Powering progress: Digital finance is redefining car ownership in Malaysia

The Star

2 days ago

In Malaysia, car ownership is more than a milestone, it is a necessity.
From school runs to side hustles, the car remains a vital utility, especially in areas underserved by public transport.
But even as the need endures, the ability to own is becoming harder to grasp, it continues to be a big financial decision, compounded by rising living costs, subsidy reforms, and tightening credit conditions, have placed affordability under increasing pressure.
Yet just as policy challenges mount, so too does innovation.
Digital banks and fintech players are reimagining how Malaysians access financing.
No longer tethered to branch offices, limited by payslips or traditional credit scores, a new wave of mobility financing is emerging – one that lowers barriers, expands access, creates a frictionless experience, and brings a broader spectrum of Malaysians into the driver's seat.
The credit divide: Who gets left behind
Traditional vehicle loans in Malaysia remain the standard route to ownership. Offered by banks and financial institutions, these loans typically stretch up to nine years, covering up to 90% of the car's price. Lenders structure repayment to keep upfront costs low, making car ownership more accessible for middle-income earners.
But access is uneven. Eligibility often depends on fixed employment, duration of service (often a minimum of three to six months), minimum income thresholds, and formal documentation.
Broadly speaking, a standard debt-servicing ratio of 60% applies, meaning your total monthly repayments, including the car loan, cannot exceed 60% of your income.
Additionally, requirements can vary depending on a multitude of factors, including whether applicants work in the public or private sector, where private-sector borrowers need to earn at least RM3,000 monthly.
For salaried professionals with stable income, this system works. But for Malaysia's growing base of gig workers, micro-entrepreneurs, and informal sector earners, the door is often closed. No payslip, no access.
Imagine needing a car to get to a new job but not having the payslip or documentation to get a loan to finance the purchase, many find themselves in such a difficult situation.
Fintech steps in: Rethinking creditworthiness
Much like other sectors it has disrupted, technology is reshaping finance and digital banks are at the centre of this shift, playing a transformative role in democratising access to financial services by lowering traditional entry barriers for communities previously underserved by brick-and-mortar banks.
A large proportion of Malaysian adults are still outside the system, with about 15% having no bank account and around 40% considered underbanked, i.e. may have bank accounts but lack access to credit, insurance, or other essential financial tools.
Digital banks are stepping in to close this gap by offering app-based services with fewer requirements, faster onboarding, and less physical documentation. For someone who has never had a formal bank loan, being able to apply for credit using just their smartphone is not only empowering, it can be life changing.
Digital banks are redefining creditworthiness, with shifts from traditional indicators to behavioural data beginning to emerge. Across the globe, behavioural data like e-wallet activity, phone top-ups, and payment histories, are becoming credible proxies for creditworthiness.
Even in the US, Buy-Now-Pay-Later (BNPL) usage can now be factored into FICO credit scores, similar to CTOS in Malaysia, signalling a shift away from legacy models toward more dynamic assessments, opening up a host of new approaches and possibilities, better reflecting the dynamic lives we lead, and the technological advancements made.
In Malaysia, BNPL has had a compounded annual growth rate of 24% from 2021 to 2024, with no signs of slowing down, whilst full of potential, is fraught, too, with risks if not supported by a robust regulatory framework.
For someone like a freelance graphic designer or a food delivery rider, consistent GrabPay or DuitNow activity could one day become a proxy for credit reliability and worthiness.
Used responsibly, users build credibility step-by-step through microloans and short-term financial products, instead of waiting years to accumulate formal credit history. These early financial footprints open the door to bigger-ticket financing, including vehicle loans.
Regulatory support has been pivotal.
Fortunately, Bank Negara has been at the forefront with recognition of the transformative power and potential fintech has, has issued digital banking licenses and catalysed the sector, whilst cautiously protected us with the proposed
Consumer Credit Act to foster transparency and enact consumer protections. Players like GXBank, AEON Bank, and Boost Bank are not just digitising banking – they're localising it for underserved communities.
As the world of tech continues to permeate our lives, the tech we use to fund it is becoming the norm, and tools of creditworthiness must keep pace to accurately assess, not to restrict.
Personal loans and lifecycle financing
Beyond vehicle purchases, fintech is expanding credit across the entire ownership journey. Platforms like Touch 'n Go and Direct Lending offer solutions like personal loans for everything from down payments to car repairs and used vehicle purchases, at consumer fingertips.
These tools open the doors to new users, providing the promise of mobility for all, supporting every stage of the journey, from purchase to maintenance, insurance to urgent repairs.
TNG CashLoan, for example, provides loans ranging from RM100 to RM150,000, with income requirements as low as RM1,400 and approvals in under 24 hours.
Direct Lending supports borrowers with monthly incomes as low as RM1,200 (in East Malaysia), offering syariah-compliant options, takaful instalments, and car service financing, in as little as two working days.
These offerings are particularly vital for lower-income groups and first-time buyers, who may be stretched, and a large outlay can be beyond their means.
More importantly, they enable continuity of ownership, because the financial pain points often come after the car is bought – repairs, renewals, servicing, insurance – and traditional financing rarely covers these. Fintech platforms are now stepping into those cracks.
Some are even bundling services like predictive maintenance alerts, resale value tracking, and vehicle buyback programmes – adding value beyond the loan.
Insurance gets smart: Telematics and behaviour-based pricing
Insurance, long a cost burden for many, is also being redefined. With connected vehicles and telematics becoming more common, usage-based insurance is gaining traction.
Instead of paying a flat premium, drivers now have access to 'pay-as-you-drive' models, where premiums are adjusted based on actual mileage and driving behaviour.
Companies like AXA and Grab in Singapore have trialled devices that monitor braking, acceleration, and distance driven – offering lower rates for safer, low-mileage drivers.
For cautious drivers or those who drive infrequently, this model feels fairer. For insurers, it improves risk prediction and lowers exposure. And for the financially stretched, it can be the difference between staying covered and going without.
With telematics, dashcams, and increasingly as software-defined tech-forward vehicles become the mainstay, insurers can increasingly trust and be confident in consumers' behaviour, reducing informational asymmetry. When bundled into digital finance ecosystems, this kind of insurance integration helps cement long-term vehicle access. It turns risk management into a seamless part of the ownership experience.
Mobility isn't just about cars – it's about opportunity. And in today's landscape, access to finance is access to opportunity.
As Malaysia rationalises subsidies and rethinks its mobility incentives, digital banks and fintech's data and tech-driven financial instruments have the potential to soften shocks, close credit gaps, and unlock access, including to car ownership, for thousands previously excluded. The financial rails behind our mobility are being rebuilt.
And in that rebuild lies a bigger truth: affordability is not just about price tags, but about systems. The future of mobility in Malaysia depends not just on the vehicles we drive, but on the ecosystems that enable us to own, run, and safeguard them.
Because in the end, progress isn't powered by engines alone – it's powered by access.
The views expressed here are the writer's own.