rushing to purchase vehicles, particularly imported electric vehicles, before the expiration of applicable tax incentives. This heightened demand for new vehicles naturally translated into a greater volume of loan applications and approvals.
Deep-Rooted Reliance on Private Vehicles Persists

Despite governmental efforts to expand public transportation networks, such as the Klang Valley LRT and MRT systems, economists highlight a deeply entrenched reliance on private vehicle ownership among Malaysians. The "last-mile" connectivity challenge remains a significant barrier for many, making private cars a necessity rather than a luxury. This fundamental dependence underpins the consistent demand for vehicle financing.
Subsidy Policies Indirectly Bolstered Car Loans

Analysts point to the delayed implementation of targeted petrol subsidies as a key factor contributing to the record car loan approvals. The continued maintenance of artificially low pump prices for petrol, compared to regional neighbours, effectively served as a subsidy for car ownership. This economic environment made the ongoing costs of private vehicle usage more palatable, thereby indirectly supporting the hire-purchase market and encouraging loan uptake.

Reading history

Hide →

This history is cleared when the page is closed.

Why did Malaysian banks approve record car loans in December 2025?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends