PTPTN : Conventional 3% Vs Ujrah 1%

PTPTN is currently offering conversion package from conventional 3% compounding rate (reducing balance) to 1% flat rate Ujrah package. There are some inquires of whether to take the offer.

First, lets calculate how much you can save from the conversion:
Assume : Loan amount : RM20,000.
Repayment period : 5 years to 20 years. Refer to "jadual bayar balik" below.
Analysis on % of saving is based on total loan amount and total interest saving.

 

To make it simple, 1% of flat rate is equal to 1.89%(20Yr)-1.93%(5 yr) of compounding rate.

Second, what is the covenant included in the Ujrah package:

• Repayment via LHDN, inland revenue  which means you can't run away.
• You will need to inform PTPTN 3 months in adv if you are traveling oversea during the repayment period. (What a hassle!)
• Late payment charges of 1%.p.a ONLY vs 3% outstanding loan with max of 3% of your study loan.
• The clause "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.” Courtesy of www.cekikdarah.com

Conclusion :
In short, for the 1% of interest rate saving, you will need to comply to those new covenants. Personally, i think the reduction of 3% compounding to roughly 2% compounding rate (1% flat rate) is a worth bargain to convert, especially you are that kind of people who will bring out all your FD to the opposite bank for additional 0.2% higher FD rate.

Previously, many rather save their money in bank instead of paying PTPTN,
Bank FD gives you 3.2% while PTPTN will take away your 3%. Smart huh?

In a nutshell, its up to individual on whether you want to save 1% going through the hassle. Converting to Ujrah will discipline you to pay, unless you are still indulge in the wishful thought that the policy maker may change their mind one day and grant certain % waiver for PTPTN loan in order to haste up recovery of bad debt.