Afyan Mat Rawi of Infaq Consultancy said mortgages and car loans often represented the largest debts for most Malaysians.
“For housing, the module can emphasise the difference in the cost of buying versus renting as well as maintenance expenses. For cars, it should highlight depreciation, fuel costs, insurance and servicing,” he told FMT.
Afyan said the module could act as a prerequisite, similar to the Central Credit Reference Information System check, to gauge a borrower’s ability to repay before loans are approved.
“With more than 30 banks competing to offer products, this module would act as an umbrella before the storm,” he said.
He was commenting on Bank Negara Malaysia’s new policy that will come into force in 2027, requiring individuals applying for personal loans exceeding RM100,000 to attend and complete a financial education module.
In the policy document issued yesterday, the central bank said the module would be provided by the banks or the Credit Counselling and Debt Management Agency.
Afyan said many applicants were lured by attractive promotional rates without realising how much more they would eventually pay.
He cited the example of a RM120,000 loan at 6% profit over 10 years, with monthly instalments of RM1,333.
“But when you add it all up, the final amount can reach RM160,000 to RM170,000. That extra RM40,000 to RM50,000 is the bank’s profit, not the principal,” he said.
“Many people see personal financing with promotional profit rates as cheap, but when recalculated, the final amount is much higher. This module is important for them to understand the real risks.”
He added that without a significant increase in salaries, such repayments could take up half of borrowers’ monthly income. He said a financial module would help applicants assess their real affordability and avoid defaults.
He also urged BNM to keep the module simple, practical and flexible, run by certified consultants with a duration of no longer than half a day.
“The cost of the module should be borne by financial institutions, not borrowers. Its content must focus on actual risks, the difference between the principal and bank profit, and the impact of instalments on monthly income,” he said.
He cautioned that the programme could become meaningless if treated as a mere “box-ticking” exercise for loan approval.
“Borrowers might attend but not take it seriously. So it must be interactive, easy to understand, and relatable to people’s real-life situations,” he said.