KUALA LUMPUR, April 9 — The move to let contributors use their Employees Provident Fund (EPF) savings as loan collaterals could lead to various problems that include saddling...
KUALA LUMPUR, April 9 — The move to let contributors use their Employees Provident Fund savings as loan collaterals could lead to various problems that include saddling borrowers with high interest payments, former second finance minister Datuk Seri Johari Abdul Ghani said.
“So, if you take a loan of RM70,000 and pay interest, say 5 per cent a year, that works out to RM3,500. Across 10 years, that’s RM35,000. Whereas EPF cannot guarantee you a return of 5 per cent on your balance,” he told news portal“The net amount from a borrowing of RM70,000 after deducting interest payments is RM35,000. In such a case, it would make more sense for a contributor to simply withdraw RM35,000 directly from his Account 2. He wouldn’t have to pay a sen in interest.
Lenders are guaranteed repayment when the borrower reaches the retirement age of 55 in the event the loan can’t be repaid within the stipulated tenure. Anwar said those using the facility can only get a loan of not more than RM50,000.
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