Bank Islam Vehicle Financing‑i is a Sharia-compliant car financing solution based on the Murabahah concept. It allows customers to purchase vehicles through a cost-plus-profit arrangement without involving interest (riba). This product complies with Islamic banking principles governed by Bank Negara Malaysia and is available for new, used, and reconditioned vehicles.
The financing covers up to 90% of the on-the-road (OTR) price for national, non-national, and hybrid vehicles. Tenure options extend up to 9 years, with profit rates varying between 2.10% and 3.92% per annum depending on the vehicle type and age. For example, electric vehicles (EVs) qualify for lower rates starting at 2.10%, while used cars aged 6–10 years have rates from 3.92%.
Bank Islam Car Loan Rates and Application
How Do Bank Islam Car Loan Rates Work?
Bank Islam car loan rates are determined using the Sum of Digits method, which calculates profit monthly based on the remaining principal. The selling price is fixed upfront, ensuring transparency. National cars like Proton and Perodua have rates ranging from 2.50% to 3.30%, while non-national and hybrid vehicles start at 2.30%.
Late payments incur a Ta’widh (compensation) fee of 1% per annum on overdue installments. Early settlements qualify for Ibra’ (rebate), reducing the total payable amount. For instance, a customer financing a RM100,000 national car over 5 years at 3.30% would pay approximately RM1,943 monthly, with the total profit amounting to RM16,580.
What Are the Eligibility Criteria for Bank Islam Vehicle Financing‑i?
Eligibility for Bank Islam Vehicle Financing‑i requires applicants to be Malaysian citizens aged 18–60 with a minimum annual income of RM24,000. Fixed-income earners must submit salary slips, bank statements, and EPF records. Self-employed applicants need additional documentation like business registration or tax filings.
The bank evaluates creditworthiness using factors such as debt-to-income ratio (DTI), payment history, and existing financial commitments. A DTI below 33% improves approval chances. For example, an applicant earning RM3,000 monthly should not exceed RM990 in combined loan repayments.
What Documents Are Needed for the Application?
Required documents include a photocopy of the applicant’s MyKad (front and back), valid driving license, and latest 3 months’ salary slips or bank statements. EPF statements (KWSP) or EA forms serve as income verification. Non-salaried applicants must provide business licenses or audited financial reports.
Bank Islam processes applications within 3–5 working days if documents are complete. Delays occur if additional verification is needed, such as for freelance income or irregular employment.
How Does the Murabahah Financing Structure Operate?
Murabahah financing involves Bank Islam purchasing the vehicle and reselling it to the customer at a disclosed profit margin. The total cost is divided into fixed monthly installments. For example, a RM80,000 car with a 3% profit rate over 7 years results in a RM1,102 monthly payment.
Ownership transfers to the customer upon full repayment. The bank retains the right to repossess the vehicle if the borrower defaults, as per the terms in the loan agreement.
What Are the Fees and Penalties?
Fees include a RM20 stamp duty for loan agreements and a 1% Ta’widh charge for late payments. Early settlement fees depend on the remaining tenure, with rebates applied to unpaid profit. For instance, settling a 5-year loan after 3 years may reduce the outstanding balance by 15–20%.
Comprehensive motor Takaful coverage is mandatory for the loan duration. Optional add-ons like personal accident Takaful incur additional costs.
How Does Bank Islam Compare to Conventional Car Loans?
Bank Islam’s profit rates are competitive against conventional interest-based loans. While conventional banks may offer lower nominal rates, Murabahah’s fixed profit structure avoids compounding interest. A RM90,000 loan at 3.3% with Bank Islam totals RM112,455 over 9 years, whereas a 3.5% conventional loan with compounding interest may cost RM115,200.
Sharia compliance appeals to customers avoiding riba. The bank’s approval process aligns with Islamic principles, prohibiting investments in non-halal industries.
Where Can Applicants Submit Their Car Loan Requests?
Applications are accepted online via Bank Islam’s website, at branches, or through authorized dealers. The portal requires uploading digital copies of documents and filling out personal and vehicle details. Dealers assist with paperwork for faster processing, especially during promotional periods.
Customer service operates from 9:00 AM to 6:00 PM on weekdays, with urgent queries handled via the 24/7 contact center at +603-26 900 900.
What Support Does Bank Islam Offer During the Loan Tenure?
Post-approval support includes online account management for installment tracking, payment reminders via SMS, and flexible payment methods like GIRO or JomPAY. Borrowers can request loan restructuring for financial hardships, subject to approval.
The Sharia Advisory Board ensures ongoing compliance, reviewing products annually. Customers receive annual statements detailing paid profit and remaining balances.
Are There Special Financing Programs for Electric Vehicles?
Electric vehicles (EVs) qualify for reduced rates starting at 2.10%, the lowest in Bank Islam’s portfolio. This aligns with Malaysia’s green mobility initiatives. A RM150,000 EV financed over 9 years at 2.20% costs RM1,614 monthly, saving RM6,480 compared to a 3.30% national car loan.
Hybrid vehicles also benefit from rates between 2.30% and 2.50%. The bank partners with manufacturers like Tesla and BYD for exclusive promotions.
How Does Early Settlement Affect the Total Cost?
Early settlement triggers Ibra’, a rebate on unrealized profit. The bank recalculates the outstanding balance using the Rule of 78, favoring borrowers who settle ahead of schedule. For a 7-year loan, settling in year 5 may reduce the payable amount by 12%.
Customers must submit a written request and settle the revised sum in one payment. The bank provides a final statement within 7 working days.
What Happens in Case of Loan Default?
Defaulting leads to repossession after 3 consecutive missed payments. The bank auctions the vehicle, applying proceeds to the outstanding balance. Any shortfall becomes the borrower’s liability. Legal actions under the Islamic Financial Services Act 2013 may follow.
Borrowers facing temporary difficulties can negotiate revised payment plans. The bank charges a RM50 processing fee for restructuring requests.
Does Bank Islam Offer Refinancing for Existing Car Loans?
Refinancing is available for loans from other banks, subject to a 5-year remaining tenure. The new profit rate depends on the vehicle’s age and model. Savings occur if the existing loan’s interest exceeds Bank Islam’s profit rate. A borrower paying 4.5% on a RM70,000 balance could save RM210 monthly by refinancing at 3.3%.
The process requires a fresh credit assessment and vehicle inspection. Stamp duty and insurance costs apply again.
How Does the Sum of Digits Method Calculate Profit?
The Sum of Digits method allocates higher profit portions to early installments. For a 5-year (60-month) loan, the total digits equal 1,830 (60+59+58…+1). The first month’s profit is 60/1,830 of the total profit, the second month 59/1,830, and so on. This front-loads the profit, making early settlements more beneficial.
A RM50,000 loan at 3% over 5 years generates RM7,500 total profit. The first month’s profit is RM246 (60/1,830 × RM7,500), while the last month’s is RM4 (1/1,830 × RM7,500).
What Are the Contact Channels for Queries?
Bank Islam’s contact center (+603-26 900 900) handles general inquiries. Email support (contactcenter@bankislam.com.my) responds within 48 hours. Branches provide in-person assistance, with locations listed on the bank’s website.
Social media platforms (Facebook, Twitter) offer updates on promotions and rate changes. The website hosts downloadable forms and a loan calculator for self-service planning.