Riding on this topic for public bank semi flexi loan, what about the additional payment for every month?

Take an example of rm1800 monthly installment but I pay 2000 a month, does the 200 goes into reducing principal amount or advanced payment? I have been paying extra this way for a year+.

If advanced payment, can I ask the bank to move the money to reduce principal? Or does the extra payment will reduce my interest charged every month directly?

I have also transferred like 30-40k in lump sum previously, and the outstanding balance in my pbb app did minus out the 30-40k from the higher amount, but I’m not sure if it reduced the monthly installment charges.

This post has been edited by LovelyPotato: Jul 8 2022, 02:58 PM

So if every month paying extra few hundred and the money goes into pre-payment, does the interest calculated based on the net principal owed or total balance owed?

Seems like there’s no consensus here.

Sorry for the spam. I called my PBB branch credit dept to check. The person says that any extra payment have 3 place to go in loan account.

One will go into redraw amount will reduce interest, one will go into prepayment, and one will go into actual loan payment.

Any lump sum will go into redraw amount (you can check on PBB website), which will reduce your interest.

Monthly interest is charged based on the outstanding balances you see on your app, which is your (total outstanding principal minus redraw amount) * interest rate /365 * number of days of the month.

Prepayment amount will make your next payment date move further. As long as your next payment date is not too far and the amount in available redraw amount is adding up then you should be fine.

Additional info: transaction type code 614 is to pay your installment, 668 is redraw amount, 999 is interest, unfortunately I don’t have any sample for prepayment code.

Edit: I checked my hire-purchase account, every month I am paying a couple ringgit extra and it all goes into 614. So the prepayment don't have a separate code, it just shares with the instalment account and calculate the next payment date from the balance from 614.

This post has been edited by LovelyPotato: Jul 8 2022, 09:13 PM

Yeah you won't be able to choose the code. But you can verify where the money goes into. If it's not the right code then you will have to check with your mortgage branch.